A collector at a Pasig branch is chasing a borrower who is two weeks behind on a ₱1,050 weekly installment. At 10:40 on a Friday night he sends a message: “Pag hindi ka nagbayad bukas, ipo-post ka namin sa GC ng barangay at tatawagan namin ang HR mo.” Three rules are broken in one message, and the lending company, not the collector, carries the fine.
The short answer: SEC Memorandum Circular No. 18, Series of 2019 lists the unfair debt collection practices banned for lending companies, financing companies, and the collectors they hire. These are threats of violence or of action that can’t legally be taken, insults and profanity, publishing a borrower’s name or debt, false or deceptive statements, contact before 6:00 AM or after 10:00 PM (with two exceptions), and contacting anyone on the borrower’s contact list other than named guarantors or co-makers. Collectors must give their full name. A first offense costs a lending company ₱25,000, and the company stays responsible even when an outside agency did the collecting.
This guide turns the circular into desk tools a collections supervisor can use on Monday: a what-it-looks-like table, a call-window check with a worked date count, a who-may-we-contact matrix, script rewrites in the Taglish collectors actually use, an escalation framework, and a weekly audit checklist.
Educational guide only, not legal advice. Have counsel review your written collection policy.
Who the rules cover
MC 18 is addressed to all financing and lending companies regulated by the SEC under the Financing Company Act and Republic Act No. 9474, the Lending Company Regulation Act of 2007. It also reaches the third-party service providers they hire to collect. The signed circular, published 23 August 2019, is also hosted in full by the ADB Law and Policy Reform Program. Section 3 says an outsourced agency is the lender’s agent and “the ultimate responsibility for collection practices and compliance with this Circular remain with the FCs and LCs.”
A second layer applies to more desks. The Financial Products and Services Consumer Protection Act (RA 11765) names the BSP, SEC, Insurance Commission, and Cooperative Development Authority as financial regulators. Section 8(d) says financial service providers “are prohibited from employing abusive collection or debt recovery practices.” Section 13 makes the provider responsible for its employees and agents and solidarily liable with accredited third-party providers, including for debt collection. If you run a cooperative credit desk rather than a lending company, MC 18 doesn’t name you, but the same habits keep you on the right side of RA 11765. Confirm the exact rules with your regulator.
The eight unfair collection practices, as they show up on a PH desk
Section 1 of MC 18 lists eight conducts. The circular’s wording is on the left; the middle column is how each one actually happens in branch collections.
| MC 18, Section 1 | What it looks like on the desk | Do this instead |
|---|---|---|
| (a) Violence or other criminal means to harm a person, reputation, or property | “Kukunin namin ang tricycle mo mamayang gabi” with no repossession right in the contract; a group visit meant to intimidate | Enforce collateral only through the process in the signed documents and with counsel |
| (b) Threats of action that cannot legally be taken | “Makukulong ka kapag hindi ka nagbayad” | State the real next step: a demand letter, a restructuring talk, or referral to counsel |
| (c) Obscenities, insults, or profane language | Name-calling on calls or chat, “manloloko,” curses in voice notes | Scripted, factual lines; end the call if it turns heated and log it |
| (d) Disclosing or publishing the names and personal information of borrowers who allegedly refuse to pay | “Wanted” posts on Facebook, a list of names posted in the barangay or office group chat | Keep the account between the lender, the borrower, and the named guarantor |
| (e) Communicating false information about the loan, including not saying the debt is disputed | Telling a guarantor the balance is ₱18,000 when the borrower’s receipts show ₱9,450; ignoring a dispute the borrower raised | Pull the statement and receipts first; say “disputed, under review” when it is |
| (f) False representation or deceptive means to collect or get information | Posing as “from the court,” a law office, NBI, or the barangay; fake subpoenas | Collectors identify themselves and the lender, every time |
| (g) Contact before 6:00 AM or after 10:00 PM | Late-night “last warning” texts, 5:00 AM doorstep visits | Use the call-window check below |
| (h) Contacting people in the borrower’s contact list other than named guarantors or co-makers | Calling the borrower’s sister, employer, or kumare to “help remind” | Use the contact matrix below; contact only the borrower and named guarantors or co-makers |
Row (b) is the one new collectors get wrong most often. The 1987 Constitution, Article III, Section 20 states: “No person shall be imprisoned for debt.” A bounced check is a separate legal matter that goes through counsel. Our post-dated check register guide covers how to track PDCs. It is never a collector’s threat on the phone.
