Loan Payment Extension Letter to an Online Lender in the Philippines
A comprehensive legal-practice guide
Disclaimer: This article is for general information only and is not a substitute for individualized legal advice. Philippine laws and regulations cited are current as of 19 May 2025.
1. Why a Formal Extension Letter Matters
- Contractual necessity. A consumer-loan contract is a meeting of minds under Article 1305 of the Civil Code. Any change—such as moving a due date—must likewise be in writing (Art. 1356) or at least provable.
- Evidence of good faith. Borrowers who initiate renegotiation before default can invoke Art. 1189 on conditional obligations, Art. 1315 on consent, and the doctrine of liberality in favor of the debtor applied by Philippine courts.
- Regulatory paper trail. Under SEC Memorandum Circular No. 18-2019 and BSP Circular No. 1133-2021 on digital lending, lenders must keep auditable records of every loan amendment.
- Consumer-protection shield. RA 3765 (Truth in Lending Act) and RA 9474 (Lending Company Regulation Act) require disclosure of “any finance-charge change.” A proper letter compels the online lender to re-issue an updated Schedule of Payments.
2. Philippine Legal Framework
| Law / Regulation | Key Provisions Relevant to Extensions |
|---|---|
| Civil Code (Arts. 1159-1308) | Sanctity of contracts, optional novation, fortuitous events, mutual agreement. |
| RA 3765 – Truth in Lending Act | Mandatory disclosure of new total finance charges upon rescheduling. |
| RA 9474 – Lending Company Regulation Act & SEC Memo. Circ. 18-2019 | Licensing of online lenders, limits on penalties, prohibition on abusive collection. |
| BSP Circular 1048-2019 & 1133-2021 | Consumer protection standards for Digital Credit Platforms; complaint-handling timeline (15 business days). |
| Data Privacy Act (RA 10173) | Requires lawful basis to process borrower data if extension causes fresh credit investigation. |
| Bayanihan to Heal as One Acts (RA 11469 & 11525) | Temporary mandatory grace periods (now expired) but serve as persuasive precedent for voluntary extensions during emergencies. |
| Revised Penal Code (Art. 315) | Establishes estafa liability for fraudulent non-payment; proactive extension helps negate intent to defraud. |
3. Typical Grounds for Requesting an Extension
- Temporary loss or reduction of income (e.g., job retrenchment, illness).
- Force majeure / fortuitous events (typhoons, pandemics, large-scale power outages).
- Delayed disbursement of expected funds (GSIS, SSS, insurance proceeds).
- Administrative errors on the lender’s side (late release of loan proceeds).
4. Legal Effects of an Approved Extension
| Aspect | Before Extension | After Extension (Novation / Modification) |
|---|---|---|
| Due date | As per original Promissory Note | New date replaces old (Art. 1291). |
| Interest computation | Continues until original maturity | Re-amortized; lender may charge additional interest only if expressly accepted by borrower and within SEC caps (24 % effective interest per annum for lending companies). |
| Penalties / default interest | Triggered the day after maturity | Waived for the extended period if contract so provides; otherwise resume if still unpaid after new date. |
| Credit-bureau report | Delinquency after 30 days past due | Maintains “current” status during extension under BSP rules. |
| Collection / harassment risk | Calls, texts, threats after 3-10 days past due | Suspended while account is in good standing. Offensive collection is punishable by a ₱25,000–₱1 M fine and revocation of SEC license. |
5. Drafting the Extension Letter
Core principle: Be specific, truthful, and proactive.
| Section | What to Include | Notes |
|---|---|---|
| Header | Full legal name, address, contact number, email; loan reference number; lender’s corporate name & address. | Use the address in the Disclosure Statement. |
| Subject line | “Request for Payment Extension – Loan No. ________” | Place loan number prominently. |
| Salutation | “Dear [Lender’s Authorized Officer / Customer Support Team],” | Check lender’s terms for proper addressee. |
| Opening paragraph | State intent immediately: “I am writing to respectfully request an extension…” | Mention original maturity date. |
| Reason / Justification | Brief factual narrative, attach supporting docs (medical certificate, termination letter, etc.). | Avoid self-incriminating admissions; focus on temporary nature. |
| Proposed terms | • New due date (or installment plan) | |
| • Willingness to pay minimal processing fee | ||
| • Assurance of continued interest accrual (if acceptable) | Offer a concrete, realistic schedule. | |
| Legal references | Citations to RA 3765, SEC MC 18-2019, Civil Code Art. 1159 (mutual compliance) to show good faith. | Optional but persuasive. |
| Request for written confirmation | Ask for a signed Amendment Agreement or updated Payment Schedule. | Protects you from future disputes. |
| Gratitude & cooperation | Maintain polite, cooperative tone. | Courts frown upon obstructionist borrowers. |
| Signature block | Wet or digital signature (e-sign under E-Commerce Act RA 8792 is valid). | Keep a PDF copy with timestamp. |
Sample Template (concise version)
19 May 2025
[Borrower Name]
[Address]
[Email • Mobile No.]
