-.' 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
) 
) 
) 
.' 
Pirst Regular Session 
SEN1910 
S. No. ___ -'-
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
'13 
NOV 11 
I~ 9 :43 
Some tirne in 2006, Payong Karatid, a late night interactive talk ;how in ABS-CBN, 
featured financial problems. About 60% of the calls that the show received were mainly about 
credit card collection agents. Majority of the callers complained that these collection agents 
were very rude and disrespectful. Even for a measly credit in the sum of Two Thousand Five 
Hundred Pesos (P2,500), these agents reportedly went as far as calling six (6) times a day, some 
made even in the late hours. According to the callers, these collection agents did not even 
introduce themselves to the persons they were calling. Further, these collection agents, some of 
whom were allegedly lawyers, went so far as sending demand letters thrice a month and 
threatening the debtor with a criminal case even if the case was purely civil in nature. 
At present, although debtors can file a civil case for harassment or malicious prosecution 
against these unscrupulous individuals, they would still have to wait for a long time for their 
rights to be vindicated. 
This bill seeks to regulate collection agencies, and require collection agents to register 
and get a license and to file a bond before operating as such. The bond will answer for any claim 
against the collection agent or the collection agency.' 
• This bill was originally filed during the Thirteenth Congress, Second Regular Session. 
1 


1 
2 
3 
SIXTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
). 
First Regular Session 
) . 
'13 
NOV 11 
1\9 :43 
SENyE 
S. No. 
tJ.1 0 
Introduced by Senator Miriam Defensor Santiago 
. 
AN ACT 
CREATING A COLLECTION AGENCY REGULATORY BOARD 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. -
This Act shall be known as the "Collection Agency 
4 
Regulatory Board Act." 
5 
SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State to 
6 
maintain peace and order, and promote the general welfare by instituting regulatory mechanisms 
7 
in debt collections coursed through collection agencies. 
8 
SECTION 3. Definition of Terms. - For purposes of this Act, the term-
9 
(A) 
"Board" means the Collection Agency Regulatory Board created by this Act; 
10 
(B) 
"Business debt" means the obligation arising from a credit transaction between 
. 11 
business or commercial enterprises for goods or services used or to be used primarily in a 
12 
commercial or business enterprise and not for personal, family or household purposes; 
13 
(C) 
14 
15 
16 
17 
18 
19 
20 
"Collection agency" means any person who: 
(1) 
(2) 
(3) 
(4) 
Engages in any business, the purpose of which is the collection of any 
debts for creditors; 
Regularly collects or attempts to collect for creditors, directly or 
indirectly, debts owed or due or asserted to be owed or due another; 
Takes assignment of-debts for the purpose of collecting such debts; 
Directly or indirectly, solicits for collection debts owed or dne or asserted 
to be owed or due a creditor; 
1 


>, 
1 
2 
3 
4 
5 
6 
7 
8 
9 
(5) 
(6) 
Uses a fictitious name or any name other than their own name in the 
collection of their own accounts receivable; or 
Collects debts incurred in this country from debtors located in this country 
by means of intra-country communications, including telephone, mail or 
facsimile or any other electronic method, from the debt collector's location 
in the Philippines. 
(D) 
"Communication" means conveying information regarding a debt in written or 
oral form, directly or indirectly, to any person through any medium; 
(E) 
"Consumer" means any natural person obligated or allegedly obligated to pay any 
10 
debt; 
11 
(F) 
"Creditor" means any person who offers or extends credit creating a debt or to 
12 
13 
14 
15 
16 
17 
18 
whom a debt is owed, but "creditor" does not include: 
(G) 
(1) 
Any person or collection agency, to the extent that the person or agency" 
receives an assignment or transfer of a debt in default solely for the 
purpose of facilitating collection of the debt for another; or 
(2) 
Any person whose principal office is located outside the Philippines and 
who only maintains a branch or satellite office in the country. 
"Debt" means any obligation or alleged, obligation of a consumer to pay money 
19 
arising out of a transaction in which the money, propelty, insurance or services which are the 
20 
subject of the transaction are primarily for personal, family or household purposes, whether or 
21 
not the obligation has been reduced to judgment; . 
22 
23 
24 
25 
26 
27 
(H) 
"Debt collector" means any person employed or engaged by a collection agency 
to perform the collection of debts owed or due or asserted to be owed or due to another, 
including any owner or shareholder of the collection agency business who engages in the 
collection of debts; 
(I) 
"Location information" means a consumer's place of abode and his telephone 
number at that place or his place of employment; 
• 
2 
, 