The 6:00 AM–10:00 PM call window, with the two exceptions
Section 1(g) defines unreasonable hours as “contact before 6:00 A.M. or after 10:00 P.M.” The window doesn’t apply in two cases:
- the account is past due for more than fifteen (15) days, or
- the borrower has given express consent that those hours are the only reasonable or convenient times to reach them. The consent must be “evidenced by written, electronic or recorded means,” and may be given before, during, or after signing the loan agreement.
Because each exception is narrow, the safe default for every collector is simple: contact only between 6:00 AM and 10:00 PM. Leave out-of-window contact to the supervisor, who checks the conditions first.
Worked example: counting the fifteen days
Ana’s ₱1,050 installment fell due on Thursday, October 1. She has paid nothing since.
| Date of contact | Days past due | Past due “more than 15 days”? | Call at 9:40 PM allowed? | Call at 10:30 PM allowed? |
|---|---|---|---|---|
| Oct 8 | 7 | No | Yes (inside the window) | No, unless consent is on file |
| Oct 16 | 15 | No: 15 is not more than 15 | Yes | No, unless consent is on file |
| Oct 17 | 16 | Yes | Yes | Time rule no longer bars it, but every other Section 1 rule still applies |
The off-by-one on day 15 is where desks get caught. Count from the due date of the oldest unpaid installment, not from the last call, and write the count in the contact note.
Even after day 15, a 10:30 PM call is rarely a good idea. It wakes children, angers the household, and turns a payment conversation into a complaint. Use the exception for genuine cases, like a night-shift BPO agent who asked in writing to be called on her 1:00 AM break, and keep that consent with her file.
What a valid consent record looks like
- The borrower’s own words naming the hours, e.g. “Please call me between 12:00 AM and 2:00 AM, I work nights”
- How it was given: signed form, email or chat message from the borrower’s registered number, or a recorded call
- Date given, and the staff member who received it
- A copy kept with the loan file and noted on the account, alongside the privacy consent covered in our borrower consent log guide
Who may we contact? The contact matrix
Section 1(h) says that “notwithstanding the borrower’s consent,” contacting people in the borrower’s contact list “other than those who were named as guarantors or co-makers” is an unfair collection practice. Section 2 adds that borrower data stays confidential except in listed cases, such as with the borrower’s written or recorded consent, with credit bureaus and other lenders, upon a court or government order, and with collection agencies and counsel acting for the lender.
The National Privacy Commission says the same from the data side. NPC Circular No. 20-01 prohibits copying or saving contact lists “for use in debt collection or to harass in any way the borrower or his/her contacts.” Its amendment, NPC Circular No. 2022-02, treats “processing for collection of debt outside of the guarantors provided by the borrower” as prohibited.
| Person | May a collector contact them about the overdue amount? | Desk rule |
|---|---|---|
| The borrower | Yes | Inside the call window; collector gives full name and the lender’s name |
| Guarantor or co-maker named in the loan documents | Yes | Same call window and tone rules; share only what they guaranteed |
| Character reference given at application | No, not for collection | References verify identity at intake; they are not collection contacts |
| Spouse or relative who is not a co-maker | No | If they answer the borrower’s phone, ask for a callback without stating the debt |
| Employer or HR | No | Not a guarantor; disclosing the debt also breaks Section 2 confidentiality |
| Barangay officials, neighbors, group chats, social media | No | Never; this is publication under Section 1(d) |
| Your counsel or accredited collection agency | Yes (Section 2(d)) | Share the file under a written agreement; you remain responsible for their conduct |
The matrix only works if the guarantor in the file is real and reachable. Our guides on guarantors and co-makers and the guarantor contact recheck before release cover getting that right before the cash leaves.
