• Creditors may only do legally acceptable acts to collect from debtors

    Persida Acosta

    Persida Acosta

    Dear PAO,
    I received a letter from the bank that issued my credit card. I was informed that my account has been transferred to their collection agent due to my failure to pay. Since then, the collection agent has continuously harassed me and even threatened me with suits. I can no longer tolerate their actions. Can I sue them?

    Dear Butch,
    As a creditor, credit card companies or their collection agents have the right to demand payment from their debtors when the obligation becomes due. This is especially true in case the debtor has been delinquent in paying his or her account. In such a case, the debt is not only due, but is overdue.

    In demanding payment, a creditor can take reasonable measures to compel the debtor to pay. This includes making threats to enforce his claim in court. Such practice is legal and has been sanctioned by the Supreme Court in a long line of cases. According to the Supreme Court, there is nothing unlawful on the threat to sue (Lee vs. Court of Appeals, 201 SCRA 405). It is a practice followed not only by banks but even by individuals to demand payment of their accounts with the threat that upon failure to do so an action would be instituted in court. Such a threat is proper within the realm of the law as a means to enforce collection (Lee vs. Court of Appeals citing Berg vs. National City Bank of New York, 102 Phil. 309).

    However, a creditor may only do legally acceptable acts in trying to collect from his debtor. If a creditor oversteps the bounds of law, legal responsibilities would attach to him and the debtor would have a ground to sue in court. Of particular relevance to the matter at hand is the rule prohibiting credit card companies and their collection agents from doing unfair collection practices. This includes (a) use or threat of violence or other criminal means to harm a person, his reputation or property; b) use of obscenities, insults, or profane language which amount to a criminal act or offense; (c) disclosure of the names of credit cardholders who allegedly refuse to pay debts, unless authorized by law; (d) threat to take any action that cannot legally be taken; e) purposely communicating or threatening to communicate false credit information; (f) any false representation or deceptive means to collect any debt or to obtain information concerning a cardholder; and (g) making contact at unreasonable/inconvenient hours before 6:00 A.M. or after 10:00 P.M., unless the account is past due for more than sixty (60) days, it is with express permission, or said times are the only reasonable or convenient opportunities for contact (Subsecs. 4301N.14, Manual of Regulations for Non-Bank Financial Institution as amended by Circular No. 454, s. 2004). Moreover, the rules enjoin banks, subsidiary/affiliate credit card companies, collection agencies, counsels and other agents to observe good faith and reasonable conduct, and refrain from engaging in unscrupulous or untoward acts in collecting the amounts due them under the credit card agreement.

    Violating the above rules would subject the credit card company or its collection agent to administrative and criminal sanction under Republic Act (R.A.) No. 7653, known as the New Central Bank Act, in addition to possible criminal responsibility under the Revised Penal Code, and civil liability under the Civil Code.

    In sum, the collection agent’s threat to sue per se is not actionable. By itself, you cannot use it to sue the credit card company or its collection agent. However, if this is accompanied by other acts that are beyond what may legally be done, you may file appropriate civil, criminal and administrative complaint against the credit card company or its collection agent to vindicate violation of your rights.

    We hope that we were able to sufficiently address your concern. Please bear in mind that this opinion is based on the facts you narrated and our appreciation of the same. Our opinion may vary if facts are changed or elaborated.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net


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    1 Comment

    1. Mam what happens if the credit card holder w/o d consent of the wife signed a compromise agreement w/ d collection agent becos of harasment & d amount indicated is much much higher than d due amount. D case is w/ d court nw. The couple wud still like to settle bt the amount shud be just & nt exorbitant as being demanded – from 200k to 1M ba nman. Also the payments tendered under the agreement were nt even deducted for advise pls. Thanks