Republic of the Philippines
HOUSE OF REPRESENTAHVES
Quezon City, Metro Manila
NINETEEI\ITTI CONGRESS
lst Regular Session
House BilENo: :.     6681
Introduced by Representatives PAOL0 Z. DUTERTE, ERIC G. YAP,
EDVIC G. YAP, and JEFFREY SORIANO
EXPIANATORY NOTE
Online lending collections, particularly online lending sharks, have become rampant
following the crackdown of unregistered lending agencies,  unfair debt collection
practices, and cyber harassment. Concerns on the violation of the debtors' rights to
privacy and unfair debt conection become pertinent as the Department of Justice
highlightsthefollowingactstobeincontraryofthesaldrights,namely:(a)accessing
the debtors' phone hook/contacts' list for purposes of sending them messages in the
event  of  untinely  and/or  non-payment;  (b)  posting  the  debtors'  personal  and
sensitive personal information onhine for purposes of shaming them; (c) threatering
debtors with death and physical injuries if they fail to settle their account balances;
and (d) using profane language through text message directly sent to the debtors and
to the debtors' references for purposes of shaming them. Most inportantly, these
lending agencies also charge very high interest rates that are uureasonable to the
creditors.
Granted that these acts are violative of the Cybercrime Prevention Act of 2012, the
Data   Privacy   Act   of   2012,   the   Securities   and   Exchange   Commission   (SEC)
Memorandum Circular No.  18, series of 2019,  and other salient provisions in the
Revised Penal Code in relation to the said Cybercrime Act, the State is mandated to
legislateonmeasuresthatwillallowthestringentimplementationofthesepenallaws.
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In this regard, this proposed bill aims to prohibit and eliminate the use of abusive,
deceptive and unfair debt collection practices by debt collectors and to ensure that
those debt collectors who refrain from using abusive debt collection practices are not
competitively   disadvantage,   thereby   protecting  borrowers   agalust   abuse   and
harassment in the collection of their debts.
In view of the foregoi
approval of this bill is earnestly sought.
EE
ITREhi-o
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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon Gty, Metro Manila
NINETEEr\ITII CONG REsS
lst Regular Session
-HojseBil|No.       668.1
Introduced by Representatives PAOL0 Z. DtJTERTE, ERIC G. YAP,
EDVIC G. YAP, and JEFFREY SORIANO
ANACT
REGUIATING TIIE DEBT COLLECII0N PRACTICES 0F DEBT COLLECTORS
T0   PROTECT   BORROWERS   FROM   ABUSES,   IIARASSMENT,   UNFAIR
TREATMENT AND MISREPRESENTATIONS
B_:_i_i...#?fled by  the  Senate  and House  Of Rapresentatives  Of the  Plulippines in Congress
assembled..
SECTION 1. Short Tt.fJe. This Act shall be known as the "Fair Debt Conection
Practices Act."
SEC. 2. Dcchar#f{.o# a/Pozi.ey. -It is hereby declared a State policy to prohibit
and eliminate the use of abusive, deceptive and unfair debt collection practices by
debt collectors, to ensure that those debt collectors who refrain from using abusive
debt collection practices  are  not competitively  disadvantaged,  and  ultimately,  to
protect borrowers against abuse and harassment in the collection of their debts.
SEC. 3. Dc¢.#..f±.o# a/ Terms. - For the purposes of this Act, the term:
a.   Deaf  CoJ/ecfor  means  any  person who  uses  any  iustrumentaljty  or  any
business the principal purpose of which is the collection of any debts, or
who regularly collects or attempts to collect, directly or indirectly, debts
owedordueorassertedtobeowedordueanother.Itincludesanycreditor
who, in the process of collecting his own debts, uses any name other than
his own, would indicate that a third person is collecting or attempting to
colleetsuchdebt.Itislikewiseinterchangeablewithadebtcouectionagency
or a third-party service provider engaged by a creditor for the purpose of
collecting debts owed by another.
