FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
Introduced by Senator Miriam Defensor Santiago\112'::~'I\lf:n gv 
EXPLANATORY NOTE 
Some time in 2006, in an episode of Payong Kapatid, a late night interactive talk show in 
ABS-CBN, the program decided to focus their episode mainly on financial problems. About 60% 
of the calls that the show received were as regards collection agents, mainly credit card 
collection agents. Majority of the callers are complaining that these collection agents are very 
rude and disrespectful that even for a measly credit in the sum of Two Thousand Five Hundred 
Pesos (P2,500), these agents would go as far as calling six (6) times a day, some made even in 
the late hours. According to the callers, these collection agents do not even introduce themselves 
to the person that they are calling. In addition to these calls, these collection agents, some of 
whom were allegedly lawyers, went so far as sending demand letters thrice a month and threaten 
. the debtor with a criminal case even if the case is purely civil in nature. At present, although the 
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. In 
addition, since the rude collection agents do not usually give their real name when they call, the 
debtors cannot anymore file a complaint since they do not know whom they are talking to. 
This bill seeks to create a regulation agency that would regulate collection agencies and 
also serve as a venue for consumers to air their grievances against debt collectors who will 
violate the code of professional conduct that will be created by the board. In addition, this bill 
would 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 ~gainst the collection agent or the collection agency.' 
• This bill was originally filed during the Thirteenth Congress, Second Regular Session. 
I 


FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENY~91 
S.No. ___ 
_ 
1,1 Jt 1 
Introduced by Senator Miriam Defensor SantiagoH"Cf.'IVF \l pv 
AN ACT 
1 
2 
CREATING A COLLECTION AGENCY REGULATORY BOARD 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
3 
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 
12 
in a commercial or business enterprise and not for personal, family or household 
13 
purposes; 
14 
(C) "Collection agency" means any person who: 
15 
(I) Engages in any business, the purpose of which is the collection of any debts 
16 
for creditors; 
17 
(2) Regularly collects or attempts to collect for creditors, directly or indirectly, 
18 
debts owed or due or asserted to be owed or due another; 
19 
(3) Takes assignment of debts for the purpose of collecting such debts; 
20 
(4) Directly or indirectly, solicits for collection debts owed or due or asserted to 
21 
be owed or due a creditor; 
1 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
II 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
(5) Uses a fictitious name or any name other than their own name in the collection 
of their own accounts receivable; or 
, (6) 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 
debt; 
(F) "Creditor" means any person who offers or extends credit creating a debt or to whom 
a debt is owed, but "creditor" does not include: 
(1) Any person or coJlection 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. 
(G) "Debt" means any obligation or aJleged 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 the obligation has been reduced to judgment; 
(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 bl,lsiness 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 


2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
(J) "Revocation" means withdrawal or tennination of the license and authority to conduct 
a collection agency in this country, and disqualification to renew the license, 
permanently or for an indefinite period of time; 
(K) "Collection Agent" means any person employed or engaged by a collection agency, 
including an owner or shareholder of the agency, who solicits or attempts to solicit 
debts, accounts, notes or othel' evidence of indebtedness for collection by the person 
or any other person; and 
(L) "Suspension" means withdrawal or tennination of the license and authority to 
conduct a collection agency, and disqualification to renew the license, for a period not 
to exceed one (1) year; 
SECTION 4. Exceptions. - The tenn "collection agency" does not include: 
(A) f-.ny officer or employee of a creditor while collecting debts for and in the name of 
the creditor; 
(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 debt, 
and who acts as a loan correspondent, seller or servicing agent for the owner or holder 
of a debt which is secured by a mortgage on real property, whether or not the debt is 
also secured by an interest in personal property; 
(E) Any person whose collection activities are carried on in the true name of the creditor, 
and are confined to the operation of a business other than a collection agency, 
including but not limited to banks, trust companies, savings and loan associations, 
abstract companies doing an escrow business, insurance companies, credit unions or 
loan or finance companies; 
(F) Any person engaged solely in the collection of one (I) or more business debts; or 
(G) Any lawyer acting in an attorney-client relationship with the creditor, and who 
conducts the collection in the true name of the client, provided, that any lawyer or 
3 


