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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Dear Atty,
Naswindle po ako last year by a best friend and nakapangutang ako ng 1.3M sa ibat ibang bank meron ping isang bank na pumalya ang payment ko for 2 months pero after po nag minimum payment naman ako , my account was already endorsed to collections and from 183k they want me to pay 300k. What is the worst case scenario as I don’t have this cash po.
I will trully appreciate guidance from you.
Thank you
Naswindle Mama
Dear Naswindle,
The worst thing that can happen is that a collection case is filed against you in court, and a judgment is rendered ordering you to pay for the amount found to be owing to the creditor. Your credit standing will also be destroyed in the process.
I would suppose that no case was already filed against you as of now. But in the event one is filed (which could be expected, but you should not look forward to it), you may ask the court to reduce the rate of interest. There is no harm in trying, but it could help you immensely if your request is granted.
-Atty. Arjay
good day po Atty. Arjay, pwede ko po bang kasuhan ng estafa ang isang tao na ginamit ang pangalan ng ibang tao as debtor, nakasulat ang kanilang pangalan at pirma, pero ang totoo wala namang tinanggap na pera or wala naman silang alam na may utang sila in short fake ang mga promissory note na binigay sa akin ng kaibigan ko. Nag papahiram po ako ng pera dito sa aboard at yung kaibigan ko ang nag garantor sa mga nangutang, ang masakit pa po umuwe ang kaibigan ko para mag bakasyon lang pero hendi na bumalik at nung pinuntahan at kinausap ko yung mga pangalan ng mga nangutang, nagulat at natakot po sila kasi wala silang pinirmahan na utang. Doon ko rin nalaman na maraming utang sa ibang tao ang kaibigan ko at gumawa rin ng mga fake na promissory note gamit ang mga ID ng ibang tao. Sa madaling salita yung pera na pinapautang ko hendi nakarating sa mga taong nakapirma at yung kaibigan ko lang ang gumamit ng lahat ng pera na pinautang ko, ang halaga ng pera ay nasa 200k katumbas sa peso. grounds po ba ito for estafa case.Ano po ang pwede kong gawin,
Maraming salamat po
Dear April68,
It would have been estafa kung dito lang sana sa Pilipinas nangyari ang mga insidente. Territorial kasi ang jurisdiction pag criminal case, meaning, kung saan nangyari ang krimen, doon dapat isampa ang kaso.
Try mong alamin kung may katumbas na krimen based sa batas diyan sa bansa kung saan naganap ang mga pangyayari, at diyan mo din isampa ang criminal case kaso kung meron man, although mahihirapan kang ipaaresto yung tao kung hindi na sya makabalik diyan sa bansang yan.
Though I believe that you have a ground to file a criminal case for estafa, ang practical advise lang na maibibigay ko sayo is to file a civil case for collection dito sa Pilipinas.
-Atty. Arjay
gud pm po..
ask ko lng po about s case ko..
nag online po kc like tin id mga id po ganun
tas my supplier po aqu nun..kla ko xa n mismo un supplier un pla my pinapashn p xa isa n supplier dn dw nia..
then s knya ko po pinapasa mga form ng client nmin
kc reseller nga po ako
then nagttaka po kmi wla n rerelease n mga id..
till cnbi nla un supplier nla is nasilaw s pera
so mga client nmin galit n galit gusto nla irefund mga pera..
ang gusto nla mag abuno ako kaso kia nga po ako nag online para mag ka extra income..bandang huli mag abono a
pko..tas anjn n u pannakot nla ipapakulong nla ako sb ko maliit p mga ank ko kia nga po ako nag online para kht panu makakbli ako ng pagkaen nmi tas diaper ng ank ko.
ngaun ang sb ng supplier ko un tao n supplier dn nla..ayw ibalik un pera kapag pinakulong nmin xa ndi n dw nia maibalik un pera..balak po sna nmin kasuhan xa ng estafa or ipakulong xa..
mga client qu gusto nla ako ipakulong dn..
posible po b n makulong dn ako..
slamat po f sagutin nio po tnung ko nid ko po tlga advise..
pasenxa npo s hinaing ko nlilito n kc ako..
Dear avie,
Kung iba-base ko sa narration mo ang mga pangyayari, di ka pwedeng ipakulong.
