Below is a comprehensive legal overview of consumer protection against harassment by lending companies in the Philippines. It covers the key laws, regulations, and remedies available to borrowers who experience abusive, unfair, or harassing debt-collection practices.

1. Introduction

Lending companies serve an essential function in the Philippines’ economy by providing credit to consumers and businesses. However, in some cases, creditors or collection agencies resort to aggressive or harassing collection methods—telephone calls at unreasonable hours, threats, shaming tactics, and other forms of intimidation. Such practices can violate laws and regulations designed to protect consumer rights and promote fair and transparent lending transactions.

This article outlines the legal framework governing lending companies in the Philippines, highlights the rules that prohibit harassment in debt collection, and sets out the remedies available to consumers who become victims of abusive practices.

2. Key Laws and Regulations

2.1. The Lending Company Regulation Act of 2007 (Republic Act No. 9474)

Republic Act (RA) No. 9474, also known as the Lending Company Regulation Act of 2007, is the primary law regulating lending companies in the Philippines. It requires lending companies to register with the Securities and Exchange Commission (SEC) and abide by fair and transparent practices. Relevant provisions include:

Registration Requirement: All lending companies must secure a Certificate of Authority from the SEC before operating.
Disclosure Requirements: Lending companies must disclose interest rates, charges, and other fees to protect borrowers from hidden or excessive costs.
Prohibited Practices: Although RA 9474 does not expressly enumerate “harassment,” it provides the basis for the SEC to issue rules and regulations to safeguard borrowers against unfair practices.

2.2. Financial Products and Services Consumer Protection Act (Republic Act No. 11765)

Signed into law in 2022, the Financial Products and Services Consumer Protection Act enhances consumer protection across financial institutions (including lending and financing companies). Key features include:

Regulatory Oversight: Empowers the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC), the Insurance Commission (IC), and the Cooperative Development Authority (CDA) to issue regulations aimed at protecting financial consumers.
Prohibition of Unfair Collection Practices: Mandates fair treatment of borrowers, including the prohibition of abusive, unethical, or oppressive debt-collection strategies.

2.3. SEC Memorandum Circulars on Unfair Debt Collection Practices

The SEC has released several circulars and guidelines addressing unfair collection practices. For instance:

SEC Memorandum Circular No. 18, Series of 2019: Provides rules on the disclosure of loan terms and regulations on debt collection. This circular underscores the prohibition of the following:
- Using or threatening violence or other criminal means to harm a borrower’s reputation or property.
- Using obscene or profane language during communication with a borrower.
- Disclosing the borrower’s personal information (such as posting on social media) to coerce payment.
- Communicating with the borrower at unreasonable or inconvenient times (such as before 6:00 AM or after 10:00 PM), unless authorized by the borrower.

These guidelines are meant to protect borrowers and penalize lending companies that engage in unscrupulous practices.

2.4. Data Privacy Act of 2012 (Republic Act No. 10173)

RA 10173, or the Data Privacy Act, provides protection against unauthorized or excessive use of personal data. Some lending companies have been reported to access the phone contacts or social media accounts of borrowers and use these to harass or shame them into paying. In such instances:

Consent and Purpose Limitation: A data subject’s personal information can only be used for purposes explicitly consented to. Using someone’s data (e.g., contacts) to harass them or to contact third parties without consent is illegal.
Right to Damages: Borrowers can seek remedies if their personal data is processed unlawfully or if there is a breach of data privacy. Complaints may be lodged with the National Privacy Commission (NPC).

2.5. Revised Penal Code Provisions

Certain extreme forms of harassment—such as threats or defamation—may also constitute criminal offenses under the Revised Penal Code (RPC). Examples include:

Grave Threats (Article 282, RPC): When a debt collector threatens the borrower with harm to their person, property, or reputation.
Grave Coercion (Article 286, RPC): When a lender compels a borrower to do something against their will through intimidation or threats.
Slander or Oral Defamation (Articles 358 & 359, RPC): If a lender publicly or maliciously imputes a discreditable act to the borrower to humiliate or shame them.