'. 
I 
(J) 
"Revocation" means withdrawal or termination of the license and authority to 
2 
conduct a collection agency in this country, and disqualification to. renew the license," 
3 
permanently or for an indefinite period of time; 
4 
(K) 
"Collection agent" means any person employed or engaged by a collection 
5 
agency, including an owner or shareholder of the agency, who solicits or attempts to solicit 
6 
debts, accounts, notes or other evidence of indebtedness for collection by the person or any other 
7 
person; and 
8 
(L) 
"Suspension" means withdrawal or termination of the license and authority to 
9 
conduct a collection agency, and disqualification to renew the license, for a period not to exceed 
10 
one (l) year; 
11 
SECTION 4. Exceptions. - The term "collection agency" does not include: 
12 
(A) 
Any officer or employee of a creditor while collecting debts 'for and in the name 
13 
of the creditor; 
14 
15 
16 
17 
18 
(B) 
Any officer or employee of the Philippine Government, to the extent that 
collecting or attempting to collect a debt is in the performance of his official duties; 
(C) 
Any person while serving or attempting to serve legal process on another person 
in connection with the judicial enforcement of any debt; 
(D) 
Any person whose principal business" is the making of loans or the servicing of 
19 
debt, and who acts as a loan correspondent, seller or servicing agent for the owner or holder of a 
20 
debt which is secured by a mortgage on real property, whether or not the debt is also secured by 
21 
an interest in personal property; 
22 
(E) 
Any person whose collection activities are carried on in the true name of the 
23 
creditor, and are confined to the operation pf a business other than a collection agency, including 
24 
but not limited to banks, trust companies, savings and loan associations, abstract companies 
25 
doing an escrow business, insurance companies, credit unions or loan or finance companies; 
26 
27 
(F) 
Any person engaged solely in the collection of one (l) or more business debts; or 
(G) 
Any lawyer acting in an attorney-client relationship with the creditor, and who 
28 
conducts the collection in the true name of the, client, provided, that any lawyer or law firm 
3 


I 
contracting with banks or credit card corporations principally for debt collection is still 
2 
considered as a collection agency in this Act. 
3 
SECTION S. Licenses Required. - No person shall conduct a collection agency or act as 
4 
a debt collector or collection agent without first having obtained a license as provided in this Act, 
S 
except that a debt collector or collection agent acting in the course of his employment for a 
6 
licensed collection agency is not required to have an individual license. 
7 
SECTION 6. Collection Agency Board Created; Membership; Appointment; Term; 
8 
Qualifications; Chairperson. -
9 
(A) 
The Collection Agency Board is hereby created. The Board shall consist of three 
10 
(3) members appointed by the President of the Philippines. One (1) member shall be a lawyer 
II 
nominated by the Integrated Bar of the Philippines. One (1) shaH be an officer, partner, owner or 
12 
resident manager of a banking or financial institution, nominated by the Bangko Sentral ng 
13 
Pilipinas. One (I) shall be a member of the public at large who is neither a lawyer nor affiliated 
14 
with a collection agency, but who is or has been a user of credit or collection services and 
IS 
nominated by any major consumer group. Members of the Board shall be appointed for a term 
16 
off our (4) years. Members of the Board shall serye until their successors are duly appointed and 
17 
qualified. 
18 
(B) 
No person shall be appointed as a member of the Board who has not been a bona 
19 
fide resident of the Philippines for at least five (S) years immediately 'Prior to his appointment. 
, 
20 
The lawyer and the officer, partner, owner or resident manager of a banking or financial 
21 
institution shall have been engaged in the banking or financial business within the Philippines for 
22 
a period of five (S) years immediately prior to appointment. The member of the public at large 
23 
shall have at least five (S) years experience as a user of credit or collection services. 
24 
(C) 
Upon the death, resignation, or reJ?oval of any member of the Board, the 
2S 
President shall appoint a member to serve the remaining unexpired term. 
26 
(D) 
Members of the Board shall elect one (1) of their members Chairperson to serve 
27 
for a term of two (2) years. 
4 