Pero may obligasyon ka parin sa mga kliyente mo. Either magdeliver ka sa commitments mo sa kanila, or i-refund mo na lang yung pera nila kung hindi mo talaga kaya magdeliver. Pwede mo habulin ang supplier mo, dahil sya naman ang kausap mo regarding sa mga deliverables nya sayo.
-Atty. Arjay
Good day po,
I also have an unpaid loan sa bangko, di ko naman po sinasadyang di mabayaran but being a single parent, nahirapan akong makarecover specially nang nagkasakit ang aking anak at nanay. Ano po ang dapat kong gawin sa summon na ito? Di ko po maintindihan how to respond to this since nasa Manila po ako now nagtatrabaho at ang loan po ay nasa province. Should I go hone personally? If mababayaran ko po ba within 10days, pwede na sa bangko pa ako makapagbabayad or should I go directly to court? Paano po ang gagawin sa ganitong sitwasyon? Wala naman po talaga akong balak na di magbayad kaya nga po nagsikap akong makawork uli. Marami pong salamat!
SUMMONS
******
***** (CO-MAKER
GREETINGS:
You are hereby required, within TEN (10) DAYS from receipt of this Summons, to file with this Court and serve on Plaintiff, Your verefied Response to the attached Statement of Claim. The form of the required Response is attached hereto.
You are required to submit with your Response certified copies of documents as well as affidavits of any witness to stand as your evidence in this case. You must present the original document/s on the day of hearing.
A motion to dismiss is prohibited and shall not be entertained. Any ground for dismissal should be included in your response.
Your Failure to respond within the 10-day period AND TO APPEAR AT THE HEARING OF THIS CASE will authorize the Court to render judgement.
Witness my hand under the seal of this Court, this 4th day of May, 2018, at —–Philippines
Dear Sampaguita_79,
Mukang meron nang small claims case na nakasampa sayo sa court. Kung makakabayad ka, magbayad ka lang sa kung sino lang ang authorized ng creditor mo tumanggap ng payment (to be safe, magbayad ka na lang kung kanino ka normally nagbabayad ng installments mo noon). Keep your proof of payment (and I hope that you kept all your previous proof of payments intact), then attach copies of it to the response that you willl submit to the court. Keep in mind that you were given by the court only 10 days to respond to the statement of claim. Kung hindi ka pa talaga makabayad, then just submit your response, and explain kung ano ang sa tingin mong dahilan kung bakit hindi ka muna dapat singilin. Better file your response, otherwise, the court will render a decision without ever hearing your side. Your response should be submitted to the court who issued the summons, so kung nasa province pa yan, you may have no other choice but to go back, or at least ask someone to submit it for you. Kasi kung ipapadaan mo pa sa post office, matagal pa yan makakarating.
-Atty. Arjay
Good day po, salamat po sa response. So if ever po na makakabayad ako within ten days, pwede na po ako na hindi umattend ng hearing? Salamat po.
Dear Sampaguita,
Umattend ka parin.
Kung makabayad ka within 10 days, pwede mo yun gamitin bilang depensa mo. Pero paano mo dedepensahan ang sarili mo kung hindi ka aattend nung hearing?
Remember, you are being required by the court to respond to the Statement of Claim. So pag nakabayad ka na, attach in your response the proof of payment. Then pagdating mo sa court, isubmit mo yung response mo, para maconsider yung payment as part of your defense.
-Atty. Arjay
Atty,
May utang po ako sa Moola and nabayaran ko naman po siya ng buo kaso nadelay ako ng ilang araw. Yun po ang sinisingil saken ngayon, yung penalty na almost 3000 samantalang ilang araw lang naman yung delay. They are threatening me to send their field collectors and legal actions. Ano po pwede gawin?
Dear alyna,
I-check mo yung agreement mo with your creditor, at baka naman nag-agree ka sa mataas na interest rate kaya may natira pa sa loan mo kahit akala mo nabayaran mo na. I cannot say for sure about their field collectors going to your place, but I doubt that they will file a legal action in court against you just to collect P3,000.00. However, this does not mean that you should not settle your obligation anymore.
