Threats from Lending Companies After Loan Closure in the Philippines
A comprehensive legal primer (updated June 2025)
Scope. This article explains why post-payment harassment occurs, the Philippine laws that regulate it, and the concrete steps a borrower can take. It covers bank, financing-company, lending-app and informal-lender scenarios. It is written for lay readers and does not create an attorney–client relationship.
1 When is a loan “closed”?
| Stage | What it means | Proof you should secure |
|---|---|---|
| Full payment | Principal, interest, penalties and fees are paid or validly condoned. | Official Receipt, Statement of Account marked “PAID”, or Notarised Quitclaim. |
| Contract extinguished | Under Art. 1231 Civil Code, obligation is extinguished by payment or novation. | Certificate of Full Payment / Release of Chattel Mortgage / Cancellation of Real-Estate Mortgage (if applicable). |
| Reporting duties | Lender must update credit bureaus within 30 days (BSP Circ. 2016-25; CIC Rules). | Keep a screenshot of your CIC report after 1–2 months. |
Once the obligation is extinguished no lawful debt-collection activity can continue. Fees not expressly reserved in the contract are void under Art. 1308 (mutuality of contracts) and RA 3765 (Truth-in-Lending Act).
2 Typical post-closure threats
| Illegitimate practice | Usual form | Why it’s unlawful |
|---|---|---|
| “You still owe ‘service fees’/‘reactivation fees’. | SMS, in-app notice. | A new consideration requires a new agreement (Art. 1318). |
| Threat of arrest / “CIDG warrant”. | Calls from “legal department”. | Debts are civil, not criminal; arrest requires a judge-issued warrant (Const. Art. III §2). |
| Doxxing / public shaming on Facebook. | Tagging friends, posting IDs. | Violates RA 10173 (Data Privacy Act), RA 10175 (Cybercrime)—libel, SEC MC 18-2019. |
| Contacting employer / references after payment. | HR calls, spam emails. | Unfair collection under RA 9474, RA 10870, SEC MC 10-2022. |
| Threat to seize collateral already released. | “We will repossess your car.” | Art. 2126 Civil Code: mortgage is inseparable only while it subsists; after release, right is gone. |
| Extortionate interest for “late notice”. | Invoices showing 20 % per day. | Usury ceiling is lifted but must be expressly stipulated and reasonable; otherwise “unconscionable” and void (Spouses Abellanosa v. Guba, G.R. 187722, Jan 20 2016). |
3 Legal framework
Civil Code
- Art. 19-21 – Abuse of rights; damages for acts contrary to morals or public policy.
- Art. 1318, 1308 – Consent and mutuality of contracts.
- Art. 1231-1251 – Extinguishment by payment/novation; burden of proving balance.
Revised Penal Code
- Art. 282 – Grave threats (imprisonment up to 4 years & 2 months).
- Art. 287 – Unjust vexation (now typically fined under the Community Service Act).
- Arts. 353–360 – Libel and slander (including cyber-libel via RA 10175).
Special laws & regulations
Statute / Circular Key provisions RA 9474 (Lending Company Regulation Act) & RA 10870 (Financing Co. Act) SEC jurisdiction; grounds for revocation of license if using threat or violence to collect. SEC Memorandum Circular 18-2019 (and MC 10-2022) Enumerates Unfair Debt-Collection Practices; bars use of profane language, contact after settlement, threats of criminal action, and disclosure to third parties. RA 11765 (Financial Products & Services Consumer Protection Act, 2022) & BSP Circular 1160-2022 BSP and SEC empowered to impose up to ₱2 M per act + disgorgement; prescribes cessation of harassment once debt is paid. RA 10173 (Data Privacy Act) Processing personal info must be proportional; disclosure without basis punishable by 1-3 years & ₱500 k–₱2 M. RA 8484 (Access Devices Regulation Act) Sec. 9 (f) makes it unlawful to use threats or violence to collect credit-card debt. CIC Rules (Credit Information Corporation) Incorrect data must be corrected within 5 business days of notice. Barangay Justice System (RA 7160 §§399-422) Grave threats, unjust vexation = katarungang pambarangay cognisable; mandatory mediation before filing criminal case if parties reside in same city/municipality (except where corporate lender is involved).
