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.
Hi Atty, I am hoping for your response.
May utang po kasi ako Moola Lending na 7,800, since hindi ko siya mababayaran agad sa due date, nagbayad ako ng prolongation fee nila 1,200. Tapos hindi ko pa din po nabayaran, ngayon nagearn na ng interest yung utang hanggang sa 14,500. May nareceive po akong text na ipapadala daw nila yung sheriff nila. Ano po kaya magandang gawin? Kasi parang unfair po na bayaran yung 14,500 eh 7,800 lang po ang utang and actually po dun sa 7,800 eh 5,400 lang po ang ibinigay nila sakin dahil s processing fee. Sana po mabasa niyo ito atty.
Dear Nicole,
Hindi ko alam kung ano ang terms ng kasunduan ninyo, pero kung consistent parin yung sinisingil nila sayo based sa interest and penalties na sinang-ayunan mo, may karapatan silang habulin yun sayo. Pero yung tungkol sa sheriff daw na ipadadala nila, maganda lang na alam mo na ang sheriff ay tao ng korte, at hindi ng creditor mo. Walang sheriff na pupunta sayo kung wala ka naman kaso sa korte. So kung may pupunta sa inyo at magpakilalang sheriff, hindi yun totoong sheriff.
-Atty. Arjay
Dear Atty,
May utang po kse ako sa moola ng 3K,pero hindi po agad ako nkbayad kya ngkaroon ng penalties . Then nung tumwag po ako sa knila sbe ko gusto ko na ipaclose ung account ko sbe nila bayran ko dw ng 6500 kse a month na yung lumipas ,. tpos sbe ko 4000 lng pera ko then sbe nila ipdala ko na dw at ung kulng pa na 2500 ay khit b4 april 20 at pumyag ako . tpos nung mgbabayad na sana ako ng kulang ko na 2500 tumwag ako sa knila at hinihingi ko ung LIFETIME ID number ko sabe nila ittetx nila pero wala ngttext skin or ngemail ng Number kaya di ko napadala ung pera . hanggang sa nsra na ang cellphone ko at di ko na mkontak sila ., pano po ako mgbabayad eh hindi nila pindala ung id number until now .,
ano po gagawin ko
samlt po
Dear Aky,
Your question does not involve a legal concern. Puntahan mo na lang yung office nila kung gusto mo magbayad at hindi mo sila ma-contact.
-Atty. Arjay
may ngtext po kse dun sa company phone nmin na
“This is from Lozano Law Office xxxx ., gnyan ganyn kaya nagulat po ako ng ppunta dw po sa brgy nmin .pg di dw po nkbayad ung property na kukunin amount dun sa utang , eh sa pgkakaalam ko po ung bal na 2500 kulang ko na sila nmn po may ksalan bkit di ako nkhulog sknila
salmt po
Dear Aky,
Just pay it off. Duda akong pupuntahan ka pa nila sa bahay mo para lang sa P2,500 na utang, pero kung gusto mong matahimik, bayaran mo na lang.
-Atty. Arjay
Hi po atty, may chance po ba kunin ung mga sapatos and damit if ever wala na po talaga sila makuha sa bahay? kasi walang wala na po kami and natatakot po kami na maharass ng sheriff. nakarent lang po kasi kami.. thank you po
Dear William,
Regarding sa pagkuha ng mga damit at sapatos ninyo, hindi yan makukuha sa inyo, dahil under the Rules of Court, exempt from execution ang “necessary clothing and articles for ordinary personal use, excluding jewelry”. And since naka-rent lang din kayo, hindi nila pwedeng hatakin yung bahay kasi hindi naman yan sa inyo.
-Atty. Arjay
Goodmorning Atty, humiram po ako sa Moola Lending worth 5K. Twice or Thrice pa lang po ako nakakabayad, after nun. Nawalan po kasi ako ng trabaho. May tumatawag ngayon at 10K na daw po utang ko. Sabi ko babayaran ko naman sila pag may trabaho na ko. Ang tanong pwede po ba nila ako kasuhan tulad ng sabi nila o puntahan ako sa bahay ko?
Dear EA,
Pwede ka nilang kasuhan ng small claims. Pero dahil P10,000 lang ang sinisingil sayo, duda akong magdedemanda sila para lang sa ganung amount. Pwede ka naman din nila puntahan sa bahay mo, pero wala kang obligasyon na tanggapin sila.
-Atty. Arjay
Hi po atty if everpo ba na may writ of execution na ano po ung pwede nilang makuha sa bahay? Saka may chance po ba na babalik sila? Hoping for your response po.. kasi nakakatakot po ung pangyayari.. thanks po..
