In the Philippines, the regulation of financing and lending companies falls under the jurisdiction of the Securities and Exchange Commission (SEC). To curb the rising incidents of debt collection harassment—particularly from Online Lending Applications (OLAs)—the SEC issued Memorandum Circular No. 18, Series of 2019 (MC 18). This circular provides the primary legal framework for what constitutes unfair collection practices and the mechanisms for redress.
1. Prohibited Acts Under SEC MC 18
Before filing a complaint, it is essential to determine if the collector's behavior violates the law. The following acts are strictly prohibited:
- Threats of Violence: Using or threatening to use physical force to harm the debtor, their reputation, or their property.
- Obscene/Profane Language: Using insults or foul language to coerce payment.
- Disclosure of Personal Information: Publicly listing the names of debtors or sharing their "delinquency" with third parties, including social media shaming or contacting people in the debtor's contact list without consent.
- False Representation: Falsely claiming to be a lawyer, a court representative, or a government official. This includes sending fake subpoenas or "notices of garnishment."
- Contacting at Unreasonable Hours: Contacting the debtor before 6:00 AM or after 10:00 PM, unless the debt is past due for more than fifteen (15) days or the debtor gave prior consent.
- Deceptive Tactics: Using any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
2. Requirements Before Filing
The SEC generally requires that the complainant has attempted to resolve the issue with the lending company first. However, in cases of severe harassment, you may proceed directly to the formal complaint process.
Documentary Evidence
A complaint is only as strong as the evidence supporting it. Ensure you have the following:
- Screenshots: Copies of text messages, emails, or social media posts containing the harassment.
- Call Logs/Recordings: Documentation of the frequency and timing of calls.
- Loan Contracts: A copy of the disclosure statement and the terms of the loan.
- Proof of Identity: A valid government-issued ID of the complainant.
3. The Filing Process
Step 1: Verification of the Entity
Check if the lending company is registered. You can verify this through the SEC List of Recorded Lending/Financing Companies on the official SEC website. If the entity is not registered, it is an "illegal lender," which may also involve a criminal report to the SEC Enforcement and Investor Protection Department (EIPD).
Step 2: Preparing the Formal Complaint
The SEC provides a Complaint Form specifically for lending/financing company violations. The document must typically include:
- Full Name and Contact Details of the complainant.
- Registered Name of the Respondent (the lending company).
- Narrative of Facts: A chronological account of the harassment or unfair practices.
- Specific Violations: Citing the provisions of MC 18 or the Financing Company Act.
Step 3: Submission
Complaints can be submitted through the following channels:
- Email: Send the scanned complaint and evidence to the SEC Corporate Governance and Finance Department (CGFD) or the EIPD at
cgfd_enforcement@sec.gov.ph. - Online Portal: Use the SEC Check App or the integrated web portal for complaints.
- Walk-in: Submit physical copies to the SEC Headquarters or the nearest SEC Extension Office.
4. Legal Consequences for Violators
Under the Lending Company Regulation Act of 2007 and the Financing Company Act of 1998, the SEC can impose the following sanctions on companies found guilty of unfair collection practices:
| Offense | Minimum Penalty | Maximum Penalty |
|---|---|---|
| First Offense | ₱25,000 fine | ₱50,000 fine |
| Second Offense | ₱50,000 fine | ₱100,000 fine + Suspension |
| Third Offense | ₱100,000 fine | Revocation of Certificate of Authority |
Furthermore, individuals involved in the harassment may be held criminally liable under the Cybercrime Prevention Act of 2012 (R.A. 10175) for acts like cyber-libel or online threats.
5. Coordination with Other Agencies
While the SEC handles the administrative and corporate aspect, other agencies may be involved depending on the nature of the harassment:
- National Privacy Commission (NPC): If the lender accessed your phone's contact list or gallery without authorization (Violation of the Data Privacy Act of 2012).
- Philippine National Police (PNP) Anti-Cybercrime Group: If there are direct death threats or grave coercion.
- Integrated Bar of the Philippines (IBP): If a person claiming to be a lawyer is using unethical tactics.
6. Important Reminders for Debtors
- Debtor’s Obligation: Filing a complaint against harassment does not extinguish the legal debt. The debtor is still civilly liable for the principal amount and legitimate interest.
- Cease and Desist: Once a formal complaint is filed, the SEC may issue orders to the company to stop the specific harassing behavior while the investigation is ongoing.
- The "Shaming" Defense: Under Philippine law, truth is not always a defense in libel. Even if you owe money, the lender has no legal right to shame you publicly.