Published — October 7, 2017
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Related Topic: Repossession of Mortgaged Automobiles
No business can survive without sufficient funds, as every action done in its operations generally have corresponding costs attached to it. When it comes to finances, however, one of the most common challenges faced by many businesses is the difficulty of collecting from their debtors the amounts owed to them. So, how is debt collection being carried out?
Pressuring debtors to obtain payment
Pressure may be employed, but only through legitimate means, such as filing of legal action, or availment of other legal remedies to collect the amount due. Resort to harassment in collecting from the debtor should be avoided, as this may enable the debtor to turn the table against the creditor who, because of his bullying, would just expose himself to civil liability for damages, and even criminal liability for coercion.
Some examples of such bullying would be by calling debtors during very inconvenient hours (e.g. between 10:00 PM and 6:00 AM); employment of threats; misrepresenting oneself as lawyers, police officers, or other government authorities to intimidate the debtor; making false statements about an impending punishment in connection with a pending case where no case is actually pending; contacting the debtor’s friends, family, neighbors, and workmates, and discussing with them the details of the debtor’s indebtedness; and threatening to deposit post-dated checks prematurely.
Legal remedies in collecting unpaid debt
Creditors who are having problems collecting from their debtors may very well resort to the following legal remedies:
- To file an action for collection of sum of money before the court.
- In case the debt is secured by a mortgage, the creditor may choose either to file an ordinary action for collection, or he may have the mortgage foreclosed.
- In case there is a check issued, which bounced, the offended party may file a complaint for violation of the Anti-Bouncing Checks Law. This is a criminal action, and therefore imprisonment is among the possible consequences upon conviction.
Civil action for collection of sum of money
If the creditor opts to file an action for collection of sum of money, all that the creditor needs to establish are the existence of a transaction for which the debtor became indebted (which may be a loan, or any dealings that create obligations such as sale concerning unpaid purchase price, or lease concerning rentals), the amount of money owed by the debtor, the fact that the obligation is already due and demandable, and that a demand had been made by the creditor upon the debtor.
Please take note, though, that if the debt does not exceed P200,000.00 (excluding damages and interests), the creditor may file his claim before the Small Claims Court. Since the amount of the claim is relatively small and the relief prayed for is solely for payment or reimbursement of sum of money, it is the court’s policy in small claims proceedings not to keep these cases from dragging for long periods before finally being decided. Since the proceedings must be speedy, inexpensive, and informal, the Small Claims Procedure was made much more simple.
Foreclosure of mortgage
Foreclosure is a necessary consequence of non-payment of mortgage indebtedness. In a real estate mortgage, when the principal obligation is not paid when due, the mortgagee-creditor has the right to foreclose the mortgage and to have the property seized and sold for purposes of applying the proceeds to the payment of the obligation [See: G.R. No. 178367].
Foreclosure of mortgage may be done through a complaint filed in court (judicial foreclosure). But the creditor, if authorized by the debtor in writing, may foreclose the mortgage constituted on the property without going to court (extrajudicial foreclosure). By virtue of his granted authority, the creditor may take possession of the mortgaged property, and sell it in a public auction, subject to the requirement that notice of the sale has to be given by posting the same for not less than 20 days in at least three public places in the city or municipality where the property is situated [See: Sec. 2, Act No. 3135]. If no such authority to sell was granted to the creditor, then he has no other alternative but to resort to judicial foreclosure.
If the proceeds of the sale are insufficient to cover the entire amount of the debt in an extrajudicial foreclosure of mortgage, the creditor is entitled to claim the deficiency from the debtor [See: G.R. No. 175816].
Criminal action for violation of Anti-Bouncing Checks Law
The Anti-Bouncing Checks Law (B.P. Blg. 22) was passed for the specific purpose of addressing the problem of continued issuance and circulation of unfunded checks. B.P. Blg. 22 considers the mere act of issuing an unfunded check as a criminal offense [See: G.R. No. 191404].
Violation of B.P. Blg. 22 shall be punished by imprisonment for 30 days to 1 year, or by a fine of double the amount of the check, but in no case it shall exceed P200,000.00. Both such fine and imprisonment may, however, be imposed at the discretion of the court.
With such remedies that every creditor may avail of against the defaulting debtor, all such creditor has to do is to choose what he believes is most effective and convenient based on the circumstances surrounding his credit. Always bear in mind that unless creditors take action, many debtors will simply ignore their obligations. Precious cash need not be unnecessarily sacrificed, especially by business entities, simply because of difficulty in collecting debts. This holds very true when the money to be collected could be used on other business activities that would bring more money in the pocket.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding credit and debt collection laws, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.
