I. Introduction

Debt collection is a legitimate business practice under Philippine law, but it must be conducted within the boundaries of fairness, truthfulness, and respect for the rights of debtors. Unfortunately, many debt collection agencies and even some lending institutions engage in misleading, harassing, or deceptive practices, often through text messages, emails, or social media. Such acts not only cause undue stress but may also constitute violations of consumer protection laws and data privacy regulations.

This article discusses the legal framework governing debt collection in the Philippines, the rights of debtors, the remedies available against misleading or abusive messages, and the proper steps to take when confronted by unlawful debt collection practices.

II. Legal Framework Governing Debt Collection

A. Republic Act No. 7394 – The Consumer Act of the Philippines

Under Article 50 to 52 of the Consumer Act, deceptive, unfair, and unconscionable sales acts or practices are prohibited. When applied to debt collection, any misrepresentation, false claims, or misleading statements used to pressure or deceive a debtor may fall within this prohibition. Debt collectors are expected to communicate truthfully and transparently, without threats or deceit.

B. Bangko Sentral ng Pilipinas (BSP) Circulars

For banks, lending companies, and credit card issuers under BSP supervision, Circular No. 1160, Series of 2023 (which updated earlier Circular No. 857) explicitly regulates the conduct of debt collection. Key provisions include:

Debt collectors must identify themselves and their principal (the lender or financing company).
They may not use threats, insults, or false representations.
They cannot contact the debtor’s relatives, employers, or friends except for purposes of locating the debtor and only if strictly necessary.
They are forbidden from making misleading or exaggerated claims about legal actions, imprisonment, or asset seizure.

Violations may subject the collector and their principal to administrative sanctions, including revocation of licenses or monetary penalties.

C. Republic Act No. 9474 – The Lending Company Regulation Act

Under this law and the Securities and Exchange Commission (SEC) Memorandum Circular No. 18, Series of 2019, lending and financing companies are prohibited from:

Using harassment or abusive collection practices;
Publicly shaming borrowers through social media;
Sending misleading messages suggesting criminal liability for mere non-payment of debt (which is civil in nature).

Offenders may face fines, suspension, or revocation of registration, and responsible officers can be held personally liable.

D. Republic Act No. 10173 – The Data Privacy Act of 2012

Misleading debt collection messages often involve unauthorized use of personal data. When collectors disclose debtor information to others—such as family members or employers—they may violate the Data Privacy Act. The National Privacy Commission (NPC) has repeatedly warned that such actions amount to unauthorized processing or disclosure of personal information, punishable by imprisonment and fines.

III. Misleading Messages and Their Legal Implications

A. What Constitutes a Misleading Message

A message from a debt collector may be deemed misleading if it:

Falsely implies that non-payment is a criminal offense;
Exaggerates the amount of debt or interest due;
Suggests that legal action has already been filed when it has not;
Uses fake legal documents or letterheads to intimidate;
Claims government or law enforcement endorsement without basis.

These messages can amount to deceptive representation, harassment, or even unfair collection practice, depending on the context.

B. Harassment and Defamation

Collectors who send repeated, threatening, or humiliating messages may also violate Articles 282 (Grave Threats) and 283 (Light Threats) of the Revised Penal Code, or be sued for civil damages under Article 26 of the Civil Code, which protects individuals from unjust vexation and defamation.

IV. Rights and Remedies of Debtors

A. Right to Fair Treatment

Every debtor has the right to respectful, truthful, and confidential treatment. You cannot be humiliated, coerced, or lied to for the purpose of collecting debt.

B. Right to Privacy

Debt collectors must not disclose your debt or personal details to anyone without your consent. Such actions can be reported to the National Privacy Commission via complaint.

C. Right to Accurate Information

Under the Consumer Act, you have the right to receive clear, accurate information about your debt—its amount, due date, interest, and any applicable fees. Misstatements or falsified claims are illegal.

V. Steps to Take When Receiving Misleading or Harassing Messages

1. Document Everything

Keep copies of all messages, emails, call recordings (if legally obtained), and screenshots. These will serve as evidence if you decide to file a complaint.

2. Do Not Engage in Hostile Exchanges

Avoid emotional responses. Instead, request that communications be made in writing and only through official channels.

3. Verify the Collector’s Identity

Ask for the collector’s name, company, and license number. You may verify lending companies and collection agencies through the SEC or BSP websites.

4. File a Complaint with the Appropriate Agency

Depending on the type of lender:

BSP – for banks and credit card issuers;
SEC – for lending and financing companies;
NPC – for data privacy violations;
DTI – for deceptive consumer practices.

Each agency provides online complaint forms and accepts supporting documentation.

5. Consult a Lawyer or the Public Attorney’s Office (PAO)

If the harassment or misrepresentation is severe, a lawyer can assist in filing a civil or criminal complaint for damages, threats, or unjust vexation.

VI. Criminal and Administrative Penalties

Debt collectors and their employers who engage in misleading practices can face:

Fines and license revocation under the BSP or SEC;
Imprisonment for threats, coercion, or data privacy violations;
Civil liability for moral and exemplary damages;
Reputational sanctions, including blacklisting and public censure.

VII. Preventive Measures for Borrowers

Borrow only from legitimate, SEC-registered lenders.
Read and keep a copy of your loan agreement.
Request periodic statements of account to monitor accuracy.
Avoid providing excessive personal data unless legally required.

VIII. Conclusion

Debt collection in the Philippines is bound by law to be truthful, respectful, and lawful. Misleading messages are not only unethical but can expose collectors to criminal, civil, and administrative liability. Debtors have a full set of rights under the Consumer Act, Data Privacy Act, and BSP/SEC regulations. Knowing these rights and the proper procedures to enforce them ensures protection against harassment and deception.

In the end, paying one’s debt is a moral duty, but collecting it must be done with legality and humanity.