In the Philippines, while the law recognizes the right of creditors to collect legitimate debts, this right is not absolute. The pursuit of unpaid obligations must be conducted within the bounds of law, public policy, and human dignity. Debt collectors who employ abusive, coercive, or unfair practices may be held liable under various civil, criminal, and administrative frameworks.
1. Prohibited Acts: SEC Memorandum Circular No. 18 (Series of 2019)
The Securities and Exchange Commission (SEC) provides the most specific guidelines regarding "unfair debt collection practices." These rules apply to financing companies and lending companies.
Prohibited acts include:
- Threats of Violence: Using or threatening to use physical force against the debtor, their reputation, or their property.
- Obscene Language: Using profane or abusive language to humiliate the debtor.
- Disclosure of Information: Publicizing the names of debtors or disclosing debt information to third parties (except as allowed by law).
- Misrepresentation: Falsely claiming to be a lawyer, a government agent, or representing a court.
- Contacting at Inconvenient Hours: Contacting the debtor before 6:00 AM or after 10:00 PM, unless the debt is past due for more than 60 days or the debtor has given express consent.
- Contacting Third Parties: Contacting the debtor's friends, family, or colleagues, unless they are guarantors/co-makers or the debtor has provided them as references. Even then, the collector can only contact them to locate the debtor.
2. Criminal Liability under the Revised Penal Code (RPC)
If a debt collector’s behavior escalates, they may be charged under the following provisions of the RPC:
- Unjust Vexation (Article 287): This is a "catch-all" provision for conduct that, while not causing physical harm, irritates, disturbs, or vexes an innocent person. Persistent, harassing phone calls and public shaming often fall under this category.
- Grave or Light Threats (Articles 282-283): If the collector threatens to commit a wrong (like physical harm or damage to property) to extort payment.
- Grave or Light Coercion (Articles 285-286): If the collector prevents the debtor from doing something lawful or compels them to do something against their will (e.g., forcing a debtor to sign a deed of sale for their house under duress).
- Libel or Cyberlibel: If the collector posts the debtor's "shame" on social media or sends mass messages to the debtor’s contacts with the intent to ruin their reputation. Under the Cybercrime Prevention Act of 2012 (R.A. 10175), penalties for cyberlibel are higher than traditional libel.
3. Violation of the Data Privacy Act of 2012 (R.A. 10173)
Debt collectors often access the contact lists of debtors through mobile apps. Using this personal information to contact third parties (who are not part of the loan agreement) for the purpose of shaming the debtor is a violation of the Data Privacy Act.
The National Privacy Commission (NPC) has been active in shutting down online lending apps (OLAs) that engage in "contact tracing" and unauthorized processing of personal data for harassment.
4. Civil Liability: Human Relations Provisions
Under the Civil Code of the Philippines, a debtor can sue for damages based on:
- Article 19: "Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith."
- Article 21: "Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage."
- Article 26: Respect for human dignity and privacy. This allows for claims of Moral Damages for mental anguish and emotional distress.
5. Procedural Steps for Redress
If a debtor is being harassed, the following steps are typically taken:
- Documentation: Keep screenshots of messages, record phone calls (while being mindful of the Anti-Wiretapping Act, though recording one's own conversation where harassment occurs is often used as evidence), and save call logs.
- Cease and Desist: Send a formal letter or email to the lending company demanding they stop the unfair practices, citing SEC MC No. 18.
- SEC Complaint: For Financing/Lending companies, file a formal complaint with the SEC’s Corporate Governance and Finance Department.
- BSP Complaint: If the collector represents a bank, the complaint should be lodged with the Bangko Sentral ng Pilipinas (BSP) Consumer Protection Department.
- NPC Complaint: If the harassment involves data privacy violations (e.g., contacting your phone directory), file a complaint with the National Privacy Commission.
- Police/NBI: For threats or cyberlibel, report the incident to the PNP Anti-Cybercrime Group or the NBI Cybercrime Division.
| Authority | Jurisdiction |
|---|---|
| SEC | Lending & Financing Companies / Online Lending Apps |
| BSP | Banks and Credit Card Companies |
| NPC | Data Privacy & Information Misuse |
| Courts | Criminal charges (Unjust Vexation, Libel) and Civil Damages |
Summary of Rights
A debt is a civil obligation, not a criminal one. In the Philippines, the Constitution explicitly states: "No person shall be imprisoned for debt." While a creditor can sue to collect money or attach properties through legal court processes, they cannot use harassment, shaming, or threats as a substitute for judicial action.