3. Prohibited Debt-Collection Practices

Although different rules address this issue, the following are generally prohibited or restricted practices when collecting debts in the Philippines:

Use or Threat of Violence – Physical harm, intimidation, or fear-based tactics are unlawful.
Obscene or Profane Language – Harassment through verbal abuse or expletives.
False or Misleading Statements – Falsely claiming legal actions have been taken or misrepresenting the amount owed.
Public Shaming – Posting photos, messages, or other personal information on social media or contacting the borrower’s family, friends, or employer without lawful basis.
Unreasonable Hours of Contact – Calling or visiting at odd hours, generally before 6:00 AM or after 10:00 PM, unless authorized by the borrower.
Repeated Contact or Continuous Ringing – Harassment through constant phone calls or messages that serve no purpose other than to annoy or harass.
Misuse of Personal Data – Accessing contact lists, sending group messages to shame the borrower, or other unauthorized use of personal data.

4. Remedies for Harassed Borrowers

Consumers in the Philippines who are subjected to harassment by lending companies may pursue several avenues for relief:

4.1. Filing a Complaint with the Securities and Exchange Commission (SEC)

Grounds: The SEC accepts complaints against lending companies for violations of RA 9474, its IRR, and SEC Memorandum Circulars on debt collection.
Procedure:
1. Gather evidence (recordings, screenshots of messages, call logs, etc.).
2. File a written complaint with the SEC’s Enforcement and Investor Protection Department (EIPD).
3. The SEC will evaluate the complaint and may impose sanctions, suspend or revoke the lending company’s license, or impose penalties.

4.2. Filing a Complaint with the Bangko Sentral ng Pilipinas (BSP)

If the lending entity is a bank or a non-bank financial institution under BSP supervision, a complaint may also be filed with the BSP for violations of consumer protection policies under RA 11765 and relevant BSP Circulars.

4.3. Filing a Complaint with the National Privacy Commission (NPC)

Data Privacy Violations: If the harassment involves unauthorized access or use of personal data, a complaint can be filed with the NPC for breaches of the Data Privacy Act (RA 10173).
Relief: The NPC can impose administrative penalties, order the cessation of unlawful processing, and award damages.

4.4. Criminal and Civil Actions

Criminal Complaint: If the acts constitute grave threats, coercion, or defamation under the Revised Penal Code, the borrower may file a criminal complaint with the Office of the Prosecutor.
Civil Actions: Borrowers who suffer emotional distress, reputational harm, or other damages due to harassing behavior may file a civil suit for damages. This could include moral damages and exemplary damages under the Civil Code.

5. Best Practices for Borrowers

Keep Records: Save screenshots of text messages, social media posts, or call logs. Record phone calls if feasible and permitted by law.
Document Interaction: Note the date, time, and content of every phone call or message.
Send a Formal Notice: If harassment persists, consider sending a formal letter or email to the lending company to cease and desist.
Seek Legal Counsel: If harassment is severe, consulting a lawyer or seeking help from a legal aid organization can clarify options and protect one’s rights.

6. Penalties and Liabilities for Lending Companies

Lending companies and their agents that violate debt-collection rules face the following potential liabilities:

Administrative Fines and Sanctions: Imposed by the SEC or BSP, such as suspension or revocation of licenses, and monetary penalties.
Criminal Liability: If the lender’s conduct constitutes a criminal offense under the Revised Penal Code, the responsible officers or agents could face imprisonment and/or fines.
Civil Liability: The borrower may sue for damages, including actual, moral, and exemplary damages, plus attorneys’ fees.

7. Conclusion

Consumer protection against harassment by lending companies in the Philippines is anchored on various laws—RA 9474 (Lending Company Regulation Act), RA 11765 (Financial Products and Services Consumer Protection Act), RA 10173 (Data Privacy Act), and relevant SEC and BSP regulations. While creditors have a right to collect, they must do so through fair and lawful means. Abusive or harassing collection tactics violate the law and can expose lenders to administrative, civil, and criminal liabilities.

For borrowers, understanding one’s rights and the available remedies is crucial. Keeping thorough documentation of any incidents and promptly seeking help—whether by filing a complaint with regulatory agencies or pursuing legal action—can provide protection and ensure that lenders who engage in illegal conduct are held accountable.