The definition does not include:
1.   A person who is collecting or attempting to collect a debt of which the
he or she is the original creditor or owner;
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2.   A business that acquires a debt or debts through the seizure of accounts
receivable under a security agreement;
3.   A corporation  that purchases  a debt  or  debts  through  acquiring or
merging with a business in a transaction that includes the transfer of
accounts receivables;
4.   A person to whom the contract that gave rise to the debt was assigned
for the purpose of financing the transaction;
5.   An officer or employee of the creditor who in the name of the creditor,
collects the debt for the creditor;
6.   Any person or entity who acts as a debt collector for another person or
entity who are related by common ownership or affiliated by corporate
control, if the person or entity collects the debt for persons or entities
whom it is related or affiliated to and its principal business is not the
collection of debts;
7.   Any officer or employee of government, national or local, to the extent
that collecting or attempting to collect any debt is in the performance of
his official duties;
8.   Any person while serving or attempting to serve legal process on any
other person in connection with the judicial enforcement of any debt;
and
9.   Any attorney-at-law collecting a debt as attorney on behalf of and in the
name of a client.
b.   Cowtocf means communications by telephone, mobile phone, facsimile, e-
mail, automated call system,  text messaging,  or any other modes, or in
person, including messages left for a debtor with another  person or by
voicemailoronanausweringmachine,oranyotherformofcommunication
not specifically excluded, but does not include communications that the
debtor has expressly consented to or solicits in advance.
c.   Creel.for means a person to whom a debtor owes a debt or who has extended
credit to a debtor, including, but not limited to, credit in the form of a sale
oncredit,aloanofmoneyortheprovisionofgoodsandservices.Itincludes
a financing company, a lending company, and online financing or lending
applications.
d.  Dear means a monetary obligation enforceable at law owed by a debtor,
including, but not limited to, a purchase on credit, accounts receivable, a
loan of money or the provision of goods or services.
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e.   Debtor means an individual who has an obligation for a debt, including, but
notlimitedto,theownerofasoleproprietorship,amemberofapartnership
or an individual who has provided a personal guarantee.
f.    Express  ConseJ€f  means  consent  in a  verifiable  form,  including,  but  not
limited to, writing and audio recordings.
9.   Represe#fflf£.zJe means a person, other than the debtor or creditor, that is duly
authorized  by  the  debtor  or  creditor  to  contact  or  be  contacted  and
communicate with about the debt.
SEC.   4.   Acquisition   Of   Location   Inforl'I:lation.   -    ALny   de:bit   coHcetor
communicatingwithanypersonotherthantheborrowerforthepurposeofacquiring
location information about the borrower shall:
a.   Identify   himself,   state   that  he   is  confirming   or  correcting   location
information concerning  the  borrower,  and  only  if expressly  requested,
identify his employer;
b.  Not state that such borrower owes any debt;
c.   Not communicate with any such person more than once unless requested
to do so by such person or unless such debt collector reasonably behieves
thattheearlierresponseofsuchpersoniserroneousorincompleteandthat
such person now has a correct or complete location information;
d.  Not communicate by post card;
e.   Not use any language or symbol on any envelope or in the contents of any
communication that indicates that the debt collector is in the debt collection
business or that the communication relates to the collection of debt;
f.   After the debt collector knows the borrower is represented by an attorney
withregardtothesubjectdebtandhasknowledgeor,canreadilyascertafn,
such attorney's name and address, not communicate with any person other
than the attorney, unless the attorney fails to respond within a reasonable
period of time to the communication from the debt collector.
SIC. 5. .Allopeable Debt _Collection Practices. - Firm:ndng compz*wies, lending
companies, online financing or lending applications, credit card companies, creditors,
debt collectors and third party service providers engaged by creditors (collectively
known as `Debt Collector') may resort to all reasonable and legally permissible mearrs
to collect amounts due them under the loan agreement, provided that in the exercise
of their rights and performance of their duties, they must observe good faith and
reasonable conduct, and refrain from engaging in abusive, unfair, and untoward acts
enumerated in this Act.