1 
SECTION 7. Collection Agency Board; Compensation, Per Diem and Travel Expense. -
2 
All members of the Collection Agency Board shall be paid salary, pel' diem, and travel expenses 
3 
in the same manner and amount as members of the Monetary Board when attending any regular 
4 
01' called meeting of the board. Salaries, per diem, and travel expenses for all Board members 
5 
shall be paid solely from the account containing the license fees established and payable under 
6 
this Act. 
7 
SECTION 8. Powers and Duties o/the Collection Agency Board. -
8 
(A) 
The Board shall assist and advise the Chairperson, who shall have charge of the 
9 
administration of this Act. All applications for licenses under this Act shat! be referred by the 
10 
Chairperson to the Board for consideration. The Board shall investigate the qualifications of the 
II 
applicant. If the Board finds the applicant fails to meet the required qualifications, the Board 
12 
shall reject the application; otherwise, the application shall be approved and a license issued on 
13 
payment of license fees and filing of a bond as required by this Act. 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
(B) 
The Board shall refuse to issue or renew a license: 
(1) 
If an applicant or licensee is not authorized to do business m the 
Philippines; 
(2) 
(3) 
If the licensee does not have an established office in the Philippines with a 
bona fide resident of the Philippines as a resident manager, or in the case 
of an applicant, the application does not disclose the proposed office 
location in the Philippines and the name of the proposed resident manager; 
If an applicant, or an owner, officer, director, partner, or resident manager 
of an applicant or licensee: 
(a) 
(b) 
Knowingly made a false statement of a material fact in any 
application for a collection agency license or renewal thereof, or in 
any documentation provided to support the application or renewal; 
Has had a license to conduct a collection agency denied, not 
renewed, suspended Or revoked for any reason other than the 
5 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
(c) 
(d) 
(e) 
(f) 
nonpayment of licensing fees or failure to meet bonding 
requirements; 
Has been convicted in any court of a felony involving forgery, 
malversation, obtainillg money under false pretenses, theft, 
extortion, fraud or con'spiracy to commit fraud and other similar 
offenses; 
Has had a judgment entered against him in any civil action 
involving forgery, malversation, obtaining money under false 
pretenses, theft, extortion, fraud or conspiracy to commit fraud and 
other similar offenses; 
Has failed to payor satisfy any judgment debt or penalty imposed 
by any court; or 
Has knowingly failed to comply with or violated any provision of 
this Act or the rules and regulations of the Board adopted pursuant 
to this Act. 
16 
SECTION 9. Authority to Make Rules and Regulations; Violations; Penalties. - The 
17 
Board shall make reasonable rules and ;fegulations for the administration ,of this Act, and for 
18 
prescribing acceptable professional standards of conduct of licensees within six (6) months from 
19 
the time that the Board is constituted with special emphasis on rules against debtor harassment. 
20 
Any violation of the rules and regulations of the board shall be grounds for the imposition of a 
21 
civil penalty not to exceed Fifty Thousand Pesos (I!50,000.00); or suspension, revocation, or 
22 
refusal to renew any license issued under this Act; or any combination thereof. 
23 
SECTION 10. Application for License; Qualifications; Financial Statement. -
24 
(A) 
A person desiring to conduct a collection agency business shall apply in writing 
25 
on forms approved by the Board. The application shall be signed and verified by the applicant 
26 
and filed in the office of the Board. The application shall state: 
27 
(1) 
The name and place of residence of the person making the application; 
6 
• 


