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Rewhli of be Philipines
HOUSE OF REPRESENTATIVES

Quexew City

EIGHTEENTH CONGRESS
‘Second Regular Session

HOUSE BILL No8383

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
PROVIDING FOR FAIR DEBT COLLECTION PRACTICES AND REQUIRING DEBT
COLLECTORS TO OBSERVE SUCH PRACTICES

There is abundant evidence of the widespread use of abusive, deceptive, and unfair debt
collection practices by many creditors and debt collectors. Abusive debt collection
practices have contributed to a number of unwarranted personal bankruptcies, to marital
instability, to loss of jobs, and to invasions of individual privacy. Existing laws are
inadequate to protect borrowers. In fact, the borrowers’ only recourse is Article 287 of the
Penal Code.

The purpose of this bill is to eliminate abusive debt collection practices by creditors and
debt collectors for the following reasons: First, means, other than misrepresentation or
other abusive debt collection practices are available for the effective collection of debts;
‘second, to ensure that those creditors and debt collectors who refrain from using abusive
debt collection practices are not competitively disadvantage; and third, to provide an
adequate legal remedy to consumers against abusive debt collection practices.

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Luis ND All ILLAFUERTE, JR.


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Reblc of de Philesines
HOUSE OF REPRESENTATIVES

Quesew City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO. 8399

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
PROVIDING FOR FAIR DEBT COLLECTION PRACTICES AND REQUIRING DEBT
COLLECTORS TO OBSERVE SUCH PRACTICES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. — This Act shall be known as the “Fair Debt Collection Practices
Act.”

SECTION 2. Declaration of Policy. - It is hereby declared a State policy to eliminate
abusive debt collection practices and to protect consumers in general against debt
collection abuses.

SECTION 3. Definition of Terms. — For the purpose of this Act, the term:
(A) “Communication” means the conveying of information regarding a debt directly or
indirectly to any person through any medium;

“Consumer” means any natural person obligated or allegedly obligated to pay any
debt. The term includes the consumer's spouse, parent if the consumer is a minor,
guardian, executor, or administrator;

“Creditor” means any person who offers or extends credit creating a debt to whom a
debt is owed, but such term does not include any person to the extent that he
receives an assignment or transfer of a debt in default solely for the purpose of
facilitating collection of such debt for another;

“Debt” means any obligation or alleged obligation of a consumer to pay money
arising out of a transaction in which the money, property, insurance, or services
which are the subject of the transaction are primarily for personal, family, or
household purposes, whether or not such obligation has been reduced to judgment;

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(E) “Debt collector means any person who is engaged in business the principal purpose
of which is the collection of any debt, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be owed or due him or to
another, including any creditor who collects his own debts.

The term does not include —

(1) Any officer or employee of a creditor while, in the name of the creditor,
collecting debts for such creditor;

(2) Any person while acting as a debt collector for another person, both of whom
are related by common ownership or affiliated by corporate control, if the
person acting as a debt collector does so only for persons to whom it is so
related or affiliated and if the principal business of such person is not the
collection of debts;

(3) 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;

(4) Any person while serving or attempting to serve legal process on any other

person in connection with the judicial enforcement of any debt;

Any attomney-at-law collecting a debt as attorney on behalf of and in the name of

aclient; and

(6) Any person collecting or attempting to collect any debt owed or due or asserted
to be owed or due another to the extent such activity —

(a) Is incidental to a bona fide fiduciary obligation or a bona fide escrow
arrangement;

(b) Concems a debt which was originated by such person;

(c) Concerns a debt which was not in default at the time it was obtained by

such person; or

Concerns a debt obtained by such person as a secured party in

commercial credit transaction involving the creditor.

The term location information means a consumer's place of abode and his telephone

number, if any, at such place, or his place of employment.

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SECTION 4. Acquisition of Location Information. - Any debt collector communicating
with any person other than the consumer for the purpose of acquiring information about
the consumer shall:

(A) Identify himself, state that he is conforming or correcting location information
concerning the consumer, and, if expressly requested, identify his employer;

(B) Not state such consumer owes any debt;

(C) Not communicate with any such person more than once unless requested to do so
by such person or unless the debt collector reasonably believes that the earlier
response of such person is erroneous or incomplete and that such person now has
correct or complete location information.

(D) Not use any language or symbol on any language or in the contents of any
communication effected by the mails or telegram that indicates that the debt
collector is in the debt collection business or that the communication relates to the
collection of debt; and

(E) After the debt collector knows the consumer is represented by an attorney with


regard to the subject debt and has knowledge of, or can readily ascertain, such
attorney's name and address, not communicate with any person other than that
attorney, unless the attorney fails to respond within a reasonable period of time to
communicate from the debt collector.