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SEC. 6. Proft..a.tI.o# Agri."st Hflrtlss"e#f or Abelse. - A debt collector shall not
engage  in  any  conduct the  natural  consequence  of which  is  to  harass,  oppress,
humiliate, or abuse any debtor in connection with the collection of a debt. Without
limiting  the  general  application  of  the  foregoing  and  without  prejudice  to  the
application of the pertinent provisions of the Revised Penal Code and other laws, the
following conduct shall be considered a violation of this section:
a.   The use or threat of use of violence or other criminal means to harm the
physical person, reputation, or property of the debtor or his /her family;
b.  The   use  of  obscene   or  profane  language  or  language  the  natural
consequence of which is to abuse or shame the debtor or his/her family
and/or which amount to a criminal act or offense under applicable laws;
c.   The disclosure or publication or posting of the names and other personal
information of the borrowers who allegedly refuse to pay debts, except as
may be allowed in Section 10 of this Act;
d.  The advertisement for sale of any debt to coerce payment of the debt;
e.   Causing a telephone or mobile phone to ring or engaging any person in
telephone or mobile phone conversation or communication repeatedly or
continuously with intent to annoy, abuse, humhiate, or harass any person
at the called or messaged number; and
f.   except as provided in this Act, the placement of telephone or mobile phone
callsormessageswithoutmeaningfuldisclosureofthecaller'sidentity.
9.   Other  similar  or  analogous  acts  contrary  to  customary  or  accepted
commercial financing or lending practices.
SEC. 7. FflJsc or Mi.sZc¢d{.„g Rqutzse#ffltr.o#s. - A debt collector shall not use
any false, deceptive, or misleading representation or means in cormection with the
collection of any debt. Without limiting the general application of the foregoing and
withoutprejudicetotheapplicationofpertinentprovisionsoftheRevisedPenalCode
and other laws, the following conduct is a violation of this section:
a.   The unauthori2red use of any badge, uniform, or facsimile thereof;
b.   The false representation of the following:
1.   The character, amount or legal status of any debt; or
2.   Any services rendered or compensation which may be lawfully received
by any debt collector for the collection of the debt;
c.   The false representation or implication that any individual is an attorney or
that any communication is from any attorney;
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d.  The representation or implication that non-payment of any debt win result
in  arrest  or  imprisonment  of  any  person  or  the  seizure,  garhishment,
attachment or sale of any property or wages of any person unless such
action is unlawful and the debt collector or creditor intends to take such
action;
e.   The use of threat to take any action that cannot be legally taken;
f.   The false representation or implication that a sale, referral or other transfer
of any interest in a debt shall cause the borrower to:
1.   Lose any claim or defense to payment of the debt; or
2.   Become subject to any practice prohibited by this Act;
9.  The false representation or imphication that the borrower committed any
crime or other conduct in order to disgrace the borrower;
h.  Communication  or  threatening  to  communicate  to  any  person  credit
information  which  is  known  or  which  should  be  known  to  be  false,
including the failure to communicate that a disputed debt is disputed;
i.   The use or distribution of any written communication which stimulates or
is falsely represented to be a document authorized, issued or approved by
any court, official, or agency of the government, national or local, or which
creates a false impression as to its source, authorization or approval;
j.    The use of any false representation or deceptive means to collect or attempt
to collect any debt or to obtain information concerning a borrower;
k.  Except  as  otherwise  provided  for  communication,  to  acquire  location
information under Section 4 of this Act, the falure to disclose clearly in all
communications made to collect a debt or to obtain information about a
borrower,thatthedebtcollectorisattemptingtocollectadebtandthatany
information obtained will be used for that purpose;
I.   The false representation or implication that accounts have been turned over
to innocent purchasers for value;
in. The use of any business, company, or organi2aton name other than that
true name of the debt col]ector's business, company, or organization; and
n.  Give any person, directly or indirectly, by implication or otherwise, any
false or misleading information, including, but not limited to, references to
the police, a law firm, prison, credit history, court proceedings or a lien or
garhishment.
o.  Other  similar  or  analogous  acts  contrary  to  customary  or  accepted
commercial financing or lending practices.
