Concern

A couple in the Philippines has faced escalating financial difficulties after lending money to friends who defaulted on repayment. To settle these losses, they borrowed from lending companies requiring high daily payments. To cope, they turned to online loan apps with high deductions and short repayment windows. One app (PESOMAX) deposited money into the wife's account without her request. She returned the amount immediately but was later harassed by the company through threatening messages, public shaming, and contact with her acquaintances. Despite changing her number and filing a police report, harassment continued after defaulting on subsequent loans. They seek advice on how to address this issue.

∇ Legal Contemplator

Foundational Observations

This situation reflects a broader issue with the aggressive tactics of some online lending platforms in the Philippines.
The borrower’s primary concerns are harassment, reputational damage, and the pressure of unsustainable debt.
It’s crucial to consider legal protections for borrowers, avenues to report harassment, and strategies to stabilize their financial situation.

1. Was the app’s deposit legal, given it wasn’t requested?

If money is sent without explicit consent, it may be classified as an unsolicited transaction. Under Philippine law, recipients are generally not obligated to repay unsolicited amounts unless explicitly agreed upon.
Returning the amount immediately was a good-faith attempt to resolve the issue. However, the platform demanding fees or interest without a legitimate agreement raises concerns about predatory practices.

2. What is the legality of their harassment tactics?

The Debt Collection Law of the Philippines prohibits debt collectors from engaging in abusive or harassing behavior, including threats of arrest, public shaming, or contacting a borrower’s acquaintances without consent.
Sending explicit or defamatory messages may also violate the Revised Penal Code on libel or cyberlibel under the Cybercrime Prevention Act (RA 10175).

3. What are the police’s responsibilities here?

The police should have acted more decisively. While cyber harassment cases can be complex, they fall under the jurisdiction of the PNP’s Anti-Cybercrime Group (ACG).
The recommendation to “ignore” the harassment may not address the potential escalation of these threats. Filing a formal complaint with evidence is critical.

4. Is their strategy of nonpayment sustainable or legal?

Refusing payment of loans is not a permanent solution, even if the loans were obtained under duress. The borrower could face legal actions for nonpayment, such as small claims suits. However, harassment is not a lawful method of debt recovery.
Addressing the harassment separately while seeking structured debt relief or settlement options could be more effective.

Exploring Solutions
Step 1: Immediate Action Against Harassment

Gather Evidence: Collect screenshots of messages, call logs, and any communications to establish a case for harassment and cyberlibel.
Formal Complaint: File a detailed complaint with the National Privacy Commission (NPC), as accessing phone contacts without consent likely violates the Data Privacy Act of 2012 (RA 10173).
PNP Anti-Cybercrime Group: Submit the evidence to the PNP-ACG. Persistent follow-ups may be necessary to ensure action.

Step 2: Legal and Financial Relief

Debt Counseling: Seek assistance from a financial adviser or nonprofit organization specializing in debt management to consolidate or restructure debts.
Legal Representation: Consult a lawyer to explore filing civil or criminal cases against the lending company for illegal debt collection practices. Public Attorney’s Office (PAO) services may be available if the couple meets the income requirements.

Step 3: Long-Term Financial Planning

Stop Borrowing: Cease engagement with online lending platforms to prevent compounding debt.
Alternative Income Streams: Explore small business grants, government aid, or legitimate lending programs (e.g., microfinance initiatives like CARD MRI).

Step 4: Community Support

Rebuild Reputation: Communicate with affected acquaintances about the nature of the harassment to mitigate rumors.
Seek Local Advocacy: Connect with community groups or NGOs that advocate for consumer protection.

Uncertainty and Reflections

Will the authorities act decisively against such companies, given their pervasive influence and the systemic nature of these practices?
How feasible is debt restructuring, given the limited income from a sari-sari store?
Should they consider legal action despite the costs and time involved, or prioritize resolving the debt informally?

These doubts highlight the complexity of their situation and reinforce the need for thorough planning and incremental progress.

Final Answer

1. Address the harassment: File a complaint with the National Privacy Commission for Data Privacy Act violations and report cyberlibel and harassment to the PNP Anti-Cybercrime Group. Persistently follow up with evidence.
2. Seek legal support: Consult PAO or a private lawyer to hold the lending platform accountable for abusive collection practices.
3. Pursue financial relief: Stop borrowing from online platforms, consolidate debts through counseling, and explore government microfinance or aid programs.
4. Rebuild relationships: Clarify the harassment situation with affected contacts and seek community support to mitigate reputational harm.