1 
2 
3 
4 
5 
6 
7 
8 
9 
(B) 
(2) 
(3) 
(4) 
(5) 
(6) 
Whether the business is organized as a corporation, partnership or sole 
proprietorship; 
The name or names under which the business will be conducted; 
The street address of the office where the business will be conducted; 
The name of the person who will be the resident manager of the office; 
Other information as the Board may require to determine the qualifications 
of the applicant and the resident manager to be licensed to conduct a 
, 
' 
collection agency business, 
The application shall be accompanied by a financial statement of the applicant, 
10 
showing the applicant to be financially sound, 
11 
(C) 
All applicants shall have an established office in the Philippines with a bona fide 
12 
resident of the Philippines as a resident manager of the office, All resident managers shall pass 
13 
an examination as prescribed by the Board to determine the fitness of the resident manager to 
14 
conduct a collection agency business, 
15 
(D) 
The Board may collect an examination fee not to exceed Five Thousand Pesos 
16 
(PS,OOO,OO) for each examination given, The Board shall establish by rule the amount and' 
17 
method of payment of the examination fee, All fees collected shall be credited to the account 
18 
and used as provided by this Act. 
19 
SECTION 11, Bond Required for License; Terms, Conditions and Execution; Amount; 
20 
Notice to Surety; New Bond. -
21 
(A) 
The applicant shall be notified when the application is approved. Within twenty 
22 
(20) days after notification, the applicant shall file and thereafter maintain a deposit with the 
23 
government treasurer or a bond as required by this Act. The license shall be issued upon 
24 
approval of the bond by the Board, The bond shall be issued by a surety company licensed and 
25 
authorized to do business in the Philippines, in the sum of Five Hundred Thousand Pesos 
26 
(J!SOO,OOO.OO) and shall go to the Philippines and to any party who ,may be a claimant. The bond 
27 
shall be executed and acknowledged by the applicant as principal. The applicant may satisfy the 
7 


I 
2 
3 
4 
5 
6 
7 
8 
9 
bond requirement of this section by depositing with the government treasurer Five Hundred 
Thousand Pesos (J1500,000.00) cash. 
(B) 
The bond shall be conditioned that the principal, as a licensee under this Act, shall 
pay and turn over to or for the use of any claimant from whom any debt is taken or received for 
collection, the proceeds of such collection less the charges fof collection iii accordance with the' 
terms of the agreement made between the principal and the claimant. 
(C) 
The bond shall cover all debts placed with the licensee for collection. Any claim 
under the bond shall be presented to the Board. The Board shall promptly notify the surety. If 
the surety fails to payor settle the claim within thirty (30) days after notice from the Board, the 
10 
claimant may bring suit on the bond in the claimant's own name. The aggregate liability of the 
c, 
11 
surety for any and all claims which may arise under the bond shall in no event exceed the amount 
12 
of the penalty of the bond. 
13 
(D) 
A licensee may file a new bond with the board at any time. A surety company 
14 
may file with the board notice of its withdrawal as surety of any licensee. Upon the filing of a 
15 
new bond or a notice of withdrawal, the liability of the former surety for all future acts of the 
16 
licensee shall terminate except as provided in this Act. 
17 
(E) 
Upon filing notice with the Board by any surety company of its withdrawal as the 
18 
surety of any licensee, or upon the revocation by the insurance commissioner of the authority of 
19 
any surety company to transact business in this state, the Board shall immediately give notice to 
20 
the licensee of the withdrawal or revocation. Within thirty (30) days from the date of notification 
21 
the licensee shall file a new bond with the board. If a licensee fails to file a new bond 
22 
satisfactory to the Board within the time allowed, the right of the licensee to conduct a collection 
23 
agency shall terminate. 
24 
SECTION 12. Bond of Agency; Limitation of Actions. - No action shall be brought upon 
25 
any bond required to be given under this act after the expiration of two (2) years from the 
26 
revocation or expiration of the license is'sued to the licensee and principal under the bond. 
27 
Except for any action commenced upon the bond prior to expiration of the two (2) year period, 
28 
all liability of the surety upon the bond shall cease on thf expiration date. 
8 


" 
I 
2 
SECTION 13. License; Renewals; Fee; License Nontransferable; Display. -
(A) 
Fees for the licensing of collection agencies shall be set by the Board. All fees 
3 
shall be established in accordance with this Act. Each office or place of business shall be 
4 
licensed separately. 
5 
(B) 
Each collection agency license expires one (1) year .from the date of issuance. A 
6 
collection agency license is not transferable. Each collection agency license shall be displayed in 
7 
a conspicuous place in licensee's place of business. 
8 
SECTION 14. Disposition of Fees. - All fees and money received and collected by the 
9 
Board shall be deposited with the government treasurer, who shall credit the money to a separate 
10 
account. All monies paid into the government treasury and credited to the account are 
II 
appropriated to the use of the collection agency board for the payment of all necessary expenses 
12 
incurred in administering this Act, including the payment of per diem, sala~y, and travel expense. 
13 
to members of the Board. 
14 
SECTION 15. Action upon ComplaInts; Records of Proceedings.-
15 
(A) 
Any interested person may file a verified written complaint charging any 
16 
collection agency licensee with the violation of this A~t or the rules adopted by the Board, or 
17 
with conduct that shows the licensee is unworthy to continue to operate a collection agency. The 
18 
complaint shall be filed with the Board, which shall investigate the complaint if necessary or 
19 
refer the complaint to appropriate staff for investigation and refelTal back to the Board for proper 
20 
disposition. 
21 
(B) 
The Board, on its own motion, may make, or cause to be made, an investigation 
22 
of the conduct of any licensee. As a part' of an investigation, the Board' may' audit the books and 
23 
accounts of a licensee. The audit may be conducted by an auditor from the government or by a 
24 
certified public accountant contracted by the Board. 
25 
(C) 
For the purpose of an investigation or for hearing a complaint, the Board may 
26 
hold a hearing in accordance with the Rules of Court. The hearing may be conducted by a 
27 
hearing examiner. The Chairperson may subpoena witnesses and books, records, and documents 
9 