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SEC. 8. Lr„/#i.r CoJJect..o# P"ck.cos. - A debt collector shall not use unfair or
unconscionablemeanstocollectorattempttocollectanydebt.Thefollowingconduct
shall be considered a violation of this Section:
a.   The collection of any amount (including any interest, fee, charge or expense
incidental  to  the  principal  obligation)  unless  such  amount  is  expressly
authorized by the agreement creating the debt permitted by law;
b.  The acceptance by a debt collector from any person of a check or other
payment instrument postdated by more than five days unless such person
is notified in writing of the debt collector's intent to deposit such check or
instrumentnotmorethanten(10)norlessthanthree(3)businessdaysprior
to such deposit;
c.   The  solicitation  by  a  debt  collector  of  any  postdated  check  or  other
postdatedpaymentinstrumentforthepurposeofthreateningoriustituting
criminal proseoution;
d.  Depositing  or  threatening  to  deposit  any  postdated  check  or  other
postdated instrument prior to the date on such check or instrument;
e.   Causing  charges  to  be  made  to  any  person  for  commutcatious  by
concealment  of the  true  purpose  of the  communication.  Such  charges
include, but are not lrfuted to, collect telephone calls and telegram fees;
f.   Taking or threatening to take any non-judicial action to effect dispossession
or disablement of property if -
1.   There  is  no  present  right  to  possession  of  the  property  claimed  as
collateral through an enforceable security interest;
2.   There is no present right to take possession of the property; or
3.   The property is exempt by law from such dispossession or disablement.
9.   Using any language or symbol, other than the debt collector's address, on
any envelope when communicating with a borrower by use of the mails or
by telegram, except that a debt collector may use his name if such name
does not indicate that he is in the debt collection business.
h.  Other  similar  or  analogous  acts  contrary  to  customary  or  accepted
commercial financing or lending practices.
SEC. 9. Offoer Profe..a..fed Acts fl"d Prflc£!.cos. - No debt collector shall commit
any of the following prohibited acts and practices:
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a.Couectorattempttocollectmoneyforacreditorexceptonthebeliefingood
faith that the money is due and owing by the person to the creditor;
b.  Fail  to provide a contact number for the debtor to call when the  debt
collector uses an automated call system to contact the debtor;
c.   Collect or attempt to collect a debt without providing the real name of the
agent  or  representative  of the  debt  collector,  the  contact  number,  the
registered name and address of the debt collector;
d.  Make any arrangement with a debtor to accept a sum of money that js less
than  the  amount  of the  balance  due  and  owing  to  a  creditor  as  final
settlement without the prior express consent of the creditor;
e.   Fail to provide a written report on the status of the account of any person
with whom the debt collector transacts with;
f.   Make any personal call or telephone call for the purpose of collecting or
attempting to collect a debt on any day except between 8 a.in. to 9 p.in.;
9.  Directly or indirectly threaten or state an intention to proceed with any
action for which the debt collector does not have the prior express consent
of the creditor or for which there is no lawful authority;
h.  Continue  to  collect  or  attempt  to  collect  money  from,  or  continue  to
communicate with:
1.   A person who has informed the debt collector that he or she is not the
debtor, unless the debt collector first takes all reasonable precautions to
ensure that the person is in fact the debtor, or
2.   The debtor, when he or she has informed the debt collector by any
verifiablemeans,including,butnotlimitedto,personalservice,certified
mail, courier, facsimile, or e-mail, or by any other method, that the debt
is in dispute and that the debtor wishes the creditor to take the matter to
court;
i.   Contact a debtor's spouse, relative, neighbor, friend or acquaintance unless
the contact is limited to the purpose of obtaining the debtor's residential
