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.
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Atty. may loan po kc aq sa moala hnd n po aq nkabayad since ngaun ngtxt sila sakin n pupunta dw sila sa bahay at kukunin mga gamit ko pwede po b nila gawin yun
Hi atty.
May Hiram po ako sa lending nag issue ako ng cheke pero unfortunatwly hindi ko napondohan kaai nagkaproblema ako. kakasuhan na daw po ako bukas.
ano po dapat gawin
Good Day! Atty.
This is about Moola Lending, I borrowed aroubnd 2k po sa knila I failed to pay dahil in and out ako sa hopsital. the amount so nag extend po ako, hanggang I was shock na umabot ng 11k or 12k ang due ko sa knila sobra pong taas ng interest I kept on paying pero lalong tumataas ang interest sobra na po nabayad ko sa kanila, now they send me “email from their atty. daw” na to pay up. but I can’t pay the amount i already explained to them na pa unti-unti ko mababayaran pero lalong tumataas ang interest? can you help me please
Good day Atty: May utang po ako sa cc 300+ po ngayon po di ako Nakabayad almost 6months na Po dahil finacial problem at nagkasakit po ako..nag email po ako sa collecting agency na by March ko pa po mababayaran..tanong ko lang po makukulong po ba ako dahil nasa collection agency na..maraming salamat po
Good day Atty. tanong ko lang po, meron po akong loan sa bestloan noong feb 2016 pa, ngayon po sinisingil nila ako nitong oct 2018 lang. lumubo po yung utang ko from 18k to 63k, pinagtataka ko lang po bakit ngayon lng po nila ako sinisingil, ang nininingil po sakin ay collection agency, ang tagal ko pong nawalan ng trabaho dahil po sa problemang pamilya. san po ako kukuha ng ganung halaga na 63k? pag po ba hindi ako nagbayad totoo po bang pwede silang mag file ng legal action sa akin sa korte at maaari po ba akong makulong pag di ako umattend kung sakaling magkaroong ng hearing sa korte? maraming salamat po!
Hello po atty. magttanong po sana ko, may salary loan po kasi ako na 300k sa isang bangko, since salary deduction po sya, nangyare po nagkaproblena at hindi sya nakakaltas pumasok po sya as undeducted loan sa payslip ko. Pero nakakapag over the counter namn ako sa bangko pero dahil hindi po ako updated sa pagbabayad mY 2 months ako past due. At kung mas ddame pa po un buwan hindi ko mabayaran maari ba nila ako kasuhan? Salamat po sa pagsagot
@Yheng, hi gusto ko lng malaman anu nangyari ngaun. parehas kasi tayo sitwasyon.
Good day,
May nkukulobg po ba sa utang sa moola lending? Kc po nawala ang phine ko..wala nmn akong nareceive na email about dun.. Nagtaka lng ako kc after 1 week akong nag apply wala pa din. NSA 2ND WEEK npo cguro dumting saumbay sa sahod ko.. D ko nga po alm na approved at inilgay na nila e.
goodmorning atty nakahiram.po ako sa zazu lending company ng 50k pang placement fee papunta.hongkong napauwi ako dahil sobrang lupit po ng amo ku.atty ngayon po nagvreport po ako sa zazu lending na.napauwi.po ako at walang dalang pera pero nakapaghulog po ako sakanila ng.una kong payment through.m lhuiller po bale tatlong beses po ako naghulog.kaso lahat po ng naihulog ko na bounced po nila ngayun po nag hearing na po kami at may agreement po sa.next hearing.kailangan ko magbayad ng 15k sa kanila hindi ko naman po kayang bayaran yung 15k atty in 1 month iilan lang po sahod ng asawako ,paano po atty.ano po mangyayari pag d po ako nakapagbayad sa agreement atty.hearing po namin sa nov15 sir
Good day po. May utang po ako sa moola na 6k pero natanggap ko lng po sa atm ko ay 4500 or 5k then babayaran ko po sya ng 6500 pero na delay po ako dahil nanakaw ang gamit ko kasama ang cellphone. at nung linggo pag open ko ng gmail ko eto na po ang sinend nila skin.
This is an important letter and requires your immediate attention. Despite sending you several reminders, we have received no response from you about your seriously past due account amounting to 8200.00. We feel we have given you ample time and have been more than patient with you. Therefore, we feel there is no other recourse but to file a small claim case under A.M. No. 08-8-7-SC or “The 2016 Revised Rules of Procedure for Small Claims Cases”.
You can avoid this by remitting payment today for the full amount due of 8200.00. If we do not receive your payment within the next 15 days, we are going to have to take action by sending our field agents to your home, work place, and barangay.
Contact us at (02) 304-9161 if you have any questions.
Pay using your reference number DT673569 and following instructions below.
Napakalaki po ng naging babayaran ko agad ilang araw pa lng po ako na dedelay. pwede po bang makulong ako at masampahan ng kaso sa small claim? maraming salamat po.