[Online Lender Company]
[Address]
Subject: Request for Payment Extension – Loan No. 2024-OL-123456
Dear Sir/Madam:
I refer to my Promissory Note dated 19 June 2024 indicating a maturity on 19 June 2025.
Due to a temporary displacement from work caused by Typhoon Aghon on 5 May 2025, I respectfully request that the due date be moved to **19 August 2025**, with interest to continue under the same rate of 2.5 % p.m.
Attached are: (1) my employer’s suspension-of-operations notice, and (2) barangay disaster certification.
This request is made in good faith pursuant to Article 1308 of the Civil Code and Section 4 of SEC Memorandum Circular No. 18-2019. Kindly issue a written confirmation and an updated Disclosure Statement should you approve.
Thank you for your consideration. I remain committed to fulfilling my obligations.
Respectfully,
[Signature]
[Printed Name]
TIN: __________6. Submission & Follow-Up
| Step | Timeline | Legal Hooks |
|---|---|---|
| Send via the lender’s in-app portal or email | Day 0 | RA 8792 ensures e-documents’ validity if the lender’s platform uses authentication. |
| Acknowledge receipt | Within 24 hrs | BSP Consumer Protection Standards require lenders to issue a ticket / case number. |
| Decision period | 7–15 business days | BSP Circular 1048 sets 10-bdays for simple complaints; SEC practice allows 15. |
| Escalation | If denied or no response within 15 bdays → file complaint with SEC Financing and Lending Division or BSP Financial Consumer Protection Dept. | Free of charge; decision in 30 days. |
7. Common Pitfalls & How to Avoid Them
| Pitfall | Consequence | Preventive Action |
|---|---|---|
| Requesting after default | Extension may be treated as a restructuring—lender can impose higher penalty rates. | Send letter at least 5 days before due date. |
| Ambiguous terms (“whenever funds arrive”) | Lender may reject outright. | State a definite date or a capped installment timeline. |
| Ignoring Data-Privacy consents | Lender may refuse to process without fresh consent. | Include line: “I consent to the processing of my personal data solely for this extension request in accordance with RA 10173.” |
| Verbal promises only | No enforceability; hard to prove. | Always follow-up calls with an email recap. |
| Failure to update auto-debit arrangements | Premature debit triggers bank fees. | Request lender to pause auto-debit until new date. |
8. Enforcement & Remedies
If the Lender Violates the Approved Extension File a complaint with:
- SEC (for lending/financing companies) – possible license suspension, fine up to ₱1 M/day.
- BSP (for banks and credit card issuers) – administrative sanctions under the New Central Bank Act.
- Department of Trade and Industry for unfair trade practices (RA 7394).
If the Borrower Still Defaults After Extension
- Lender may proceed with collection suits or small-claims (up to ₱1 M under A.M. No. 08-8-7-SC, as amended).
- Negative report to Credit Information Corporation.
- Estafa risk only if fraud is present (e.g., bouncing checks, falsified documents).
9. Best-Practice Checklist (Borrower’s Side)
- Read the Promissory Note for any “no-extension” clauses.
- Prepare documentary evidence of hardship.
- Draft a clear, specific, polite letter.
- Send before the due date and keep proof of transmission.
- Confirm the lender’s written approval and updated payment schedule.
- Adjust auto-debit or post-dated checks accordingly.
- Continue monitoring emails/SMS for notices.
- Document every interaction (screenshots, call logs).
10. Key Takeaways
- Philippine law allows loan-payment extensions by mutual agreement; a well-crafted letter is the safest trigger.
- Cite the Civil Code, Truth in Lending Act, and SEC/BSP guidelines to reinforce your request.
- Specificity, timeliness, and documentary support dramatically improve approval odds.
- Keep the entire process in writing to protect both parties and ensure regulatory compliance.