Dear William,
Bibigyan ka parin muna ng sheriff ng chance na magbayad ng cash. Pero kung talagang hindi ka makabayad, or kulang ang iyong bayad, pwede nyang ipahatak ang properties mo. Uunahin muna ang personal properties mo na may value (jewelries, appliances, vehicles, etc.). Pero kung kulang parin, pwede din ipahatak yung mga real properties na pag-aari mo, including yung mismong bahay at lupa kung ikaw ang owner nito. Pwede ka balikan ng sheriff dahil ang objective nya ay ma-execute kung ano man ang judgment ng court. So kung ang utos ng court ay magbayad ka ng P500,000.00, masasabi lang nating tapos na ang execution pag nabayaran na ang P500,000.00.
-Atty. Arjay
Hi po atty. Salamat sa reply, papano po kung walang wala na po talaga silang makuha kasi nagrerent lang po kami eh. Ung magulang ko po kasi ung may utang.. madadamay po ba pati gamit po namin ng kapatid ko? Thank you po..
Dear William,
Kung wala na talagang makukuha, wala na silang magagawa. May kasabihan nga, “you cannot squeeze blood from stone.” Saka kung maipapakita naman ninyo na mga kapatid nyo ang may-ari nung mga gamit, pwedeng pakawalan na yun ng sheriff. Kung yung mga may value tulad ng mga sasakayan ang pag-uusapan, may rehistro naman kung kanino nakapangalan, so hindi yun dapat hatakin kung sa kapatid mo naman nakapangalan.
-Atty. Arjay
by kizzabianca2
hi atty, urgent po sana…nakareceive po ako ng text message containing this…
this is from credit investigation bureau inc
re: writ of execution for violation of article 318 deciet (warrant to seize property) against you will be conducted on june 8, 2018 by court sheriffs
& authorities, kindly secure your presence at your residence venue on given date to avoid any untoward incidents. you may call atty. xxxxxxx at cp no xxxxxx details to avoid full extent of the law.
I remember po nakareceive kmi summon years ago, nireceive nmin pero di kmi nakaattend then wala n kmi nareceived n followup letter from rtc di na rin nmin sinasagot ung law firm or collector agency na nag file ng case….
totoo po ba ito atty? hindi ko po alam if related ito sa summon dati, kasi 2 credit card (different bank) ang di nmin nasettle at yung isa lang ang nakapag-summon samin…salamat po ng marami sa time.
Dear bianca,
It is possible na connected yan sa court summons na natanggap mo dati. Most likely, nagrender na ng default judgment ang court dahil hindi kayo naga-appear kapag may hearing, at hindi nyo na din sinasagot ang reklamong isinampa laban sa inyo.
Just to make sure, try mo mag-inquire sa mismong court na nagpadala sa inyo ng summons kung meron na ba silang judgment sa case mo, at kung ano ang mga latest issuances ng court (para malaman mo meron ba talagang order sa sheriff na mag-sieze ng property mo. Hindi kasi maganda ang pakiramdam ko sa text message na natanggap mo, kaya mabuti kung i-verify mo muna just to be sure. Pero wag kang tatawag sa number na ibinigay sayo ng kung sino man yang nag-text sayo, dahil hindi natin alam kung sino ba talaga yang “attorney” na pinapatawagan nila sayo. Dumeretso ka magtanong dun mismo sa court na nag-issue ng summons sayo noon. Sana lang hindi mo pa nawawala yung summons para may reference ka, pati na yung court personnel na makakausap mo, dahil doon nakalagay yung title ng case mo, pati yung case number na kailangan para mahanap nila yung kaso mo (dahil sobrang dami ng mga cases na hawak ng mga courts).
Kung sakali man na may magpakilalang sheriff na pumunta sa bahay nyo, hanapan mo muna sya ng “writ of execution” na issued ng court, dahil yun ang magsisilbing authority ng sheriff na i-execute ang judgment (kung talagang meron man). Kung walang writ of execution na maipakita sayo, wag na wag kang papayag na kumuha sya ng kahit anong gamit mo.
-Atty. Arjay
follow up question lang po atty, recently nakapagtrabaho po ulit ako sa kuwait, ang utang ko po ay sa saudi, mahohold po ba ako sa immigration pag nasampa sila ng case? makukulong po ba ako? me criminal case po ba sila isasampa sa saudi? thank you po
Dear nicole,
I am not in the position to answer based on the laws that they have in Saudi. Every country has their own set of laws, and I am not qualified to tell you kung meron bang criminal case na pwedeng isampa sa Saudi laban sayo. I am also not aware of their immigration policies there.
Pero kung dito lang sa Pilipinas, hindi ka pwedeng i-hold sa immigration, at hindi ka din pwedeng ikulong, dahil lang sa nagkautang ka.