law filTI1 contracting with banks or credit card corporations principally for debt 
2 
collection is still considered as a collection agency in this Act. 
3 
SECTION 5. 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, 
5 
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 created. The Board shall consist of three (3) 
10 
members appointed by the President of the Philippines. One (J) member shall be a lawyer who is 
11 
recommended by the Integrated Bar of the Philippines. One (1) shall be an officer, partner, 
12 
owner or resident manager of a banking or financial institution, who is not a lawyer and 
13 
nominated by the Bangko Sentral ng Pilipinas. One (I) shall be a member of the public at large 
14 
who is neither an lawyer nor affiliated with a collection agency, but who is or has been a user of 
15 
credit or collection services and nominated by any major consumer group. Commencing in 
16 
2006, members of the Board shall be appointed for a telTI1 of four (4) years. Members of the 
17 
Board shall serve until their successors are duly appointed and qualified. 
18 
(B) No person shall be appointed as a member of the board who has not been a bona fide 
19 
resident of the Philippines for at least five (5) years immediately prior to his appointment. The 
20 
lawyer and the officer, partner, owner or resident manager of a banking or financial institution 
21 
shall hav~ been engaged in the banking or financial business within the Philippines for a period 
22 
of five (5) years immediately prior to appointment. The member ofthe public at large shall have 
23 
at least five (5) years experience as a user of credit or collection services. 
24 
(C) Upon the death, resignation or removal of any member of the board, the governor 
25 
shall appoint a member to serve the remaining unexpired telTI1. Any member of the Board may 
26 
be removed by the president for cause. 
27 
(D) Members of the Board shall elect one (1) of their members Chairperson to serve for a 
28 
term of two (2) years. 
4 


SECTION 7. Collection Agency Board; Compensation, Per Diem and Travel Expense. -
2 
All members of the collection agency Board shall be paid salary, per diem and travel expenses in 
3 
the same manner and amount as members of the Monetary Board when attending any regular or 
4 
called meeting of the board. Salaries, per diem and travel expenses for all board members shall 
5 
be paid solely from the account containing the license fees established and payable under this 
6 
Act. 
7 
SECTION 8. Powers and duties of Collection Agency Board.-
8 
(A) The Board shall assist and advise the chairman, who shall have charge of the 
9 
administratipn of this act. All applications for licenses under this Act shall 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 shall 
12 
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 
(B) The Board shall refuse to issue or renew a license: 
15 
(I) If an individual applicant or licensee is not an adult; 
16 
(2) If an applicant or licensee is not authorized to do business in the Philippines; 
17 
(3) If the licensee does not have an established office in the Philippines with a 
18 
bona fide resident of the Philippines as a resident manager, or in the case of an 
19 
applicant, the application does not disclose the proposed office location in the 
20 
Philippines and the name ofthe proposed resident manager; 
21 
(4) If an applicant, or an owner, officer, director, partner or resident manager of 
22 
an applicant or licensee: 
23 
(a) Knowingly made a false statement of a material fact in any application 
24 
for a collection agency license or renewal thereof, or in any 
25 
documentation provided to support the application or renewal; 
26 
(b) Has had a license to conduct a collection agency denied, not renewed, 
27 
suspended or revoked for any reason other than the nonpayment of 
28 
licensing fees or failure to meet bonding requirements; 
5 


I 
(c) Has been convicted in any court of a felony involving forgery, 
2 
malversation, obtaining money under false pretenses,. theft, extortion, 
3 
fraud or conspiracy to commit fraud and other similar offenses; 
4 
(d) Has had a judgment entered against him in any civil action involving 
5 
forgery, malversation, obtaining money under false pretenses, theft, 
6 
extortion, fraud or conspiracy to commit fraud and other similar 
7 
offenses; 
8 
(e) Has failed to payor satisfy any judgment debt or penalty imposed by 
9 
any court; or 
10 
(f) Has knowingly failed to comply with or violated any provision of this 
II 
Act or the rules and regulations of the Board adopted pursuant to this 
12 
Act. 
13 
SECTION 9. Authority to Make Rules and Regulations; Violations; Penalties. - The 
14 
Board shaH make reasonable rules and regulations for the administration of this Act, and for 
15 
prescribing acceptable professional standards of conduct of licensees within six (6) months from 
16 
the time that the Board is constituted with special emphasis on rules against debtor harassment. 
17 
Any violation of the rules and regulations of the board shaH be grounds for the imposition of a 
, 
18 
civil penalty not to exceed Fifty Thousand Pesos (P50,000.00) or suspension, revocation or 
19 
refusal to renew any license issued under this act, or any combination thereof. 
20 
SECTION 10. Applicationfor License; Qualifications; Financial Statement.-
21 
(A) A person desiring to conduct a coHection agency business shaH apply in writing on 
22 
forms approved by the Board. The application shaHbe signed and verified by the applicant and 
23 
filed in the office of the board. The application shaH state: 
24 
(I) The name and place of residence of the person making the application; 
25 
(2) Whether the business is organized as a corporation, partnership or sole 
26 
proprietorship; 
27 
(3) The name or names under which the business will be conducted; 
28 
(4) The street address of the office where the business will be conducted; 
6 


