Credit-Card Default Laws in the Philippines
(Everything You Need to Know—2025 Edition)

This article is written for informational purposes only and should not be taken as formal legal advice. Statutes and regulations cited are current as of 26 April 2025. Always check the latest issuances or consult counsel for definitive guidance.

1 Core Legal Sources

Instrument	Scope & Key Provisions
1987 Constitution, Art. III §20	Absolute bar against imprisonment for non-payment of debt.
Civil Code of the Philippines (1949)	Arts. 1159–1307 (contracts); Arts. 1144, 1179–1191 (default & prescription).
Republic Act No. 10870 (2016) — Credit Card Industry Regulation Law (CCIRL)	First comprehensive statute on issuance, billing, dispute resolution, collection, and assignment of credit-card receivables.
BSP Circulars & Memos (Bangko Sentral ng Pilipinas)	Implementing rules of R.A. 10870; caps on interest/fees; consumer-protection standards.
R.A. No. 11765 (2022) — Financial Products and Services Consumer Protection Act (FPSCPA)	Gives BSP quasi-judicial powers vs. abusive practices; codifies borrower rights.
R.A. No. 3765 (1963) — Truth in Lending Act & BSP Circular No. 755 (2002)	Full disclosure of finance charges and effective interest rates (EIR).
R.A. No. 9510 (2008) — Credit Information System Act (CISA)	Central credit registry; default data sharing.
R.A. No. 10173 (2012) — Data Privacy Act	Limits disclosure of personal data in collection activities.
SEC Mem. Circ. 18-2019 & 03-2023	Anti-harassment rules for collection agencies (banks follow parallel BSP rules).
Special Pandemic Laws — R.A. 11469 (Bayanihan 1), R.A. 11494 (Bayanihan 2), BSP M-2020-xxx series	Mandatory grace periods and interest capitalization bans during COVID-19.

2 What Constitutes “Default”?

Contractual Trigger. Your card’s terms and conditions (T&C) list events of default—most commonly failure to pay any amount on or before the due date.
Acceleration Clause. Upon default, the entire outstanding balance becomes “due and demandable.”
Notice Requirement. R.A. 10870 §14 and BSP Circular 960 require written notice and a 30-day cure period before an issuer may endorse the account to an external collection agency (ECA).
Prescription. Civil actions on written contracts prescribe in 10 years (Civil Code Art. 1144). The clock usually starts on the default date or the last partial payment/acknowledgment, whichever is later.

3 Permissible Interest, Penalties & Fees

Item	Current BSP Ceiling (as of 1 Jan 2025)*
Finance charge on unpaid balances	3 % per month (36 % EIR p.a.)
Installment interest	1 % per month
Late-payment penalty	Max ₱1,000 or the unpaid minimum amount, whichever is lower
Over-limit fee	Must be a flat peso amount; no percentage on excess

* Set by BSP Circular 1148-2023, which superseded the 24 % cap of BSP Memo M-2020-068. Caps are reviewed every six months.

Issuers must display the Total Amount Due and Total Finance Charge prominently (R.A. 3765; BSP Circular 960 Annex A). Fees not in the T&C are void.

4 Collection and Enforcement

4.1 In-House Collection

Banks may commence telephone, SMS, e-mail, and letter follow-ups immediately after default, but no calls:

before 8 a.m. or after 9 p.m.;
on Sundays & holidays;
at the debtor’s office if the debtor objects (BSP Consumer Protection Standards §7.13).

Harassment (threats, profane language, contact of third parties other than guarantors/spouse) exposes the bank to administrative fines up to ₱2 million per violation plus daily penalties under R.A. 11765.

4.2 External Collection Agencies

Must be SEC-registered and reported to BSP (§15, CCIRL).
The creditor must send a final demand and a Notice of Assignment before turning the file over.
ECAs are bound by the same anti-harassment rules; individuals may complain to the BSP Consumer Protection and Market Conduct Office (CPMCO).

4.3 Court Action

Civil suit for Sum of Money in the proper RTC/MTC, depending on amount (>₱2 million to RTC after the Judiciary Reorganization Act of 2023).
Evidence: card agreement, statement of account (SOA), and a “Certification of Non-Payment” subscribed before a bank officer.
Defenses: unauthorized transactions, unlawful charges, flawed SOA, lack of notice, novation, prescription, or payment.
No imprisonment for mere non-payment; B.P. 22 (bouncing-checks law) applies only if you issued a check that actually bounced.
Judgment may be enforced through garnishment of deposits, levy on real/personal property, or salary garnishment (limited by Labor Code Art. 1708: 25 % ceiling).

