No person shall be imprisoned for debt or non-payment of a poll tax.

The rationale for this prohibition is explained in the case of Lozano vs. Martinez, thus:
. . . Viewed in its historical context, the constitutional prohibition against imprisonment for debt is a
safeguard that evolved gradually during the early part of the nineteenth century in the various states
of the American Union as a result of the peoples revulsion at the cruel and inhumane practice,
sanctioned by common law, which permitted creditors to cause the incarceration of debtors who
could not pay their debts. At common law, money judgments arising from actions for the recovery of
a debt or for damages from breach of a contract could be enforced against the person or body of the
debtor by writ of capias ad satisfaciendum. By means of this writ, a debtor could be seized and
imprisoned at the instance of the creditor until he makes the satisfaction awarded. As a consequence
of the popular ground swell against such a barbarous practice, provisions forbidding imprisonment
for debt came to be generally enshrined in the constitutions of various states of the Union.

This humanitarian provision was transported to our shores by the Americans at the turn of the
century and embodied in our organic laws. Later, our fundamental law outlawed not only
imprisonment for debt, but also the infamous practice, native to our shore, of throwing people in jail
for non-payment of the cedula or poll tax.

In other words, no one could be compelled to pay a debt under pain of criminal sanctions (estafa is a
different matter). No one could also substitute the payment of debt through imprisonment or other
criminal penalties (subsidiary imprisonment is also another matter).

Lets examine some laws that were questioned, albeit unsuccessfully, on the ground that these laws
violate the constitutional prohibition against non-imprisonment for debt.

Bouncing checks. Certain laws, including Bouncing Checks Law (BP 22), have been questioned
as a violation of this right. However, its not the non-payment of an obligation which this law
punishes. The law isnt designed to coerce a debtor to pay his debt. The thrust of the law is to
prohibit, under pain of penal sanctions, the making of worthless checks and putting them in
circulation. Checks have become widely accepted as a medium of payment in trade and commerce,
and if the confidence in checks is shaken, the usefulness of checks as currency substitutes would
be greatly diminished. When the question was resolved in 1986, it had been reported that the
approximate value of bouncing checks per day was close to 200 Million Pesos, thereafter averaging
between P50 to P80 Million a day. (Lozano vs. Martinez)
Trust receipts. The same argument was raised against the Trust Receipts Law (PD 115), which is a
declaration by the legislative authority that, as a matter of public policy, the failure of a person to turn
over the proceeds of the sale of goods covered by a trust receipt or to return said goods if not sold is
a public nuisance to be abated by the imposition of penal sanctions. It punishes the dishonesty and
abuse of confidence in the handling of money or goods to the prejudice of another. The law does not
seek to enforce payment of a loan. (Tiomico vs. CA)
Credit cards. Under the Access Devices Regulation Act of 1998 (RA. 8484), anyone who obtains
money or anything of value through the use of an access device, with intent to defraud or with intent
to gain and fleeing thereafter is criminally liable, punishable with a fine and imprisonment. That law
also provides that a cardholder who abandons or surreptitiously leaves the place of employment,
business or residence stated in his application or credit card, without informing the credit card
company of the place where he could actually be found, if at the time of such abandonment or
surreptitious leaving, the outstanding and unpaid balance is past due for at least 90 days and is more
than P10,000.00, shall be prima facie presumed to have used his credit card with intent to defraud.
We are still waiting for the test case on this.

No person shall be imprisoned for debt or non-payment of a poll tax.

The rationale for this prohibition is explained in the case of Lozano vs. Martinez, thus:
. . . Viewed in its historical context, the constitutional prohibition against imprisonment for debt is a
safeguard that evolved gradually during the early part of the nineteenth century in the various states
of the American Union as a result of the peoples revulsion at the cruel and inhumane practice,
sanctioned by common law, which permitted creditors to cause the incarceration of debtors who
could not pay their debts. At common law, money judgments arising from actions for the recovery of
a debt or for damages from breach of a contract could be enforced against the person or body of the
debtor by writ of capias ad satisfaciendum. By means of this writ, a debtor could be seized and
imprisoned at the instance of the creditor until he makes the satisfaction awarded. As a consequence
of the popular ground swell against such a barbarous practice, provisions forbidding imprisonment
for debt came to be generally enshrined in the constitutions of various states of the Union.

This humanitarian provision was transported to our shores by the Americans at the turn of the
century and embodied in our organic laws. Later, our fundamental law outlawed not only
imprisonment for debt, but also the infamous practice, native to our shore, of throwing people in jail
for non-payment of the cedula or poll tax.

