NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
)
i\l]V 26 /'lO :26
SENATE
S. B. No. 2882
Introduced by Senator Robinhood Padilla
AN ACT
PROHIBITING UNFAIR DEBT COLLECTION PRACTICES, PROVIDING 
PENALTIES THEREFOR AND FOR OTHER PURPOSES
Over the years, the Securities and Exchange Commission (SEC), the National 
Data Privacy Commission and law enforcement agencies have received numerous 
complaints against Financing Companies (FCs) and Lending Companies (LCs) 
harassing, shaming, and employing abusive, unethical, and unfair means upon their 
customers/clients to force the settlement of debts. Likewise, there has been a 
proliferation of misuse of customer/client personal information and the public 
disclosure of unpaid loans or balances.
In order to evade liability from said unethical practices, lending companies 
intentionally seek the services of third-party service providers (TPSPs) in order to raise 
their separate juridical personality as defense.
Republic Act No. 9474, otherwise known as the "Lending Company Regulation 
Act' and Republic Act No. 7394 otherwise known as the "Consumer Act' do not have 
enough protections against the said unethical collection practices.


This proposed measure declares it as a policy to regulate the collection 
practices of FCs and LCs to deter the use of means that are prejudicial to the interest 
of the public.
To put the said policy in perspective, prohibited acts in relation to collection of 
debts are hereby enumerated and punished. Likewise, FCs and LCs are obligated to 
disclose any third-party service provider/s whose services are engaged for purposes 
of debt collection. To avoid intentional evasion of liability, this measure imposes upon 
FCs and LCs the ultimate responsibility over the prohibited acts that may be committed 
by its outsourced TPSPs.
Considering this, the passage of this measure is earnestly sought.
RQBiNHOOlTPADILLA
/ Senator


NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
)
c.‘. I\!jv 26 .-.i-j
SENATE
S. B. No. 2882
Introduced by Senator Robinhood Padilla
AN ACT
PROHIBITING UNFAIR DEBT COLLECTION PRACTICES, PROVIDING 
PENALTIES THEREFOR AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
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Section 1. Short Tide. - This Act shall be known as the "Anti-Unfair Debt
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CoHection Practices Act."
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Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to
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regulate the collection practices of Financing Companies and Lending Companies to
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deter the use of means that are prejudicial to the interest of the public.
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Sec. 3. Definition of Terms. - As used in this Act, the term:
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a. Financing Companies (FCs) refers to corporations, except banks,
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investment houses, savings and loan associations, insurance companies,
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cooperatives, and other financial institutions organized or operating
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under other special laws, which are primarily organized for the purpose
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of extending credit facilities to consumers and to industrial, commercial,
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or agricultural enterprises, by direct lending or by discounting or
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factoring commercial papers or accounts receivables, or by buying and
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selling contracts, leases, chattel mortgages, or other evidences of


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indebtedness, or by financial leasing of movable as well as immovable 
property;
b. Lending Companies (LCs) refers to a corporation engaged in granting 
loans from its own capital funds or from funds sourced from not more 
than nineteen (19) persons. It shall not be deemed to include banking 
institutions, investment houses, savings and loan associations, financial 
companies, pawnshops, insurance companies, cooperatives and other 
credit institutions already regulated by law. The term shall be 
synonymous with lending investors; and
c. Third party service providers refers to any individual, or entity engaged 
in the business of providing debt collection services on behalf of 
Financing Companies and Lending Companies.
Sec. 4. Prohibited Acts - Financing companies, lending companies, and third- 
party service providers hired by them may resort to all reasonable and legally 
permissible means to collect amounts due to 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 unscrupulous and 
untoward acts. Without limiting the general application of the foregoing, the following 
conduct shall constitute unfair collection practices:
a. The use or threat of use of violence or other criminal means to harm the 
physical person, reputation, or property of any person;
b. The use of threats to take any action that cannot be legally taken;
c. The use of obscenities, insults, or profane language the natural consequence 
of which is to abuse the borrower and/or which amount to a criminal act or 
offense under applicable laws;
d. The use of social media or other online platforms to cause humiliation or 
indignity to the borrowers;