1 
(5) The name of the person who will be the resident manager of the office; 
2 
(6) Other information as the Board may require to determine the qualifications of 
3 
the applicant and the resident manager to be licensed to conduct a collection 
4 
agency business. 
5 
(B) The application shall be accompanied by a financial statement of the applicant, 
6 
showing the ilpplicant to be financially sound. 
7 
(q All applicants shall have an established office in the Philippines with a bona fide 
8 
resident of the Philippines as a resident manager of the office. All resident managers shall pass 
9 
an examination as prescribed by the board to determine the fitness of the resident manager to 
10 
conduct a collection agency business. 
11 
(D) The Board may collect an examination fee not to exceed Five Thousand Pesos 
12 
(P5,000.00) for each examination given. The board shall establish by rule the amount and 
13 
method of payment of the examination fee. All fees collected shall be credited to the account 
14 
and used as provided by this Act. 
15 
SECTION 11. Bond Required for License; Terms, Conditions and Execution; Amount; 
16 
Notice to Surety; New Bond. -
17 
(A) The applicant shall be notified when the application is approved. Within twenty (20) 
18 
days after notification, the applicant shall file and thereafter maintain a deposit with the 
19 
government treasurer or a bond as required by this Act. The license shall be issued upon 
20 
approval of the bond by the Board. The bond shal1 be issued by a surety company licensed and 
21 
authorized to do business in the Philippines, in the sum of Five Hundred Thousand Pesos 
22 
(,11500,000.00) and shall go to the Philippines and to any party who may be a claimant. The bond 
23 
shall be executed and acknowledged by the applicant as principal. The applicant may satisfy the 
24 
bond requirement of this section by depositing with the government treasurer Five Hundred 
25 
Thousand Pesos (P500,000.00) cash .. 
26 
(B) The bond shall be conditioned that the principal, as a licensee under this act, shal1 pay 
27 
and turn over to or' for the use of any claimant from whom any debt is taken or received for 
28 
collection, the proceeds of such collection less the charges for collection in accordance with the 
29 
terms of the agreement made between the principal and the claimant. 
7 


I 
(C) The bond shall cover all debts placed with the licensee for collection. Any claim 
2 
under the bond shall be presented to the Board. The Board shall promptly notifY the surety. If 
3 
the surety fails to payor settle the claim within thirty (30) days after notice from the Board, the 
4 
claimant may bring suit on the bond in the claimant's own name. The aggregate liability of the 
5 
surety for any and all claims which may arise under the bond shall in no event exceed the amount 
6 
of the penalty of the bond. 
7 
(D) A licensee may file a new bond with the board at any time. A surety company may 
8 
file with the board notice of its withdrawal ~s surety of any licensee. Upon the filing of a new 
9 
bond or a notice of withdrawal, the liability of the former surety for all future acts of the licensee 
10 
shall terminate except as provided in this Act. 
II 
(E) Upon filing notice with the Board by any surety company of its withdrawal as the 
12 
surety of any licensee, or upon the revocation by the insurance commissioner of the authority of 
13 
any surety company to transact business in this state, the Board shall immediately give notice to 
14 
the licensee of the withdrawal or revocation. Within thirty (30) days from the date of notification 
15 
the licensee' shall file a new bond with the board. If a licensee fails to file a new bond 
16 
satisfactorY to the Board within the time allowed, the right of the licensee to conduct a collection 
17 
agency shall terminate. 
18 
SECTION 12. Bond of Agency; Limitation of Actions. - No action shall be brought upon 
19 
any bond required to be given under this act after the expiration of two (2) years from the 
20 
revocation or expiration of the license issued to the licensee and principal under the bond. 
21 
Except for any action commenced upon the bond prior to expiration of the two (2) year period, 
22 
all liability of the surety upon the bond shall cease on the expiration date. 
23 
SECTION 13. License; Renewals; Fee; License Nontransferable; Display. -
24 
(A) Fees for the licensing of collection agencies shall be set by the Board. All fees shall 
25 
be established in accordance with this Act. Each office or place of business shall be licensed 
26 
separately. 
8 