'" 
1 
relative to the inquiry, Witnesses may be required (0 testify under oath, If the Board finds the 
2 
licensee has violated the provisions of this Act or the rules promulgate.d by the Board, the . 
3 
licensee may be sanctioned by a civil penalty not to exceed Fifty Thousand Pesos (P,50,000,00); 
4 
or refusal to renew, suspension, or revocation of license; or any combination thereof. 
5 
SECTION 16, Records of License and Bond Actions; Confidentiality,-
6 
(A) 
The Board shall keep a record of all applications for licenses and all bonds filed, 
7 
The record shall state whether Of not a license has been issued under the application and bond, If 
8 
a bond is withdrawn, replaced or revoked, or the license to operate a collection agency is 
9 
temporarily terminated because of the failure of the surety on the bond, the facts shall be 
10 
reflected in the record with the date of filing any order of suspension, revocation or 
11 
reinstatement The application form and bond, and records relating thereto shall be open for 
12 
inspection as a public record in the office' of the Board, 
13 
(B) 
Financial statements, credit reports and other financial information required by 
14 
the board in support of a license application or in an investigation, and unresolved complaints or 
15 
complaints found to be without merit are confidential and are not subject to inspection as a 
16 
public record. 
17 
SECTION 17, Furnishing or Advertising Legal Services; Scope of Authority to Solicit, 
18 
Acquire or Collect Claims. - No licensee, under the terms of this Act, shall render legal services 
19 
or advertise directly or indirectly, that it will render legal services, but any licensee can solicit 
20 
claims exclusively for the purpose of collection, take assignments thereof for the purpose of 
21 
collection by suit or otherwise, and for such purpose, shall be deemed to be the real party in 
22 
interest in any suit brought upon such assigned claim. 
23 
SECTION 18, Prohibited Acts; Penalty for Violations; Injunctive Relief. -
, 
24 
(A) 
In addition to other penalties, any person who carries on the business of a 
25 
collection agency without first having obtained a license, or who carries on a collection agency 
26 
business after the termination, suspension, revocation or expiration of a license, shall, upon 
10 


· ' 
1 
conviction be fined not less than Fifty Thousand Pesos (I!50,000.00) nor more than Two 
2 
Hundred Thousand Pesos (i!200,OOO.OO), or imprisonment for not more than six (6) months, or 
3 
both. 
4 
(B) 
When it appears to the Board that any person is violating any of the provisions of 
5 
this Act, the Board may, in its own name, bring an action in a court of competent jurisdiction for 
6 
an injunction, and courts may enjoin any person from violating this Act regardless of whether 
7 
proceedings have been or may be instituted before the Board or whether proceedings have been 
8 
or may be instituted under this Act 
9 
SECTION 19. Separability Clause. - If any provision or part hereof is held invalid or 
10 
unconstitutional, the remainder of the law or the provision not otherwise affected shall remain 
11 
valid and subsisting. 
12 
SECTION 20. Repealing Clause. - Any law, presidential decree or issuance, executive 
13 
order, letter of instruction, administrative order, rule, or regulation contrary to or inconsistent 
14 
with the provisions of this Act is hereby repealed, modified, or amended accordingly. 
15 
SECTION 21. Effectivity Clause. - This Act. shan take effect fifteen· (15) days after its 
16 
publication in at least two (2) newspapers of general circulation. 
Approved, 
11