5 Borrower Rights & Remedies

Billing Error Dispute (CCIRL §11).
File a written dispute within 30 days of SOA receipt. Issuer must provisionally reverse the charge within 10 days and complete an investigation in 90 days.
Grace Periods for Installments.
RA 10870 mandates a one-time “double-cycle grace period” on first default; pandemic-era grace periods (RA 11469/11494) are no longer automatic but voluntary restructurings continue.
Debt Restructuring/Settlement.
Credit Card Repayment Programs (CCRPs) allow longer terms (up to 60 mos.) at concessionary rates. Under BSP Memo M-2021-024, restructured loans booked at ≤ 12 % EIR need not be classified as NPL until 2026.
Credit Information & Privacy.
Only negative information at least 30 days past due may be uploaded to the Credit Information Corp. (CIC) (CISA IRR §8.2). Data must be purged after 5 years from full settlement.
Complaint Channels.
- In-house customer service (mandatory first resort, 15-day resolution).
- BSP CPMCO (online portal or walk-in).
- NPC for privacy breaches.
- SEC Enforcement and Investor Protection Department (if ECA is at fault).

6 Special Situations

Scenario	Key Rules / Options
Overseas Filipino Worker defaulting abroad	Civil suit must still be filed in PH courts; service via Hague Service Convention (if host country is a signatory) or by publication.
Cardholder dies	Estate liable; bank files claim in estate settlement within the one-year probate notice period (Rule 87 §5, Rules of Court).
Bankruptcy / Insolvency	Individuals may file Voluntary Liquidation under R.A. 10142 (FRIA) if debts ≤ ₱500 k, or Suspension of Payments (Art. 1605 et seq., Civil Code).
Fraudulent card use by a third party	Issuer bears loss unless gross negligence by cardholder is proven (CCIRL §12; BSP Circular 1039-2019 on EMV liability shift).

7 Landmark Supreme Court Decisions

Case	G.R. No. / Date	Take-Away
Bank of the Phil. Islands v. Spouses De Leon	106620 / 29 Jan 1993	Credit-card SOAs are admissible if accompanied by a duly authenticated computer print-out.
Equitable PCI Bank v. Ng Sheung Ngo	171545 / 30 Jul 2009	36 % p.a. interest void for being unconscionable; courts may temper rates even if freely stipulated.
Citibank vs. Sps. Caballero	165590 / 10 Feb 2016	Acceleration clauses are not penal damages and do not require judicial demand if expressly agreed.
Spouses Abad v. Goldwell	202871 / 27 Jan 2021	Harassing phone calls may give rise to moral and exemplary damages.

8 Practical Tips for Cardholders Facing Default

Act before the due date—ask for a payment holiday or restructuring; banks reward early transparency.
Document everything: save e-mails, SOAs, and call logs.
Never ignore summons. Failing to answer a complaint leads to default judgment.
Check interest computations—courts frequently reduce absurd charges.
Know settlement math. A 60-month plan at 12 % EIR roughly doubles the amount you pay compared with a lump-sum 50 % discount today.
Guard your data—you may revoke consent for public disclosure of your debt beyond what the law allows.
If harassed, send a cease-and-desist letter quoting R.A. 11765 §5; escalate to BSP if ignored.

9 Key Regulator Contact Details (2025)

Agency	Hotline / E-mail
BSP CPMCO	(02) 8708-7087 • consumeraffairs@bsp.gov.ph
NPC Complaints & Investigation	(02) 8234-2228 • complaints@privacy.gov.ph
SEC EIPD	(02) 8818-0921 • epd@sec.gov.ph

10 Looking Ahead

Open-Finance & BNPL Oversight. BSP draft Circular 1156 (2025) proposes that buy-now-pay-later platforms will be treated as “credit-card substitutes,” applying the same interest caps and collection rules.
Digital Writs of Execution. The Revised Rules on Civil Procedure 2024 allow electronic service of writs to payment gateways, simplifying garnishment of e-wallets.
AI-Driven Credit Scoring. Pending Digital Credit Act bills seek to amend R.A. 9510, tightening algorithmic transparency to prevent unfair denial of restructuring.

Conclusion

Credit-card default in the Philippines remains a purely civil matter, but the web of statutes, BSP directives, and jurisprudence means both creditors and debtors must navigate strict procedural and consumer-protection safeguards. Understanding (1) how default is triggered, (2) the lawful limits on interest and collection, and (3) the remedies on both sides will put you in the best position—whether you need to enforce a claim or negotiate a fresh start.