4 Regulatory & enforcement venues
| Concern | Where to complain | Procedure |
|---|---|---|
| Bank / credit-card issuer | BSP Consumer Protection & Market Conduct (cps@bsp.gov.ph) | File written complaint; BSP will forward to bank; bank has 7 days to act; BSP may impose sanctions under RA 7653. |
| Licensed lending / financing co. | SEC – Financing & Lending Company Division / Enforcement & Investor Protection Department | File SWORN complaint; attach proof of payment & harassment; possible cease-and-desist order, license revocation, ₱1 M per offense, criminal referral. |
| Unregistered online-lending platform | SEC + NBI Cybercrime Division | SEC publishes list of illegal apps; NBI can file charges for Syndicated Estafa under PD 1689. |
| Privacy violation / doxxing | National Privacy Commission (complaints@privacy.gov.ph) | Mediation → compliance order → fines up to ₱5 M per infraction. |
| Threats of violence / libel | PNP or NBI (CIDG, Anti-Cybercrime Group) | Execute Sworn Statement + provide screenshots/recordings; prosecutor’s inquest or regular filing. |
| Small Claims for damages ≤ ₱400 k | MTC / MeTC (A.M. 08-8-7-SC, as amended 2022) | Filing fee ≈ ₱2 k; decision within 30 days; lawyer not required. |
5 Practical steps for the harassed borrower
Gather evidence early. Save screenshots, call recordings, payment receipts, courier envelopes.
Issue a demand-to-cease letter. Cite payment date, contract clause on full settlement, and Art. 19 Civil Code. Give 3 days to comply.
Report simultaneously to regulators. Parallel filing (SEC + NPC + BSP) speeds up relief; agencies now share data under the 2023 Joint Memorandum on Financial Harassment.
Block and record. Philippine courts admit phone screen-captured videos (People v. Evertude, CA-G.R. CR-HC No. 06078, 2019) if authentication chain is clear.
Consider civil damages. Moral & exemplary damages are routinely awarded where harassment continues after loan closure (see Spouses Sia v. Court of Appeals, G.R. 83508, Feb 27 1990).
Avoid counter-harassment. Do not post lender’s personal data; it could backfire under Data Privacy Act or Cyber-libel.
6 Frequently-asked questions
| Question | Short answer |
|---|---|
| Can a collection agent file a “BP 22” (bounced check) case after I’ve already paid? | Only if another check you later issued actually bounced. Once the settling check clears, BP 22 for the settled obligation is baseless. |
| The app keeps the right to auto-debit “post-closure audit fees”. Valid? | No. Any post-payment fee not determinable at the time of contracting is void for vagueness (Art. 1305) and violates SEC MC 18 – “undisclosed charges”. |
| They refuse to release my collateral unless I sign a new waiver. | File a replevin or specific-performance suit; refusal may be constructive mortgagee in possession entitling you to damages. |
| Is arbitration mandatory because the contract says so? | Arbitration survives payment only for disputes “arising from” the contract. A completed loan often extinguishes the arbitration clause (see Gonzales v. Climax Mining, G.R. 168584, Jan 20 2009). |
7 Best-practice checklist for borrowers
- Demand a Certificate of Full Payment immediately after the last installment.
- Monitor your CIC credit report (free once a year) until the account shows “Closed-Paid”.
- Keep the contract and receipts for at least five (5) years—the prescriptive period for written contracts.
- Use written channels (email, registered mail) when communicating post-payment; they leave audit trails.
- Educate guarantors and co-makers that their liability is extinguished simultaneously (Art. 1291).
8 Conclusion
Under Philippine law, all threats or collection attempts after a loan is fully settled are presumptively unlawful. A well-documented borrower can invoke an arsenal of protections—from the Civil Code to specialised SEC circulars—to stop the harassment, claim damages, and even have rogue lenders shut down. The keys are evidence, prompt reporting, and an understanding of which regulator or court has jurisdiction.
Disclaimer: This article provides general information current as of June 28 2025. Laws change, and their application depends on specific facts. Always consult a Philippine lawyer or accredited financial adviser for advice on your particular situation.