SECTION 5. Communication in Collection with Debt Collection. —

(A) Communication with Consumer. — Without the prior consent of the consumer given
directly to the debt collector or the express permission of a court of competent jurisdiction,
a debt collector may not communicate with a consumer in connection with the collection
of any debt -

(1) At any unusual time or place or a time or place known or which should be
known to be inconvenient to the consumer. In the absence of knowledge of
circumstances to the contrary, a debt collector shall assume that the convenient
time for communicating with a consumer is after 8 o clock a.m. and before 9
o'clock p.m., local time at the consumer's location, on any day of the week
including Saturdays and Sundays and even holidays:

If the debt collector knows the consumer is represented by an attorney with
respect to such debt and has knowledge of, or can readily ascertain, such
attorney's name and address, unless the attorney fails to respond within a
reasonable period of time to a communication from the debt collector or unless
the attorney consents to direct communication with the consumer; or
(3) At the consumer's place of employment if the debt collector knows or has
reason to know that the consumer's employer prohibits the consumer from
receiving such communication.
(B) Communication with Third Parties. - Except as provided in section 4 of this Act,
without the prior consent of the consumer given directly to the debt collector, or the
express permission of a court of competent jurisdiction, or as reasonably necessary to
effectuate post judgment judicial remedy, a debt collector may not communicate, in
communication with the collection of any debt, with the collection of any debt, with any
person other than the consumer or his attorney.
(C) Ceasing Communication. - If a consumer notifies a debt collector in writing that the
consumer refuses to pay a debt or that the consumer wishes the debt collector to cease
further communication with the consumer, the debt collector shall not communicate
further with the consumer with respect to such debt, except -
(1) To advise the consumer that the debt collectors further efforts are being
terminated;
(2) To notify the consumer that the debt collector or creditor may invoke specified
remedies which are ordinarily invoked by such debt collector or creditor; or
(3) Where applicable, to notify the consumer that the debt collector or creditor
intends to invoke the specified remedy.
If such notice from the consumer is made by mail, notification shall be complete upon receipt.

(2)

SECTION 6. Harassment or Abuse. — A debt collector may not engage in any conduct
the natural consequence of which is to harass, oppress, or abuse any person in
connection with the collection of a debt. Without limiting the general application of the
foregoing and without prejudice to the application of pertinent provisions of the Revised


Penal Code and other laws, the following conduct is 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 any reason;

(B) The use of obscene or profane language or language the natural consequence of
which is to abuse the hearer or reader;

(C) The publication of a list of consumers who allegedly refuse to pay debts; or

(D) The advertisement for sale of any debt to coerce payment of the debt.

SECTION 7. False or Misleading Representations. — A debt collector may not use any
false, deceptive, or misleading representation or means in connection with the collection
of any debt. Without limiting the general application of the foregoing and without
prejudice to the application of pertinent provisions of the Penal Code and other laws, the
following conduct is a violation of this section:

(A) The unauthorized use of any badge, uniform, or facsimile thereof.

(B) The false representation of --

(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 an attorney.

(D) The representation or implication that non-payment of any debt will result in arrest or
imprisonment of any person or the seizure, garnishment, 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 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 consumer to:

(1) Lose any claim or defense to payment of the debt; or

(2) Become subject to any practice prohibited by this Act.

The false representation or implication that the consumer committed any crime or

other conduct in order to disgrace the consumer.

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.

()) The use or distribution of any written communication which simulates or is falsely
represented to be a document authorized, issued, or approved by any court, official,
or agency of 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 conceming a consumer.

Except as otherwise provided for communications, to acquire location information

under section 4 of this Act, the failure to disclose clearly in all communications made

to collect a debt or to obtain information about a consumer, that the debt collector is
attempting to collect a debt and that any information obtained will be used for that
purpose.

(L) The false representation or implication that accounts have been tumed over to

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innocent purchasers for value.
(M) The use of any business, company, or organization name other that the true name
of the debt collector's business, company, or organization.

SECTION 8. Unfair Practices. - A debt collector may not use unfair or unconscionable

means to collect or attempt to collect any debt. Without limiting the general application

of the foregoing and without prejudice to the provisions of the Civil Code, Penal Code,

and other laws, the following conduct is 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 or permitted by law;

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 instrument not more than ten

nor less than three business days prior to such deposit;

The solicitation by a debt collector of any postdated check or other postdated

payment instrument for the purpose of threatening or instituting criminal prosecution;

(D) Depositing of 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 communications by concealment of

the true purpose of the communication, including, but not limited to, collect

telephone calls and telegram fees;

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 intention to take possession of the property; or

(3) The property is exempt by law from such dispossession or disablement.