Script rewrites: the same pressure, inside the rules
Firm is allowed. Section 1 of MC 18 opens by saying lenders “may resort to all reasonable and legally permissible means to collect.” The aim is to keep the pressure and drop the parts that become a complaint.
| What collectors send today | Rule it breaks | Rewrite |
|---|---|---|
| “Makukulong ka kapag hindi ka nagbayad.” | 1(b) threat of action that cannot legally be taken | “Ma’am Ana, this is Jun Reyes of (company name). Your ₱1,050 due on Oct 1 is still unpaid. Can you pay this week, or should we discuss a payment plan?” |
| “Ipo-post ka namin sa GC ng barangay.” | 1(d) publication of borrower information | “If we can’t agree on a plan by Oct 20, the account goes to our branch manager for review.” |
| “Taga-korte ito. May subpoena ka na.” | 1(f) false representation | “This is Jun Reyes, collector for (company name). You may call our branch at (branch number) to confirm.” |
| Voice note with curses at 11:15 PM | 1(c) profanity; 1(g) call window | Text at 8:00 AM: “Good morning. Reminder: ₱1,050 due Oct 1 remains open. Reply with a date you can pay.” |
| “Tatawagan namin ang HR mo.” | 1(h) contact outside guarantors; Section 2 confidentiality | Call the named co-maker, inside the window, and tell them only the amount they guaranteed |
| “₱18,000 na ang utang mo” (receipts show ₱9,450) | 1(e) false loan information | Quote the balance from the loan statement, and say “disputed, under review” if the borrower has raised a dispute |
Every rewrite carries the collector’s full name, which Section 4 requires of in-house collectors and agencies alike. Section 4 also requires a customer service unit or designated personnel to handle borrower complaints. Route those into a dated complaint log so supervisors see patterns before the SEC does.
What one bad message costs: the penalty math
Section 5 sets the fines.
| Offense | Lending company | Financing company |
|---|---|---|
| First | ₱25,000 | ₱50,000 |
| Second | ₱50,000 | ₱100,000 |
| Third | At the SEC’s discretion: a fine of at least twice the second-offense fine but not more than ₱1,000,000; or a 60-day suspension of lending or financing activities; or revocation of the Certificate of Authority | |
The progression of offenses lapses every three years from the last order of payment. Violations are counted “on a per loan transaction per complainant basis.” One collector who posts three borrowers’ names in one group chat has created three complainant cases, not one.
Put a peso figure on it for a small book. Take a ₱15,000 four-month loan at an illustrative 3% a month flat: interest is ₱15,000 × 3% × 4 = ₱1,800. A single first-offense fine of ₱25,000 wipes out the interest on 14 such loans (₱25,000 ÷ ₱1,800 ≈ 13.9). That is before staff time on the response, the reputational hit in the barangay, and the borrowers who quietly stop paying a lender they now see as abusive. The overdue amount that started it was ₱1,050.
Decision framework: what to do at each stage
A written ladder keeps collectors from escalating on mood. Tie each step to days past due and to who decides.
| Stage | Days past due | Who acts | Allowed moves |
|---|---|---|---|
| Reminder | Due date to 3 | Collector | Neutral text or call inside the window; confirm amount and payment channel |
| Follow-up | 4 to 15 | Collector | Calls and a branch-scheduled visit; record any promise to pay on a PTP board; contact the named co-maker |
| Supervisor review | 16 to 30 | Branch manager | Decide on out-of-window contact (only if justified and noted), a restructure review, or a formal demand |
| Formal stage | 31+ | Manager with counsel | Demand letter through counsel; restructure or rewrite; collateral steps per the contract |
| Stop chasing | Per policy | Approval chain | Move through your write-off approval chain; never hand the file to an informal “taga-singil” |
MC 18 fixes the conduct; your written policy fixes the day ranges. Where to stop spending on chasing is a cost question, covered in cost-to-collect by DPD bucket, and the early stages are covered in the week-one delinquency playbook.
Traps that turn a good collector into a complaint
- Personal phones and personal chats. Collectors message from their own numbers, the lender has no record, and the first anyone sees of a threat is a screenshot at the SEC.
