Letter to an Attorney

Dear Attorney,

I am writing to seek your professional advice regarding a pressing concern I have encountered with a lending company. This company, which I shall refer to as "Ihiram" for anonymity, has repeatedly engaged in what I perceive to be harassing behavior. Specifically, they contact borrowers persistently even a day before the due date, causing unnecessary stress and inconvenience. Despite prior complaints lodged against these practices, the company continues with the same conduct.

I would like to know whether such actions are permissible under Philippine law and what legal remedies may be available to individuals who experience this form of harassment. Additionally, I am interested in understanding what steps can be taken to formally address this issue and prevent further harassment.

Your advice on this matter will be greatly appreciated.

Sincerely,
A Concerned Borrower

Comprehensive Legal Article: Lending Company Harassment in the Philippines

Overview

In the Philippines, harassment by lending companies is a significant issue that affects many individuals, particularly those who borrow under personal or small-scale lending arrangements. Borrowers may feel intimidated or threatened by persistent communication, especially if such actions occur before payment obligations are due. This article explores the legal framework governing lending company conduct, the rights of borrowers, remedies for harassment, and the role of regulatory authorities.

Relevant Philippine Laws on Lending Practices

Republic Act No. 3765 (Truth in Lending Act):
- This law mandates that lending institutions provide clear and transparent disclosure of loan terms. While it primarily concerns financial transparency, ethical practices in the collection of debts are inherently connected to fair lending standards.
Republic Act No. 10173 (Data Privacy Act of 2012):
- Lending companies are bound by the Data Privacy Act to protect borrowers’ personal information. If harassment involves unauthorized communication, especially involving third-party disclosure of a borrower’s debt, it may constitute a violation of this law.
Bangko Sentral ng Pilipinas (BSP) Circular No. 1048:
- Issued in 2019, this circular outlines the rules for financial institutions concerning the handling of borrowers’ concerns. Harassment and threats during debt collection activities are explicitly prohibited.
The Revised Penal Code:
- Articles 287 (Unjust Vexation) and 282 (Grave Threats) may apply to harassment cases if lending company actions are excessive or cause undue distress to the borrower.
Fair Debt Collection Practices:
- Although the Philippines does not have a stand-alone law similar to the U.S. Fair Debt Collection Practices Act (FDCPA), existing regulations by the Securities and Exchange Commission (SEC) provide guidance. SEC Memorandum Circular No. 18, Series of 2019, explicitly prohibits unfair debt collection practices, including threats, intimidation, and repeated or excessive communication.

Understanding Harassment in Lending Practices

Harassment by lending companies can take various forms, including:

Excessive Communication: Repeatedly contacting borrowers by phone, text, email, or through social media.
Preemptive Action: Contacting borrowers before the due date, which is unnecessary and unreasonable.
Threats and Intimidation: Using aggressive language or threats to coerce payment.
Unauthorized Disclosure: Informing third parties, such as family members, friends, or employers, about the borrower’s debt without consent.

These practices may not only violate ethical guidelines but also infringe upon legal rights.

Borrowers' Rights Under Philippine Law

Borrowers in the Philippines are entitled to protection from abusive and unethical practices under the following principles:

Right to Fair Treatment:
Borrowers have a right to fair and respectful treatment from lenders. Persistent harassment may breach this principle.
Right to Privacy:
The Data Privacy Act ensures borrowers’ information is protected and cannot be used to publicly shame or intimidate them.
Right to Due Process:
Lenders must follow the prescribed legal process for debt recovery. Extrajudicial harassment is not sanctioned.
Right to File Complaints:
Borrowers may lodge formal complaints with regulatory authorities, such as the SEC, BSP, or the National Privacy Commission (NPC), to address violations.

Remedies for Borrowers Experiencing Harassment

Borrowers who face harassment have several options:

File a Complaint with the SEC:
Lending companies, especially those registered with the SEC, are subject to strict regulations. SEC Memorandum Circular No. 18 provides borrowers with a basis to file complaints against unfair practices.
Report to the NPC:
If the harassment involves a breach of data privacy, such as unauthorized disclosure of borrower information, a complaint may be filed with the NPC.
Seek Police Assistance:
In cases involving threats, intimidation, or unjust vexation, borrowers can report incidents to the police for possible violations under the Revised Penal Code.
Civil Actions for Damages:
Borrowers may pursue civil claims against lending companies for damages resulting from harassment, including emotional distress or reputational harm.
Demand Letters and Legal Representation:
Sending a demand letter through a lawyer can serve as a formal notice to the lending company, signaling intent to escalate the matter legally if the behavior continues.

Regulatory Oversight and Enforcement

The SEC and BSP play pivotal roles in overseeing lending practices in the Philippines. Borrowers should be aware of the following:

Licensing and Accreditation:
Lending companies must be licensed by the SEC to operate. Complaints of harassment could jeopardize their license.
Monitoring and Penalties:
The SEC actively monitors lending companies and imposes penalties for non-compliance, including suspension or revocation of licenses.
Consumer Education Programs:
BSP and SEC initiatives aim to educate borrowers on their rights and responsibilities, empowering them to handle lending disputes effectively.

Practical Steps for Borrowers

To address harassment effectively, borrowers should:

Document Incidents:
Keep records of all communications, including text messages, call logs, and emails, to establish a pattern of harassment.
Communicate with the Lender:
Borrowers may initially attempt to resolve concerns by formally communicating with the lending company.
Engage a Lawyer:
Seeking legal counsel ensures professional guidance in navigating the complexities of harassment cases.
Escalate to Authorities:
If the issue remains unresolved, filing formal complaints with the SEC or NPC can prompt regulatory action.

Conclusion

Harassment by lending companies is not only unethical but often illegal under Philippine law. Borrowers have the right to fair treatment, privacy, and due process, and there are robust mechanisms in place to address violations. By understanding their rights and utilizing the available legal remedies, borrowers can effectively combat harassment and promote accountability among lending companies.

For those facing persistent issues, seeking professional legal advice is strongly recommended to ensure proper resolution and protection of their rights.