address, personal telephone number or employment telephone number;
j.    Contact the debtor's employer for any purpose other than to confirm the
debtor's employment status, business title and the address of the business,
in preparation for legal proceedings;
k.  Contact the debtor when he or she has notified the debt collector in writing
tocommunicateonlywiththedebtor'srepresentative,providingthereinthe
current address and telephone number of the same for the purpose o£
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1.   Making reasonable  arrangements  to  discuss  the  debt with  the  debt
collector, and
2.   Discussing  the  debt with  the  debt collector  jn  accordance  with  the
arrangements;
I.   Contact a debtor at his or her place of employment where the debtor has
previously requested that the debt collector not to contact the debtor there;
Prow.ded that the debtor makes reasonable arrangements to discuss the debt
with the debt collector, and discusses the debt with the debt collector in
accordance with the arrangements;
in. Communicate information about the debt or the existence of the debt with
any person other than the debtor, a guarantor of the debt, the debtor's
representative or the creditor of the debt, unless the debtor has expressly
consented to the same;
n.  Charge any fee to a debtor beyond the debt that is due and owing from the
debtor to the creditor;
o.  Refuse to provide sufficient information on request of the debtor to ensure
that the debtor is aware of the identity of the original and current creditor
of the debt and the details of the debt;
p.  Enter into or arrange wage or salary assignments with a debtor or the
employer of a debtor;
q.  Exceed 3 unsolicited contacts on behalf of the same creditor with a debtor
in any period of 7 consecutive days, not including contacts with a third
party to locate a debtor, mistaken contact with a third party, or contacts by
traditional mail; or
r.   Cancel  or  alter  a  payment  agreement with  a  debtor  if the  debtor  has
complied  with  the  terms  of  the  agreement  and  the  debtor's  financial
circumstances   have   not   changed   materially,   unless   the   debtor   has
misrepresented the debtor's financial circumstances.
s.   Other  similar  or  analogous  acts  contrary  to  customary  or  accepted
commercial financing or lending practices.
SEC. 10. Profe..b!.ted Agreenienfs. - Any agreement entered into by the debtor
and the debt collector shall be deemed void if that agreement:
a.   Misrepresents the rights and powers of a person collecting or attempting to
collect a debt;
b.   Misrepresents the obligations or legal liabhities of a debtor; or
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c.   Is rfusleading as to its true nature and purpose.
SEC.  11.   Co#¢.de"ff¢Jc.fry  a/  J„/or`illfl£{.o#.   -  Creditors  shall  keep  strictly
confidential the data on the borrower, except under the following circumstances:
a.   Disclosure of information with the express written consent of the borrower,
provided that consented disclosure of information shall not include acts
prohibited under this Act;
b.  Release,  submission  or  exchange  of  customer  information  with  other
fl.nancial institutions, credit information bureaus, lenders, their subsidiaries
and affiliates;
c.   Upon orders of a court of competent jurisdiction or any government office
or agency authorized by law;
d.  Disclosure by creditors to  debt collectors,  counsels  and  other agents  to
enforce their rights against the borrower; and
e.   Disclosure to third parties,  such as insurance companies, solely for the
purpose of insuring the creditor from borrower default or other credit loss,
andtheborrowerfromfraudorunauthoriaedcharges.
SEC. 12. Jss#¢#ce a/ Rect#.pis.  - Every debt collector must acknowledge the
receipt of all cash transactions, payments made in person, or payments made at the
debtor's  request  that  the  debt  collector  collects  or  receives  from  a  debtor  for
distribution to  the debtor's creditors by means  of receipts  that must contain the
following,
a.   The date the amount is collected or received;
b.  The name of the debtor;
c.   The name of the person for whom the debt collector acts on his behalf; and
d.  The amount received from the debtor.