Good day atty. meron po kasi akong utang sa moola loan, then umabot na ng 5k plus kasi may interest at dahil nawala ung phone ko at ung hacker pinlitan ng password ang dalawa kong email. kaya po hindi ako nakapag bayad agad. then my problem is nakita ko sa computer ko na naka login pa sa site ng moola ang id ko then may message sila na warning: You have missed your payment date by more than 30 days! Repay immediately to avoid legal actions. pero mag babayad naman po ako, pwede po ba ako makasuha pero mag babayad naman ako. Wala pa kasi ang allowance ko.
Dear Joshua Gucela,
Since may intention ka naman na magbayad, sabihan mo sila kung kelan mo ito magagawa. Para at least alam din ng creditor mo kung ano ang ie-expect nya mula sayo. Kasi kung hindi nya alam na magbabayad ka, at hindi rin nya alam kung kelan mo ito magagawa, pwede talaga syang mag-proceed legally against you kung gugustuhin nya (though I doubt magdedemanda sya para lang maka-kolekta ng P5,000.00 na pagkakautang).
-Atty. Arjay
Hi po atty ngloan po ako sa doctor cash/moola lending 10k ung nloan ko pero nsa 8k lng po last march 2016 ung nkuha ko tpos ngrenew aq 2x tpos nung last n hram ko dq nbyaran so ngprolongation aq for 10mos ng 3k per month tpos ngaun tntxt pdn aq na 27k ndw bbyaran ko ibat ibang number ang gngmit nla,ano po mgandang gwin?bbyaran ko po b ung 27k?
Dear Angel,
At the very least, bayaran mo muna yung P10,000.00 kung kaya mo naman, kasi talaga naman inutang mo yun.
Balkan mo yung kontrata mo at tignan kung anu-ano ba ang mga charges na imposable sayo pag hindi ka makabayad. Bound ka ng kontrata mo dahil sinang-ayunan mo ito. Magpa-explain ka din sa creditor mo kung paano lumaki yung utang mo hanggang P27,000.00 para maliwanagan ka, dahil posible din namang tama ang computation nila base sa kontrata mo (kaya ko sina-suggest na balikan mo yung kontrata).
Kung pakiramdam mong hina-harass ka, then ireport yung creditor mo sa Financial Protection Consumer Department ng Bangko Sentral ng Pilipinas.
-Atty. Arjay
Gud eve po atty.. Ask ko lng po ung problem ko ako po kc my utang sa direct selling na 2k plus dko po nbyaran 6 months na kso po my dumating sakin ngaun n demand letter dw po at nka saad don na 4k plus n po utang ko sa ngaun po kc wla pa akong pmbyad dahil sa wla po ako work ano po ba mgndang gawin don sbi po sa sulat ay mgsasampa cla ng kaso laban sakin
Dear Jacquilin Acuna,
Legally speaking, pwede naman talaga magsampa ng kaso laban sayo (for small claims) ang creditor mo. Pero duda akong gagawin yun, hindi ko nakikitang aabalahin nya ang sarili nyang pumunta sa korte at magdemanda para lang maningil ng P4,000.00 na pagkakautang.
On your part, either bayaran mo na lang ang utang mo, or sagutin mo yung letter at sabihin mo kung kelan mo babayaran yung utang mo (tutal, aminado ka namang meron ka talagang utang, so hindi mo yun dapat takbuhan).
-Atty. Arjay
Dear Atty,
I have an outstanding loan of 5k with CashWagon Philippines. I am willing to pay, but due to me being hospitalized and being out of work I am unable to do so. Now their supposed “Sheriff Department” is threatening to go to my house and get items from me for payment of my loan. Can they do that? Is it legal? Where do I go just in case I want to file a harassment complaint? Thanks.
Dear Rain Austria,
Sheriff is a court employee, NOT your creditor’s. If you feel harassed, you can report your creditor to the Financial Protection Consumer Department of the Bangko Sentral ng Pilipinas.
-Atty. Arjay
I have same experience sa cashwagon po. Tinatawagan nila ako na may mga tauhan silang ipapadala sa workplace ko to serve some documents. Tumawag daw dapat ako sa kanila para maiwasan ang komusyon. To think that I am working sa skwelahan. Nakikiusap ako na i installment basis ayaw nila kasi dapat buo. When i asked the breakdown of my loan 15k kaagad wala man lang nakalagay kung magkano ang penalty. Iyong nagpakilalang lawyer at pulis mga bastos hindi marunong makipag usap ng maayos!