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e. Disclosure or publication of the names and other personal information of 
borrowers who allegedly refuse to pay debts, except as may be allowed under 
Section 4 hereof;
f. Communicating or threatening to communicate to any person loan information, 
which is known or which should be known, to be false, including the failure to 
communicate that the debt is being disputed, except as may be allowed under 
Section 4 hereof;
g. The use of any false representation or deceptive means to collect or attempt 
to collect any debt or to obtain information concerning the borrower; and
h. Making contact at unreasonable or inconvenient hours (from 6:00AM or after 
7:00pm) unless the borrower has given express consent the loan agreement 
that the said times are the only reasonable or convenient opportunities for 
contact;
Notwithstanding the borrower's consent, contacting the persons relatives, 
colleagues, or acquaintances other than those named as guarantors, surety, or co­
makers shall also constitute unfair debt collection practice.
Sec. 5. Confidentiality of Information. - For purposes of collection, FCs and LCs 
shall keep strictly confidential the data on the borrower, except under the following 
circumstances:
a. Disclosure of information with the written or recorded consent of the borrower;
b. Release, submission or exchange of customer information with other financial 
institutions, credit information bureaus lenders (potential or actual), their 
agents and/or representatives;
c. Upon orders of a court of competent jurisdiction or any government office or 
agency authorized by law;
d. Disclosure to collection agencies, counsels and other agents of the FCs and LCs 
to enforce the latter's rights against the borrower;
e. Disclosure to third party service providers solely for the purpose of insuring the 
FCs and LCs in the administration of its lending or financing business; and


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f. Disclosure to third parties such as insurance companies, solely for the purpose
of insuring the FCs and LCs from borrower default or other credit loss, and the
borrower from fraud or unauthorized charges.
Sec. 6. Outsourcing of Collection - FCs and LCs may outsource the conduct of 
collection to a TPSP which shall be regarded as agent of the FCs and LCs. The ultimate 
responsibility for collection practices and compliance with this Act remain with the FCs 
and LCs.
Sec. 7. Disclosure of TPSPs. - Within fifteen (15) days from the engagement of 
TPSPs, FCs and LCs shall submit to the Securities and Exchange Commission (SEC) 
and Bangko Sentral ng Pilipinas and cause the online publication on their official 
website and social media page/s the following information;
a. Name of the Third-Party Service Provider/s;
b. Business Registration of the TPSP or any proof of registration, if 
applicable;
c. Name of the President, or Compliance Officer, or any duly authorized 
representative, and his/her official email address; and
d. Registered mobile phone numbers used by the TPSP and its Agents used 
in debt collection.
An updated disclosure and online publication thereof shall be made within ten 
(10) days immediately following any changes or amendments to any of the above- 
mentioned details.
Sec. 8. Handling of Collection Accounts and Customer Service. - FCs and LCs 
shall adopt policies and procedures to require personnel handling the collection of 
accounts, whether these are in-house collectors or TPSPs, to disclose his/her full name 
or true identity to the borrower.
FCs and LCs shall also establish a Customer Service Department or Unit or 
designate personnel who shall be responsible for promptly addressing complaints.


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questions and concerns of borrowers. The president, chief executive officer, and/or 
compliance officer of PCs and LCs shall submit to the SEC, within thirty (30) days from 
the effectivity of this Law, a sworn certification stating the company's compliance with 
this provision.
Sec. 9. Penalties. - The commission of any of the prohibited acts mentioned in 
Section 3 hereof shall be punishable with the following:
a. First Offense - fine of Fifty Thousand Pesos (P50,000.00);
b. Second Offense - fine of One Hundred Thousand Pesos (P100,000.00);
c. Third Offense - a fine not less than Five Hundred Thousand Pesos 
(P500,000.00) but not more than One Million Pesos (P1,000,000.00) and 
suspension of lending and financing activities for a period of ninety (90) 
days; and
d. Fourth Offense - revocation of Certificate of Authority to Operate as a 
Financing or Lending Company.
This is without prejudice to the filing of civil, criminal or administrative cases 
for the imposition of penalties under the Revised Penal Code, Republic Act No. 10175 
otherwise known as the "Cybercrime Prevention Act", Republic Act No. 7394 otherwise 
known as the " Consumer Act', Republic Act No. 10173 otherwise known as the ''Data 
Privacy Act of 2012" or any other special laws, that may be ordered by the courts 
or other government agencies.
Sec. 10. Applicability of the Corporation Code. - The penalties provided under 
this Act shall be without prejudice to the penalties that may be imposed by the SEC 
pursuant to Presidential Decree No. 902-A, Republic Act No. 11232, as amended, and 
all other relevant laws, rules and regulations being implemented by the SEC.
Sec. 11. Applicability to Online Lending Platforms or Applications. - All financing 
services conducted or facilitated through the use of online platforms or applications 
are likewise covered by these Act.


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Sec. 12. Separability Clause. — If any provision of this Act shall be held
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unconstitutional or invalid, the other provisions not otherwise affected shall remain in
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full force and effect.
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Sec. 13. Repeating Clause. — All laws, decrees, orders, issuances, and rules
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and regulations or parts thereof inconsistent with the provisions of this Act are hereby
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repealed or modified accordingly.
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Sec. 14. Effectivity Clause. — This Act shall take effect fifteen (15) days after
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its publication in the Official Gazette or in at least two (2) newspapers of general
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circulation.
Approved,