Using any language or symbol, other than the debt collector’s address, on any

envelope when communicating with a consumer 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.

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SECTION 9. Validation of Debts; Notice of Debt; Contents. — Within five days after the

initial communication with a consumer in connection with the collection of any debt, a

debt collector shall, unless the following information is contained in the initial

communication or the consumer has paid the debt, send the consumer a written notice
containing -

(A) The amount of the debt;

(B) The name of the creditor to whom the debt is owed;

(C) A statement that unless the consumer, within thirty days after the receipt of the
notice, disputes the validity of the debt, or any portion thereof, the debt will be
assumed to be valid by the debt collector

(D) A statement that if the consumer notifies the debt collector in writing within the
thirty-day period that the debt, or any portion thereof, is disputed the debt collector
will obtain verification of the debt or a copy of a judgment against the consumer and


a copy of such verification or judgment will be mailed to the consumer by the debt
collector; and
(E) A statement that, upon the consumer's written request within the thirty-day period,
the debt collector will provide the consumer with the name and address of the
original creditor, if different from the current creditor.
If the consumer notifies the debt collector in writing, within the thirty (30) day period
described above, that the debt or any portion thereof is disputed, or that the consumer
requests the name and address of the original creditor, the debt collector shall cease
collection of the debt, or any disputed portion thereof, until the debt collector obtains
verification of the debt or a copy of a judgment, or the name and address of the original
creditor, is mailed to the consumer by the debt collector.
The failure of a consumer to dispute the validity of a debt under this section may not be
construed by any court as an admission of liability by the consumer.

SECTION 10. Multiple Debts. - If any consumer owes multiple debts and makes any
single payment to any debt collector with respect to such debts, such debt collector may
not apply such payment to any debt which is disputed by the consumer and, where
applicable, shall apply such payment in accordance with the consumer's directions.

SECTION 11. Venue of Legal Actions by Debt Collectors. - Any debt collector who

brings any legal action on a debt against any consumer shall -—

(A) In the case of an action to enforce an interest in real property securing the
consumer's obligation, bring such action only in the place where the property or any
part thereof lies;

(B) In the case of an action not described in paragraph (A), bring such action only in the
place of the execution of the contract sued upon; or in which such consumer resides
at the commencement of the action.

SECTION 12. Furnishing Deceptive Forms. - It is unlawful to design, compile, and
furnish any form knowing that such form would be used to create the false belief in a
consumer that a person other than the creditor of such consumer is participating in the
collection of or in an attempt to collect such consumer allegedly owes such creditor,
when in fact such person is not so participating.

Any person who violates this section shall be liable to the same extent and in the same
manner as a debt collector is liable under Section 13 of this Act for failure to comply with
a provision of this Act.

SECTION 13. Civil Liability. —
(A) Amount of Damages. — Except as otherwise provided by this section, any debt
collector who fails to comply with any provision of this Act with respect to any person is
liable to such person in an amount equal to the sum of —

(1) Any actual damage sustained by such person as a result of such failure;

(2) In the case of any action by an individual, such additional damages as the court

may allow, but not exceeding Twenty Thousand Pesos (P20,000.00);
(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 the lesser of Fifty Thousand Pesos (P50,000.00) or one (1) per centum
of the net worth of the debt collector; and
(B) Factors Considered by the Court. - 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)(2) of this section, the frequency and
persistence of non-compliance by the debt collector, the nature of such non-compliance,
and the extent to which such non-compliance was intentional; or

(2) In any class action under paragraph (A)(2) of this section, the frequency and
persistence of non-compliance by the debt collector, the nature of such non-compliance,
the resources of the debt collector, the number of persons adversely affected, and the
extent to which the debt collector's non-compliance was intentional.

(C) Intent. - A debt collector may not be held liable 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 notwithstanding the maintenance of
procedures reasonably adopted to avoid any such error.

(0) Jurisdiction. - An action to enforce any liability created by this Act may be brought in
any appropriate court using as jurisdictional basis the amount of debt involved.

SECTION 14. Separability Clause. - If any provision or part hereof, is held invalid or
unconstitutional, the reminder of the law of the provision not otherwise affected shall
remain valid and subsisting.

SECTION 15. Repealing Clause. — Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule or regulation contrary to, or
inconsistent with, the provisions of this Act is hereby repealed, modified or amended
accordingly.

SECTION 16. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
Publication in at least two (2) newspaper of general circulation.

Approved,