SEC.  13.  Sc#Jermen£ Agree#ienf.  -  If  a  debt  collector  reaches  a  settlement
agreement with a debtor, the debt collector must, when the amount set out in the
settlementagreementhasbeenpaldinfull,providetothedebtorareceiptcontaining;
a.   The amount paid;
b.  The name of the creditor or creditors; and
c.   A statement that the amount received is in final settlement of the debt or
debts owing.
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SEC. 14. Rcq#es£/orAcco"„f±.#g. - A debt collector must provide the debtor on
request, with a complete accounting of all the details of the debt and, if such an
accounting is not in the possession of the debt collector, the agency must request that
thecreditorprovideit.If,within30daysafterreceivingarequestforanaccountingof
a debt collector, the creditor has not provided a complete accounting of the debt, the
debt collector must:
a.   Inform the debtor in writing that it cannot provide the accounting and the
reasons for it, and
b.   Cease all  collection activity  for  that account and  not resume collection
activity until the accounting is provided.
A debtor may request a complete accounting only once every six (6) months,
unless the debt collector fails to provide the complete accounting as requested.
SEC.15.Adi#I.„..sfrolf±.ztePenfl[Zfl.cs.-TheSecuritiesandExchangeCommission
and the Bangko Sentral ng Pihipinas shall issue their respective rules and regulations
for  the  implementation  of the  provisions  of this  Act  and  for  the  imposition  of
reasonable administrative penalties on different violations thereof.
SEC. +6. Civil Lichtlity. -
a.   Aowo##f a/Dor„ages. - Any debt conector who violates any of the provisions
in this Act with respect to any person shall be liable to such person in an
amount equal to the sum of:
1.   Any actual damage sustained by such person as a result of the violation;
2.   In the case of any action by an individual, such additional damages as
the   court   may   allow,   but   not   exceeding   Fifty   Thousand   Pesos
(P50,000.00); or
3.   In the case of a class action, such amount for each named plaintiff as
could be recovered under paragraph (a), and such amount as the Court
may allow for all other class members, without regard to a minimum
individual  recovery,  not  to  exceed  Cine  Hundred  Thousand  Pesos
(P100,000.00) or one (1) percent of the net worth of the debt collector,
whichever is lesser.
b.   F¢cfors fo be Considered dy the Co#rf. - In determining the amount of liability
in any action under paragraph (a) of this section, the court shall consider,
among other relevant factors:
1.   In any individual action under paragraph (a) (ii) of this section, the
frequency and persistence of non{ompliance by the debt collector, the
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nature   of  such  non{ompliance,   and   the   extent  to   which  such
noncompliance was intentional, or
2.   In any class action under paragraph (a) (iif) of this section, the frequency
and persistence of non{ompliance by the debt collector, the nature of
such non{ompliance, the resources of the debt collector, the number of
persons adversely affected, and the extent to which the debt collector's
nomcompliance was intentional.
c.   J7!ft#tf. -A collector may not be held hiable in any action brought under this
section if the debt collector shows by a preponderance of evidence that the
violation was not intentional and resulted from a bona fide error in good
faith.
d.  /i/risd!.cfI.on. -An action to enforce any liability created by this Act may be
broughtinanyappropriafecourtusingasjurisdictionalbasistheamountof
debt involved.
SEC. 17. Squfl"[bI.JI.fry Cha#se. - If any provision of this Act is declared invalid
or uncoustitutional, the provisions not affected thereby sham remain in full force and
effect.
SEC. 18. Rquefl[J!.ng CZ¢usc. - All laws, presidential decrees, executive orders,
presidential proclamations,  rules  and  regulations  or  parts  thereof contrary  to or
inconsistent with this Act are hereby repealed or modified accordingly.
SEC.  19.  £#ecfi.zJ..fry.  -  This  Act  shall  take  effect  fifteen  (15)  days  after  its
publication in  the Official Gazette or at least two  (2)  nationd papers  of general
circulation.
Approved,
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