Dear Attorney,

Good afternoon. I hope this message finds you well. I am writing to seek legal advice regarding a matter that has caused significant distress to my family. My sibling borrowed a sum of ₱30,000 from an individual or group that operates without a legitimate lending license. Due to exorbitantly high interest rates, this debt has ballooned to ₱300,000 within just a month.

In addition to these unfair charges, my sibling has been subjected to harassment from the lenders. We are exploring the possibility of bringing this matter to the attention of the Bangko Sentral ng Pilipinas (BSP).

Could you kindly guide us on the legal remedies available to address this situation? Your insights on how to proceed, both in seeking justice and protecting my sibling from further harm, would be invaluable.

Thank you for your time and assistance.

Respectfully, A Concerned Sibling

Understanding the Legal Context of Usurious Lending and Harassment in the Philippines

The situation described raises two critical legal concerns: (1) the enforcement of usurious interest rates by an unlicensed lender, and (2) the use of harassment to coerce repayment. Both issues violate Philippine law, and various legal remedies are available to address them. Below is a detailed analysis of the applicable laws, regulations, and recourse options.

1. Usury and Predatory Lending Practices

A. Definition and Legal Framework

Under Philippine law, usury is the practice of charging excessive interest on loans, which is prohibited by several statutes, including the following:

Act No. 2655 (Usury Law)
- While the Usury Law has been effectively superseded by Central Bank Circular No. 905, which removed interest rate caps, it remains unlawful to charge unconscionable or exorbitant interest rates. Courts evaluate the reasonableness of interest rates on a case-by-case basis.
New Civil Code of the Philippines
- Article 1956 of the Civil Code states that "no interest shall be due unless it has been expressly stipulated in writing." Excessive interest rates can be deemed void under Article 1306 (limitations on contractual freedom) and Article 1409 (void contracts for being contrary to public policy).
BSP Circular No. 1133 (Series of 2021)
- Governs consumer loans and prescribes fair and transparent lending practices for financial institutions. Though primarily directed at licensed entities, its principles serve as benchmarks for evaluating the conduct of informal lenders.
Revised Penal Code
- Under Articles 315 (Swindling/Estafa) and 318 (Other Deceits), lenders who misrepresent terms or employ deceitful tactics may be held criminally liable.

B. Lending Without a License

Lending without proper authorization violates Republic Act No. 9474 (Lending Company Regulation Act of 2007), which mandates that lending companies must be registered with the Securities and Exchange Commission (SEC) and secure a Certificate of Authority.

Key provisions include:

Section 12: Prohibits unauthorized lending operations. Violators may face fines ranging from ₱10,000 to ₱50,000 or imprisonment of six months to 10 years.
Section 20: Empowers the SEC to penalize unlicensed lenders, issue cease-and-desist orders, and file criminal complaints.

C. Exorbitant Interest Rates

While there is no fixed cap on interest rates for private loans, the Supreme Court has consistently struck down rates exceeding 12% per annum as excessive. In Medel v. CA (G.R. No. 131622) and Dungo v. Lopena (G.R. No. 174158), the Court invalidated interest rates of 66% and 5% per month, respectively, for being unconscionable.

D. Remedies for Victims of Usury

Victims may:

File a Civil Case for Annulment or Rescission of Loan Contracts
- Seek judicial declaration of the loan’s terms as void due to unconscionability.
Recover Excessive Interest Paid
- Demand restitution for payments exceeding the principal plus a reasonable interest rate.
Report to the SEC and BSP
- File complaints against the lender for operating without a license and violating consumer protection laws.

2. Harassment by Lenders

A. Relevant Laws and Provisions

Anti-Usury Law and Revised Penal Code
- Harassment, coercion, and threats are considered criminal acts under Article 282 (Grave Threats) and Article 286 (Grave Coercion).
Republic Act No. 10173 (Data Privacy Act of 2012)
- If harassment involves disclosure of personal information, the lender may be held liable for unauthorized processing or misuse of personal data.
RA 3765 (Truth in Lending Act)
- Requires transparency in loan agreements. Concealing terms or applying deceptive collection methods violates this Act.
Cybercrime Prevention Act (RA 10175)
- Digital harassment through text messages, social media, or other online platforms is punishable under the law.

B. Remedies for Harassment Victims

Victims may pursue the following:

File Criminal Charges for Threats or Coercion
- Evidence of intimidation, such as text messages or recorded calls, strengthens the case.
Seek a Protection Order
- A court may issue orders prohibiting lenders from contacting the victim.
Report to Authorities
- File complaints with the National Bureau of Investigation (NBI) or Philippine National Police (PNP) Anti-Cybercrime Unit for digital harassment.

3. Steps to Bring the Matter to BSP and SEC

A. Filing a Complaint with BSP
Submit a written complaint to the Financial Consumer Protection Department of the BSP. Include:

Details of the loan and interest rate.
Evidence of harassment and lender’s unlicensed status.

B. Reporting to the SEC
Provide:

A notarized affidavit detailing the lender's unauthorized activities.
Supporting documents (loan agreements, payment receipts, etc.).

The SEC may impose sanctions or initiate legal proceedings against the lender.

4. Additional Legal Considerations

A. Amicable Settlement
Before escalating, attempt to negotiate a fair resolution. Engage a mediator or barangay official to facilitate discussions.

B. Documentation
Preserve all communications, payment records, and loan documents to support claims in court or before regulatory agencies.

C. Community Action
If the lender operates widely, collective complaints from affected individuals may strengthen the case.

Conclusion

The practices described are clear violations of Philippine law. Immediate legal action and reporting to regulatory authorities are necessary to protect your sibling and prevent similar abuses. Engaging a lawyer is crucial to navigating this process effectively, ensuring your rights are upheld, and securing the best possible outcome.