-Atty. Arjay
gud pm atty arjay,
ask ko lang po pag nakapag file na sa small claims court, pwede po ba ihiling sa judge na utusan ang employer na ibawas automatic yung amount ng utang? paano po kung nangako na yung umutang na magbabayad sa specific date pero hindi parin nag bayad? ano po sunod na dapat gawin?
Dear rodney,
Pwede yun. Pero mag-uutos lang ang court na i-garnish ang salaries mo pag meron nang final judgment favorable sa creditor (ito ay isa sa mga paraan ng pag-execute ng judgment). Ibig sabihin nito, natapos na ang kaso at panalo na ang creditor with finality bago ito pwedeng ipag-utos ng court. Pero kung mababayaran na ang pagkakautang bago pa lang ipa-execute ang judgment, hindi na kailangan ipa-garnish ang salary ng debtor.
-Atty. Arjay
Hello Atty.
Good Day!
Natabunan na po ang aking message kaya dito na ako nagreply.
Kung hindi po makakapekto sa pagkuha ko ng NBI ang pending kung cash loan sa Home credit at maari akong makakuha ng VIsa. May pagkakataon po ba na maari akong mahold sa airport dahil sa utrang ko? ano po ang maari kong gawin sa ganitong pagkakataon
Salamat po
-anonymous27-
Dear anonymous27,
Kung ma-hold ka man sa airport, yun ay walang kinalaman sa utang mo. Walang hold departure order na pwedeng ma-issue sayo dahil lang sa may utang ka, lalo na kung wala ka naman case na nakasampa sa court.
-Atty. Arjay
salamat po atty.
Godbless you more po!
Hi Atty. Magandang araw.
Naka receive po ako ng final legal warning from planters bank now chinabank sa dati kong address. From 12k remaining balance kong unpaid its now 58k. Nakalagay dn po sa letter yung writ of preliminary attachment. Ask ko lang po i am married but i dont have savings on my own kahit properties wala because of on and off health issues. Pag nangyari po ba ang writ of preliminary attachment na sinasabi affected po ba dun yung savings ng asawa ko? Damay po ba sya sa case na to?
Thank you po in advance sa reply.
Dear Ging,
No. Yung saving mo lang ang affected. Pero kung yung account sa bank ay joint account with your husband, the. He could be affected.
Kung umabot man sa demandahan ang sitwasyon mo at pareho kayong nakademanda mag-asawa, pwede kayo pareho maissuhan ng writ of attachment.
-Atty. Arjay
Atty. May tanung po ako… Ganeto po un. May nagpagawa sa aking certificate of employment. Aplikante po sya sa deped.. Tapos po nalaman ng school na hndi po totoo ung certificate at isa pa sa school pala nila galing ung school. Tapos po ung teacher applicant sinabi niya ang pangalan ko na ako daw gumawa ng certificate.. Kaya un kinuha po ng division ung pangalan ko. At sabi po nila kakasuhan daw po ako. Anu pong pwede kong gawin. Totoo po ba un na kksuhan nila ako.eh sila naman po nagpagawa.
Dear Corrine,
Your query is out of topic. Kindly post queries related to debt collection matters. Thank you.
-Atty. Arjay
Dear Atty,
Meron po akong kapatid na nagkautang kay Moola. Ang initial na utang nya is 20k. Every month nagbabayad sya ng prolongation amounting to 6k since October of 2017. Nagyong March of 2018, hindi na po sya naka settle ng prolongation due to financial crisis na po. Everyday tumatawag si Moola and hanggang ngayon naman po sinasagot nya ang tawag ni Moola kaso po umabot na po sa 38,700 in a span of 20 days. Everyday po 700 ang ipinapatong sa principal then kung hindi po makakasettle hanggang April 27, 2018 sa Legal na daw po dadalhin yung account nya.Willing naman po sya magsettle kaso sa ngayon wala pa lang pong hawak na pera ang kapatid ko. Ano po kayang magandang gawin sa case nya.
Thank you
Dear Maria Victoria Fabicon,
Wala naman magagawa ang kapatid mo kung ie-endorso na ng creditor sa Legal nila ang pagkakautang nya, dahil karapatan naman yun ng creditor nya. Kung umabot man sa punto na magsampa ng kaso sa korte si creditor, pwedeng hilingin ng kapatid mo sa husgado na mapababaan ang interest rate para hindi sya malubog lalo.
-Atty. Arjay