The digital transformation of the Philippine financial sector has introduced "Online Lending Applications" (OLAs) as a convenient source of credit. However, this convenience is often eclipsed by predatory practices, specifically unfair debt collection tactics and harassment. For borrowers trapped in these cycles, the Philippine legal system provides specific protections and avenues for redress.
I. The Regulatory Framework: SEC Memorandum Circular No. 18
The Securities and Exchange Commission (SEC) is the primary regulatory body for lending and financing companies. To curb abusive behavior, the SEC issued Memorandum Circular No. 18, Series of 2019, which outlines prohibited "Unfair Debt Collection Practices."
Under this circular, the following acts are strictly prohibited:
- Physical Violence: Using or threatening to use physical violence or other criminal means to harm a person, their reputation, or property.
- Profanity and Insults: Using obscene or profane language to insult the borrower or the public.
- Debt Shaming: Publicly disclosing the borrower's names or personal information as "delinquent" or "scammers," including posting on social media or contacting people in the borrower's contact list who are not co-makers or guarantors.
- False Representation: Falsely claiming to be lawyers, police officers, or representatives of government agencies to intimidate the borrower.
- Contact Outside Permitted Hours: Contacting the borrower at unreasonable hours (e.g., between 10:00 PM and 6:00 AM), unless the borrower gave express consent or the past due is more than 60 days.
II. Data Privacy Violations (RA 10173)
Most OLAs require permissions to access a borrower’s contacts, gallery, and location. While often buried in the "Terms and Conditions," the National Privacy Commission (NPC) has ruled that accessing a phone’s contact list to harass third parties is a violation of the Data Privacy Act of 2012.
- Unauthorized Processing: Collecting data for purposes other than what was declared (e.g., using contacts for harassment rather than credit scoring).
- Malicious Disclosure: Revealing sensitive personal information with the intent to cause harm or embarrassment.
The NPC has the power to issue Cease and Desist Orders against applications found to be violating these privacy principles and can recommend the permanent takedown of the app from the Google Play Store or Apple App Store.
III. Criminal Liability under the Cybercrime Prevention Act (RA 10175)
Harassment often migrates to digital platforms, triggering the Cybercrime Prevention Act of 2012. Key offenses include:
- Cyber Libel: If an OLA representative posts defamatory comments about a borrower on social media (e.g., Facebook) or sends such messages to their contacts.
- Unjust Vexation: Broadly defined as any human conduct which, although not causing physical injury, unjustly annoys or vexes an innocent person.
- Grave Threats and Coercion: If the agent threatens the borrower with death, physical injury, or forces them to do something against their will (such as selling organs or performing illegal acts to pay the debt).
IV. Determining the Legitimacy of the OLA
Before filing a case, it is crucial to determine if the OLA is registered. There are two tiers of registration required:
- Certificate of Incorporation: Proves the company is a legal entity.
- Certificate of Authority (CA): Proves the company is specifically authorized to operate as a lending or financing company.
Note: Operating a lending application without a CA is a criminal violation of the Lending Company Regulation Act of 2007 (RA 9474).
V. Step-by-Step Actions for Victims
| Step | Action | Agency/Entity |
|---|---|---|
| 1. Evidence Gathering | Save screenshots of harassing messages, call logs, and social media posts. Do not delete the app immediately; keep the "Terms of Service" if possible. | Internal Records |
| 2. Cease and Desist | Inform the harasser (via text/email) that their actions violate SEC MC No. 18 and the Data Privacy Act. | The OLA Agent |
| 3. Formal SEC Complaint | File a formal complaint via the SEC Corporate Governance and Finance Department (CGFD). | Securities and Exchange Commission |
| 4. Privacy Complaint | If they contacted your phonebook or posted your photo, file a "Complaints and Investigations" report. | National Privacy Commission |
| 5. Criminal Report | For threats of death or cyber libel, report to the Anti-Cybercrime Group. | PNP-ACG or NBI-Cybercrime Division |
VI. Summary of Key Legal Protections
- Truth in Lending Act (RA 3765): Requires full disclosure of interest rates and fees. If the OLA hides "service fees" that drastically reduce the principal, they are in violation.
- BSP Circular No. 1133: Imposes ceilings on interest rates and other charges for small-value, short-term loans (effective 2022). Currently, nominal interest is capped at 6% per month and liquidated damages at 0.125% per day.
While the obligation to pay a valid debt remains under the Civil Code, no debt justifies the stripping of a person's constitutional right to privacy and dignity. Philippine law dictates that the collection process must be conducted with "justice, give everyone his due, and observe honesty and good faith."