Gandang gabi po Atty. 10 years ago po meron kaming bagong credit card sa hsbc, naloko po ang asawa at na-swipe po ang card nya amounting to almost 10k. Since then po,dahil hindi naman namin ginusto ung nautang sa card, basta hindi na lang po namin ginamit ang card at hinayaan na lang. So after po non naktatanggap kami ng mga letters, pero since hindi po namin tinanggap ung mga sumunod na letter at nagkunyaring wala na sa lugar na yon, natigil po ang pagpapadala nila ng sulat.
Pero last week lang po, after 5 years po siguro, bigla po ulit nabuhay at nakatanggap ng letter. Hindi ko po nakuhang buksan ung sulat dahil sa takot ko. At plano ko po sana na wag na lang ulit tanggapin kung may darating pa ulit na sulat from collecting agency. Natatakot po ako, ano pong dapat kong gawin?
Maraming salamat po.
Dear Ivy Aguas,
I believe you have to start communicating with the bank now. Hindi naman alam ng bank yung tungkol sa pagkakaloko sa asawa mo at pagkakaswipe ng card nya, so ituturing lang yun ni bank as if everything had been normal. Saka, maaaring wala ka nang natanggap na communication mula sa bank, pero hindi ibig sabihin nun ay waived na nila ang utang na na-incur ng credit card ng husband mo. To be sure, pwede parin nila i-enforce legally ang utang sa credit card, at mukang gagawin nila yun kung hindi kayo makikipag-usap ng maayos. You have to open the letter and read it, because that’s the only way you will be able to face the situation.
-Atty. Arjay
hi atty.
need help po . tanung ko lang kung anung action ang gagawin ko . dahil ung second cousin ko nangutang sakin ng 15k noong aug. 5 at nangangakong magbabayad tuwing sahod nya daw 18 at 3 , tatlong buwan ang tagal . pero nung lumipas ang araw dumating n ang araw ng unang hulog d sya nag pakita puro sya bukas at mmya . hanggang sa aug 22 . nangako sya magbabayad sya ng around 6:30 sa pero dumating n ang oras wala pa din sya still update sya n wala pa daw finace nya antayin daw namin sya ng hanggang alas dose ng gabi . so inantay nmin sya ng fiance ko hanggang sa nag 2am in the morning d n sya nagpakita at nagparamdam . kinabukasan pumnta kmi sa house naka podlock hanggang sa sinabi ko n sa ate at papa nya dun ko napag alaman na marami pala sya uatang . d ko po alm kung anu gagawin ko . dahil niloko nya ko na gagamitin nya pang opera pero wala pa lang opera na nangyare .
thanks po sa help
Dear mymy jabonete,
I would not encourage you to take up legal action against your second cousin, kasi kahit second cousin mo na lang sya, magkaanak parin kayo. Kung magagawan mo ng paraan na makontak sya ulit through your common relatives, the better. Kasi kung mapag-usapan nyo parin kung ano ang terms na maaaring magaan sa kanya pero acceptable parin sayo, that would be a lot better. You can take the matter to the barangay if you want, though. But I would still encourage you to settle with your cousin amicably.
-Atty. Arjay
gudpm atty. meron kasi ako nakuha sa Cashwagon amounting to 5k pero hindi ko agad nabayaran daw sa financial problem tapos ngayon my tumawag saakin na kailngan ko na daw mabayaran until monday which is 9k na daw.its almost 2 months na daw po kasi hindi ako nakakabayad kaso walang wala kasi ako ngayon pero hindi ko naman tatakasan ang utang ko pag maluwag luwag na ako babayaran ko naman.Ang taas kasi ng interes nila 40%.tapos sa late payment 500 per week.kaya inabot na 9k yong 5k na hiniram.Salamat po
Dear anonymous28,
The thing is, nag-agree ka sa interest rate nila noong kinuha mo yung loan, so talagang sisingilin ka nila ng ayon sa rate na yan. Tulad ng sinabi mo, babayaran mo naman kung makaluwag ka, pero siguraduhin mong talagang gagawin mo yun, dahil ikaw din ang mahinirapan pag lalo pang lumobo ang loan mo at ikaw din ang mabaon.