-Atty. Arjay
good day po, nagkautang po ako sa saudi 3 years ago at di ko na po nabayarandue to unemployment at iba pang factors, ngayon po sinisingil po ako ng collecting agency na within 6 months e mabayaran, at kung di ay kakasuhan, pwede po ba akong dumerecho sa original creditor ang bank para humingi ng amnesty o khit 50% off sa kabuuang nautang ko, me cases po b na ganun, kung makasuhan po ba sa saudi e automatic di ako makakuha police clearance
Dear nicole,
Pwede ka dumeretso sa creditor mo, dahil hindi ka naman sa collecting agency may utang kundi sa creditor. Yung creditor lang din ang may full authority na magbigay sayo ng kung ano mang concession ang gusto mong i-request, tulad ng amnesty na nabaggit mo. Ang collecting agency kasi, makakapagbigay lang ng concessions kung pinayagan sila ng creditor. Kung kasuhan ka man, most likely dito nila sa Pilipinas isasampa ang collection case against you, at hindi sa Saudi. Ganun pa man, makakakuha ka parin dapat ng police clearance, dahil hindi naman criminal case, kundi civil case lang, ang collection case.
-Atty. Arjay
Good day po Atty.
Tanong ko lang po kung pwde ba mg file sa kin ang bangko ng BP22??
Ang nangyari po kasi meron po akong personal loan sa bangko na ng issue ako ng pdc. Nung april 2018, lalagyan ko sana ito ng pondo pero ako ay nagulat na biglang na account closed ang aking account… Ang sabi nila nung november 2017 pa daw ito naclose… Ang pinagtataka ko lang, kung ito ay naclose ng nkaraang taon bakit nakakapondo pa ako nun november 2017-march 2018..??
At ngayon sinisingil nila ako ng 5 mos delay ng aking account…
Dear lady red,
Kailangan mong linawin sa bank kung paano nangyari yung pag-close ng account mo. Sila na ang makakasagot nyan, because it will involve their policies in closing the account of depositors, pati na yung mga record ng previous transactions mo with them. Unahan mo na bago dumating yung due date nung PDC mo, dahil kung hahayaan mo lang na hindi ma-resolve yung issue ng pagkaka-close nung bank account mo, pwede ka talagang ma-demanda ng violation of BP 22 once tumalbog na yang check mo.
-Atty. Arjay
Dear Atty.
Good Day po!
Itatanong ko Lang po, ang sitwasyon ko po kasi ngaun ay sa guarantor ko.galing po ako Saudi ngaun po nagbakasyon ako, un company po namin bago ka payagan umuwi dapat May guarantor ka..pumayag po siya mag guarantor para makauwi ako..ngaun po Hindi ako nakabalik ng Saudi dahil nabuntis po ako,un guarantor ko po sinisingil ako at kinakaltasan daw po siya dun sa Saudi dahil sa Hindi ko pagbalik. Ang binabayaran daw po nya dun s company namin un bayad ng ticket ko at iqama ko po..hanggang sa tinatakot na po ako ng guarantor ko, ipapabarangay at ipapapulis daw po nya ako at idedemanda.kahit Wala po ako nakuha na pera or nagpirmahan Kami ng guarantor ko dun Saudi maari po ba nya ko kasuhan dito s pilipinas kahit sa Saudi po un nangyari?
Dear Jane,
Kahit wala kang natanggap na cash, meron kang na-derive na advantage mula sa isang bagay na binabayaran nya ngayon, tulad ng ipinambili ng ticket mo pabalik ng Pilipinas (na ikaw din naman ang nakinabang at hindi sya). Meron siyang legal right to seek reimbursement from you. Bilang guarantor nya, sya ngayon ang nagsa-suffer sa consequences ng hindi mo pagbalik sa Saudi, kahit na sya pa ang nagmagandang loob para lang makauwi ka dito.
Kahit wala kayong pinirmahang kasunduan, madali lang para sa kanya ang patunayan na meron syang ni-guarantee para sayo sa Saudi, dahil malamang meron syang pinirmahan doon na guarantee agreement. Pwede nya yun magamit para patunayan na meron syang claims mula sayo.
Though pwede sya magreklamo sa barangay at magdemanda sa korte (through a duly authorized representative, or pag nakauwi sya sa Pilipinas), hindi ka nya maipapa-pulis, dahil walang criminal case na pwedeng isampa laban sayo (based sa narration mo ng mga nangyari). Civil case for collection lang ang pwedeng nyang i-file sa court.
Para aware ka, ang venue ng civil case ay kung saan ang residence either ng plaintiff or ng defendant. Ang venue ng criminal case ay kung saan nangyari ang insidente. Since resident ka dito sa Pilipinas, pwede ka nya kasuhan dito sa Pilipinas kahit sa Saudi nangyari ang iyong pagkakautang, dahil ang rules on venue ng civil cases ang susundin, at hindi yung rules ng criminal cases.
-Atty. Arjay