Dear Attorney,

I am facing repeated harassment over a loan I am unable to pay at this time. The creditor has been contacting me through calls and messages daily, some of which are threatening and aggressive. Is this kind of treatment legal? What can I do to protect myself from these actions while I work on resolving the debt?

Sincerely,
A Distressed Borrower

Insights

In the Philippines, harassment over unpaid loans can fall under multiple legal frameworks, particularly within the bounds of civil, criminal, and administrative law. Understanding how these concepts interplay is key to identifying the legal options available to individuals facing loan-related harassment.

1. Fair Debt Collection Practices

While the Philippines does not have a law specifically called the Fair Debt Collection Practices Act (unlike the United States), it has several protections for debtors under general law. Creditors or collecting agencies are expected to follow legal guidelines when attempting to collect debts. Any behavior that exceeds reasonable and lawful collection efforts can be subject to penalties.

Under Philippine law, the following practices are prohibited:

Repeated and excessive calls or messages: Collection efforts must not involve harassing the debtor. Constant, frequent communication in an intimidating manner may be considered harassment and could be reported to authorities.
Threats of violence or harm: Any threats made to a debtor’s person, family, or property are illegal and can lead to criminal charges.
Public shaming: Collectors cannot disclose the debtor’s financial obligations to others as a means of shaming them into payment. This includes posting on social media, contacting family members, neighbors, or employers about the debt, which could violate privacy laws under the Data Privacy Act of 2012.
Illegal charges: Lenders cannot charge excessive or illegal interest rates that violate the terms of the loan agreement or existing usury laws.

Any violation of these principles can give rise to a civil action for damages and, in some cases, criminal liability.

2. Psychological Violence under RA 9262 (Anti-Violence Against Women and Their Children Act)

If the debtor is a woman, repeated harassment from creditors may also be classified as psychological violence under Republic Act No. 9262. Psychological violence includes causing mental or emotional suffering, intimidation, and threats. A debtor experiencing constant harassment or intimidation could invoke this law, especially if the collector's actions are affecting her mental health and wellbeing.

Filing a case under this law could lead to protective orders against the collector, including stopping the harassment and maintaining a distance from the debtor.

3. Usury and Illegal Interest Rates

The Bangko Sentral ng Pilipinas (BSP) oversees the regulation of interest rates in the Philippines. While the Usury Law has been suspended, agreements must still comply with the principle of reasonableness in interest rates. Interest charges that are exorbitant and unconscionable can be contested in court. If a lender is charging an abusive amount of interest or additional charges, the debtor may file a civil case questioning the validity of the loan terms.

4. Data Privacy Violations

The Data Privacy Act of 2012 (RA 10173) provides another line of protection for debtors. It prohibits unauthorized access to or disclosure of personal information. In cases where debt collectors contact people unrelated to the debtor (e.g., family, friends, or employers), this may constitute a breach of privacy. The law imposes hefty fines and penalties for such actions, which can be taken up with the National Privacy Commission (NPC).

5. Criminal and Civil Remedies

Civil Damages: Debtors subjected to unlawful collection tactics may file for civil damages. Under Article 19 of the Civil Code of the Philippines, any person who wilfully causes injury to another in a manner that is contrary to morals, good customs, or public policy shall compensate the injured party. This article, together with Articles 20 and 21, can serve as the basis for recovering damages if harassment has been proven.
Criminal Complaints: If the harassment escalates to include threats of bodily harm or slander, the debtor may file a criminal case for grave threats, unjust vexation, or even libel, depending on the circumstances. This could result in both financial penalties and imprisonment for the offender.

6. Small Claims Court

If the amount of the loan qualifies, the debtor may file in the Small Claims Court to settle the matter without needing a lawyer. Small claims court is designed to resolve debt disputes quickly and efficiently, though it does not cover harassment issues per se. However, it offers debtors a way to contest the validity of a loan or request a repayment schedule that is manageable, especially if the loan terms were unfair or if illegal collection practices were involved.

7. Regulatory Bodies for Loan Complaints

If the harassment is coming from a financial institution or a registered lending company, complaints can be directed to the Securities and Exchange Commission (SEC) or the Bangko Sentral ng Pilipinas (BSP), depending on which entity has jurisdiction over the lender. The SEC, in particular, has been active in cracking down on illegal and unfair collection practices, issuing penalties and suspensions for violators.

Practical Tips for Debtors

Document everything: Keep records of all communications with the creditor or collection agency. Save text messages, call logs, and any other evidence of harassment. This documentation is crucial in building a case if legal action becomes necessary.
Request a cease-and-desist letter: A formal letter from a lawyer asking the creditor to stop harassing the debtor may sometimes be enough to deter aggressive collection tactics.
Negotiate repayment terms: If possible, try to work out a more manageable repayment schedule with the lender. Having a clear and structured payment plan could reduce the intensity of collection efforts.
Consult a lawyer: Given the complexity of the laws surrounding loan harassment, consulting with an attorney is highly recommended. Legal counsel can help guide the debtor on how to file complaints, seek damages, or negotiate loan terms, depending on the situation.

Conclusion

Harassment over loan payments is not tolerated under Philippine law, and debtors have multiple legal remedies at their disposal, including civil actions for damages, criminal complaints, and complaints filed with regulatory bodies like the BSP and SEC. Whether through judicial or administrative routes, individuals subjected to harassment have legal recourse to stop the abusive behavior and protect their rights while addressing their debt. It is important for debtors to understand their rights, keep evidence of any harassment, and seek legal counsel to explore options for relief.