-Atty. Arjay
Good day po sir,
Ask ko lang po meron po akong hiniram sa moola na 4k hnd q pa sya nababayaran hanggang umabot na sya ng 9k tapus tawga sila ng tawg pati yung ginamit kong referal person tinatawagan at tinitxt nila sinampahan dw nila ako ng kaso sa metro politan at magpapadala dw sila ng sheriff sa bahay wala nmn kami pinirmahan na kahit anong contract sa kanila magbabayad namn aq wala lang po aq work now dahil nagkasaket aq sa puso ano po ba gagawin ko salamat po
Dear Joy Nablo,
Tinatakot ka lang na magpapadala ng sheriff, dahil magagawa lang nila yun kung nanalo na sila sa case. Sa nakikita ko, muka naman wala pa silang case na isinasampa sayo. Ituloy mo lang bayaran ang utang mo, yun lang naman ang objective nila (ang makakolekta). So kahit takutin ka pa, basta ba nagbabayad ka, hindi na sila makakaisip magsampa pa sa court ng kaso dahil pati rin naman sila ay sobrang maaabala din para lang sa P9,000 na utang.
-Atty. Arjay
Good day Attorney!
Nagloan sa Home Credit ang asawa ko. Nakakuha kami ng 37,000 kung di ako nagkakamali at ang monthly is 1920 for 36months. Unfortunately, nong patapos na kami mag bayad, last 4 months, nawalan ng work asawa ko. Then last April pumunta yun credit collecter at tinry takutin asawa ko. Pero since sinabi ko na walang nakukulong sa utang medyo tumigil sila sa pananakot. Then today, di pa din kasi nasesettle yun four months na kulang maliban sa 1k na binayad namin last april, nagtext ulit sila:
Mr. *****, Your contract 350******* has still an overdue balance of 8680. Your account will now be handled by Collection Agency The Law Firm of Lauron-Delos Reyes and Partners. Pay your debt of 8680 to avoid never ending collection activities. For payment settlement, call agency at 028773926 today.
Ano po ang worst case scenario dito?
Dear Lala,
Worst case scenario is pwede ang collection agency magresort to legal action against you by filing a collection case. But as you said, and you are correct, walang nakukulong sa hindi pagkakabayad ng utang. Just in case meron nang unfavorable judgment against you sa collection case, the court may order na ipahatak ang mga gamit mong may value (vehicles, jewelries, etc.), which will be sold in a public sale. Yung proceeds nung sale ang gagamitin pambayad sa utang mong kinokolekta mula sayo.
-Atty. Arjay
Hi po good morning Atty. Meron po kasi ako dati motor na iniwan po ng asawa ko s pinsan nya with the agreement po na sila ang mag tutuloy ng payment s kinuhaan po s Desmark. Ang problema po kasi verbal lang and ginawa po nung pinsan eh isinanla po s iba. nag pasa pasa na po ung motor hanggang ngayon hindi n po ma trace. binalikan po ako ng Desmark nag file po ng case, nag attend po ako nun then nag settle s payment na 3k per month po hanggang matapos ung balance. kaso po s ngayon di ko po kaya ung 3k kasi po nawalan po ng trabaho ung asawa ko at wla p din po trabaho s ngayon. nag sabi po ako na pwede ko po bayaran 2k per month ung balance ayaw po nilang tanggapin. sabi po lalagyan daw po ng interest ung balance kahit settlement agreement n po un. Sa ngayon po nag sabi ako na kaya ko po mag bayad ng 2k buwan buwan ayaw po nilang tanggapin tapos po sabi ipapasheriff daw po nila ko. Pwede po b nila lagyan pa ng tubo ung utang na hirap na ko bayaran? pwede po b ko mag request ulit ng settlement s kanila through a court order? ano po b ang dapat kong gawin sir/madam kasi po hirap po tlaga ako s ngayon.
Dear Christine Joyce R Delas Penas,
Actually, dati nang may tubo ang utang mo kahit noong mga panahon na hindi ka pa nahihirapan magbayad. Malamang meron kang kontrata na pinirmahan noong kinuha mo ang motor kung saan ikaw ay sumang-ayon sa pagbabayad ng interest. Unfortunately, hindi problema ng creditor mo kung nawalan ng trabaho ang asawa mo, dahil ikaw ang dapat gumawa ng paraan para matupad mo ang mga bagay na ikaw din mismo ang nagcommit.
Just in case lang na magdemanda sila dahil sa hindi makabayad, pwede mo hilingin sa court na babaan ang interest rate sa utang mo. Pero kailangan mo parin kumbinsihin ang court kung bakit dapat kang pagbigyan sa hinihiling mo.
-Atty. Arjay