Dear Attorney,

I am seeking legal advice regarding my situation with an online lending app. Due to financial difficulties, I borrowed money from this app but failed to pay on the due date. I communicated with them, explaining my intent to pay as soon as I could gather the necessary funds, including penalties. However, since then, they have harassed me continuously, threatening my life and reputation. They claim they will post defamatory statements about me online, create a fabricated sex scandal, and even send flowers and a coffin to intimidate me. They also threaten to contact everyone in my phonebook to coerce me into paying.

Upon further investigation, I discovered that the lending company is not registered with the Securities and Exchange Commission (SEC). Additionally, they impose a penalty rate of 40%, and their app misrepresents the repayment terms: the loan advertises a three-month payment period but only allows for a seven-day repayment after processing. For instance, I borrowed PHP 3,000 but received only around PHP 2,800 due to deductions.

This harassment has severely damaged my reputation and caused me immense stress. I wish to understand the legal actions I can take against this company to protect my rights and seek justice.

Sincerely,
A Concerned Borrower

Understanding the Legal Context: Harassment and Unlawful Lending Practices

In the Philippines, lenders, including online lending companies, must comply with laws protecting borrowers' rights and prohibiting abusive practices. Your situation involves potential violations of several laws and regulations. Here is a detailed breakdown:

1. Applicable Laws and Regulations

A. Securities Regulation Code and Lending Company Regulation Act (RA 9474)

Registration Requirements
Lending companies in the Philippines are required to register with the SEC under the Lending Company Regulation Act. If the lending app is not registered, its operations are unlawful. Borrowers can report unregistered entities to the SEC for appropriate action.
Disclosure of Terms
Lenders must transparently disclose loan terms, including interest rates, penalties, and repayment schedules. Misrepresentation of loan terms, such as shortening repayment periods and imposing exorbitant penalties, is a violation of the law.

B. Revised Penal Code

Grave Threats (Article 282)
Threatening to harm a person’s life or reputation constitutes the crime of grave threats. In your case, threats to post defamatory materials, fabricate sex scandals, and intimidate with coffin deliveries may qualify as such.
Libel and Cyber Libel (Articles 353 and 355, in conjunction with the Cybercrime Prevention Act of 2012)
Publicly shaming or posting defamatory statements about you on social media is considered libel. If these statements are made online, they fall under cyber libel, which carries heavier penalties.

C. Data Privacy Act of 2012 (RA 10173)

Lending companies are prohibited from using personal data (e.g., contact lists) without explicit consent for purposes unrelated to the original agreement. Contacting your family and friends to pressure you constitutes unauthorized processing of data, violating the Data Privacy Act.

D. Anti-Usury Law

While the Anti-Usury Law is no longer in effect, lending companies are expected to adhere to reasonable interest rates and penalties. A 40% penalty is excessive and may be challenged for being unconscionable.

2. Filing a Complaint

A. SEC Complaint

If the lending company is unregistered or engages in unfair practices, file a complaint with the SEC. Include evidence of their actions (e.g., screenshots, loan agreements).

B. National Privacy Commission (NPC) Complaint

For violations of the Data Privacy Act, lodge a complaint with the NPC. Submit any proof that the lender accessed or misused your contact list without consent.

C. Criminal Complaint

File criminal charges for grave threats, libel, or cyber libel at your local police station or prosecutor’s office. Bring documentation, such as messages or posts from the lender.

D. Barangay Conciliation (Optional)

For minor disputes or to seek an amicable settlement, you may consider barangay mediation before escalating to formal legal proceedings.

3. Legal Remedies

A. Protection from Harassment

Temporary Restraining Order (TRO) or Injunction
Seek a TRO or permanent injunction against the lending company to stop them from harassing you.
Barangay Protection Order (BPO)
For immediate relief, you may request a BPO if threats escalate to imminent danger.

B. Damages

File a civil case for damages to recover compensation for reputational harm, emotional distress, and other consequences of the harassment.

C. Debt Resolution

You may negotiate repayment terms through mediation or seek legal counsel to dispute unconscionable penalties or terms.

4. Practical Steps for Borrowers

A. Collect Evidence

Preserve screenshots, emails, text messages, call logs, or social media posts that document the lender's harassment and misrepresentation.

B. Secure Personal Information

Change passwords, enable privacy settings, and warn contacts about potential misuse of your data.

C. Consult a Lawyer

Seek professional legal advice to explore specific options tailored to your situation.

5. Role of Government Agencies

A. Securities and Exchange Commission (SEC)

The SEC monitors lending companies and penalizes those operating without registration. It recently issued Memorandum Circular No. 18, Series of 2019, strengthening its oversight of online lending companies.

B. National Privacy Commission (NPC)

The NPC addresses complaints about data misuse and can impose penalties for non-compliance.

C. Department of Justice (DOJ)

The DOJ prosecutes cybercrimes, including cyber libel and threats made through electronic communication.

D. Local Government and Barangay

Local authorities provide immediate assistance for disputes and issue BPOs in harassment cases.

Conclusion

The actions of the lending company clearly violate several laws, including RA 9474, the Data Privacy Act, and the Revised Penal Code. You have multiple legal avenues to protect your rights and seek redress. File complaints with relevant agencies, document every instance of harassment, and consider consulting a lawyer to guide you through the legal process.

Standing up against abusive lending practices not only helps your situation but also contributes to holding such companies accountable for their unlawful behavior.