- Agency contracts silent on MC 18. Section 3 keeps responsibility with you. Put the eight conducts, the call window, and the contact matrix into the agency agreement, and ask for their call logs.
- Treating references as backups. A character reference is not a co-maker. Calling one “just to locate” the borrower is contact outside the named guarantors.
- Quoting balances from memory. A wrong figure told to a co-maker is false loan information. Read the balance from the statement, and post every payment the same day with a receipt, as in our receipt discipline guide.
- Miscounting day 15. The exception starts on day 16. Count from the oldest unpaid due date.
- Incentives with no conduct gate. If collector pay rises with recoveries but nothing falls with complaints, you are paying for shortcuts.
- Visits as group shows. Three staff at the gate, loudly, in front of neighbors, is intimidation and publication rolled into one. Send one or two identified staff, and talk privately.
Weekly collections conduct audit (15 minutes per collector)
Run it every Monday on last week’s work. Pull ten contact notes per collector at random.
- Every contact has a date, time, channel, person contacted, and outcome written in the note
- No contact before 6:00 AM or after 10:00 PM, unless the note cites day 16+ or a consent record on file
- Every person contacted is the borrower or a named guarantor or co-maker
- Balances quoted match the loan statement
- Collector identified themselves by full name and the lender’s name
- No message mentions jail, court, police, NBI, or posting online
- Any borrower dispute or complaint is logged and routed to the designated complaints person
- Agency accounts: the agency’s call log matches your notes
Any miss gets a same-week coaching note. Two misses in a month get a supervisor sitting in on the next ten calls.
Where PesoLend fits today
PesoLend gives collectors a Today’s collections queue. It lists open installments from the last 14 days through today on active and in-arrears loans, with each installment’s due date and amount, the borrower’s phone as a tap-to-call link, and a form to record the payment on the spot. The due date sits beside every row, so the collector can count days past due before deciding whether a late call is even an option. The Collections calendar shows the month’s dues, disbursements, and payments received, and every payment gets a receipt number you can print.
Access follows staff roles. The Collector role can view borrowers and loans, record repayments, and work the collector queue, but cannot edit borrower records. Each loan lists its guarantors with name, phone, and relationship, so the contact matrix comes from the file, not from memory. Staff can add notes on the loan; each note shows its author, so the weekly audit has something to read. Ask collectors to type the date, time, channel, and person contacted at the start of each note.
To be plain about the limits: PesoLend does not block calls or messages outside 6:00 AM–10:00 PM, does not record calls or read chat messages, does not have a dedicated consent-for-contact-hours field, and does not flag unfair language. The call window, contact matrix, and audit above are desk rules your team runs on top of the queue, guarantor list, and notes.
FAQ
Does SEC MC 18 apply to in-house collectors or only to collection agencies?
Both. Section 1 covers lending companies, financing companies, and the third-party service providers they hire, and Section 4 requires in-house collectors and agencies alike to disclose their full name or true identity to the borrower.
Can we call a borrower after 10:00 PM if they’re 20 days late?
The time rule in Section 1(g) no longer bars it once the account is past due for more than fifteen days. Every other rule still applies, and a late call often produces a complaint rather than a payment. Keep it a supervisor decision and note the reason.
Can we tell the co-maker how much the borrower owes?
A named guarantor or co-maker is one of the people MC 18 allows you to contact. Tell them the accurate amount from the statement, limited to what they guaranteed, and say so if the borrower disputes it.
What can a borrower do if a collector harasses them?
Borrowers can complain to the lender’s designated complaints unit, which Section 4 requires, and to the SEC, which enforces MC 18. If contact lists or personal data were misused, they can also go to the National Privacy Commission. Lenders should treat every complaint as an audit trigger, not a nuisance.
What to do next
This week, print the eight-row table and the contact matrix for every collector and agency. Count day 15 correctly on your three oldest accounts, and run the conduct audit on last week’s notes. Then make the full-name, statement-balance, and named-co-maker rules part of how each account is worked.
Log in to PesoLend to work today’s collector queue with due dates beside every installment, pull the named guarantors from each loan, and leave a dated contact note your supervisor can audit on Monday.