(B) Each collection agency license expires one (1) year from the date of issuance. A 
2 
collection agency license is not transferable. Each collection agency license shall be displayed in 
3 
a conspicuou~ place in licensee's place of business. 
4 
SECTION 14. Disposition of Fees. - All fees and money received and collected by the 
5 
Board shall be deposited with the govemment treasurer, who shall credit the money to a separate 
6 
account. All monies paid into the government treasury and credited to the account are 
7 
appropriated to the use of the collection agency board for the payment of all necessary expenses 
8 
incurred in administering this act, including the payment of per diem, salary and travel expense 
9 
to members of the board. 
10 
SECTION 15. Action upon Complaints; Records of Proceedings. -
11 
(A) Any interested person may file a verified written complaint charging any collection 
12 
agency licensee with the violation of this Act or the rules adopted by the board, or with conduct 
13 
that shows the licensee is unworthy to continue to operate a collection agency within this state. 
14 
The complaint shall be filed with the Board, which shall investigate the complaint if necessary or 
15 
refer the complaint to appropriate staff for investigation and referral back to the board for proper 
16 
disposition. 
17 
(B) The Board, on its own motion, may make, or cause to be made, an investigation of 
18 
the conduct of any licensee. As a part of an investigation, the board may audit the books and 
19 
accounts of a licensee. The audit may be conducted by an auditor from the government of audit 
20 
or by a certified public accountant contracted by the Board. 
21 
(C) For the purpose of an investigation or for hearing a complaint, the Board may hold a 
22 
hearing in accordance with the Rules of Court. The hearing may be conducted by a hearing 
23 
examiner. Ti\e Chairman may subpoena witnesses and books, records and documents relative to 
24 
the inquiry. Witnesses may be required to testify under oath. If the Board finds the licensee has 
25 
violated the provisions of this Act or the rules promulgated by the Board, the licensee may be 
26 
sanctioned by a civil penalty not to exceed Fifty Thousand Pesos (l!50,000.00) or refusal to 
27 
renew, suspension or revocation of his license or any combination thereof. Any civil penalties 
9 


• 
colIected pursuant to this section shalI be paid to the state treasurer and credited as provided in 
2 
this Act. 
3 
(D) A copy of the complaint and a complete record of the investigation and the 
4 
disposition made shall be retained by the board in the office of the Board. 
5 
SECTION J 6. Records of License and Bond Actions; Confidentiality. -
6 
(A) The Board shalI keep a record of alI applications for licenses and all bonds filed. The 
7 
record shall state whether or not a license has been issued under the application and bond. If a 
8 
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 
II 
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 the 
14 
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 
2 J 
colIection 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; l1ifunctive Relief. -
24 
(A) In addition to other penalties, any person who carries on the business of a collection 
25 
agency without first having obtained a license, or who carries on a collection agency business 
26 
after the termination, suspension, revocation or expiration of a license, shall, upon conviction be 
27 
fined not less than Five Thousand Pesos (P5,000.00) nor more than Two Hundred Thousand 
28 
Pesos (P200,000.00), or imprisonment for not more than six (6) months, or both. 
10 


, . 
• 
1 
(B) When it appears to the board that any person is violating any of the provisions of this 
2 
act, the Board may, in its own name, bring an action in a court of competent jurisdiction for an 
3 
injunction, and courts of this state may enjoin any person from violating this act regardless of 
4 
whether proceedings have been or may be instituted before the Board or whether proceedings 
5 
have been or may be instituted under subsection (a) of this section. The proceedings shall be 
6 
prosecuted by the city prosecutor, or if approved by the Board, by a private counsel engaged by 
7 
the Board. 
8 
SECTION 19. Prosecution of Violations. - The city prosecutor shall prosecute all 
9 
violations of this Act occurring within his district. 
10 
SECTION 20. Separability Clause. - If any provision or part hereof, is held invalid or 
11 
unconstitutional, the remainder of the law or the provision not otherwise affected shall remain 
12 
valid and subsisting. 
13 
SECTION 21. Repealing Clause. - Any law, presidential decree or issuance, executive 
14 
order, letter of instruction, administrative order, rule or regulation contrary to, or inconsistent 
15 
with the provisions of this Act is hereby repealed, modified or amended accordingly. 
16 
SECTION 22. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
17 
publication in at least two (2) newspapers of general circulation. 
Approved. 
, 
11