In other words, no one could be compelled to pay a debt under pain of criminal sanctions (estafa is a
different matter). No one could also substitute the payment of debt through imprisonment or other
criminal penalties (subsidiary imprisonment is also another matter).
Lets examine some laws that were questioned, albeit unsuccessfully, on the ground that these laws
violate the constitutional prohibition against non-imprisonment for debt.

Bouncing checks. Certain laws, including Bouncing Checks Law (BP 22), have been questioned
as a violation of this right. However, its not the non-payment of an obligation which this law
punishes. The law isnt designed to coerce a debtor to pay his debt. The thrust of the law is to
prohibit, under pain of penal sanctions, the making of worthless checks and putting them in
circulation. Checks have become widely accepted as a medium of payment in trade and commerce,
and if the confidence in checks is shaken, the usefulness of checks as currency substitutes would
be greatly diminished. When the question was resolved in 1986, it had been reported that the
approximate value of bouncing checks per day was close to 200 Million Pesos, thereafter averaging
between P50 to P80 Million a day. (Lozano vs. Martinez)
Trust receipts. The same argument was raised against the Trust Receipts Law (PD 115), which is a
declaration by the legislative authority that, as a matter of public policy, the failure of a person to turn
over the proceeds of the sale of goods covered by a trust receipt or to return said goods if not sold is
a public nuisance to be abated by the imposition of penal sanctions. It punishes the dishonesty and
abuse of confidence in the handling of money or goods to the prejudice of another. The law does not
seek to enforce payment of a loan. (Tiomico vs. CA)
Credit cards. Under the Access Devices Regulation Act of 1998 (RA. 8484), anyone who obtains
money or anything of value through the use of an access device, with intent to defraud or with intent
to gain and fleeing thereafter is criminally liable, punishable with a fine and imprisonment. That law
also provides that a cardholder who abandons or surreptitiously leaves the place of employment,
business or residence stated in his application or credit card, without informing the credit card
company of the place where he could actually be found, if at the time of such abandonment or
surreptitious leaving, the outstanding and unpaid balance is past due for at least 90 days and is more
than P10,000.00, shall be prima facie presumed to have used his credit card with intent to defraud.
We are still waiting for the test case on this.
Additional protection for credit card holders under BSP Circular No. 702,
Series of 2010

Section 4 of this circular released on December 15, 2010 amended the Manual of Regulations of
Banks (Subsection X320.14) and MORNBFI, (Subsections 4320Q.14 and 4301N.14). The circular
applies to all credit operations of banks and other BSP-supervised financial institutions to better
protect all financial consumers, including credit card holders.

Sections 3 and 4 of the circular require credit card companies to:

[1] notify the card holder in writing of the endorsement of the collection to an agency at least seven
days before the actual endorsement;

[2] give the defaulting credit card holder the name of the agent assigned to the account once they
have endorsed the collection to a third-party;

[3] change all disclosure documents and marketing materials so that they are printed in plain
language and in bold black letters against a white background using the Arial font and a minimum 12
point font size.

These new requirements protect the credit card holders:

by giving them enough time to consider what actions to take,

from being harassed by an unscrupulous collection agent who might use aliases or
pseudonyms in order to avoid the sanctions for using unfair practices; and

by providing them with easily understood documents from the credit card companies.

Sanctions for credit card companies or their collection agents

The sanctions for unfair collection practices under Section 6 of the circular are:

First offense: Reprimand for the directors/officers responsible for the violation.

Second offense: Disqualification of the bank concerned from the credit facilities of the BSP except as
may be allowed under Section 84 of R.A. No. 7653 (New Central Bank Act).

Subsequent offenses:

Prohibition on the bank concerned from the extension of additional credit accommodation
against personal security; and

Penalties and sanctions under Sections 36 and 37 of RA 7653

Where to file the complaint for unfair collection practices

For further clarification and inquiries, please contact the Financial Consumer Affairs Group,
Supervision and Examination Sector, Bangko Sentral Ng Pilipinas, 5th Floor, Multi-Storey Building,
BSP Complex, A. Mabini St., Malate, Manila; e-mail address: consumeraffairs@bsp.gov.ph; Tel.
Nos.: Direct Line: (+632)523-3631; Trunkline (+632)524-7011 local 2584

Practical and legal problems with BSP Circular No. 702, Series of 2010

[1] Shrewd and unscrupulous collection agents wont use their office phone to call up the
card holder or the school principal.Having caller ID wont matter then. The agents can also say
that it wasn't them who called up.

[2] Section 4 provides that the credit card company must notify the card holder in writing of
the endorsement of the collection to an agency at least seven days before the actual
endorsement. Does it mean sending the written notice by ordinary mail, registered mail, or
personal service on the card holder? To prevent any circumvention or confusion, the circular
should have provided instead that the notification must be made by registered mail at least seven
days before the actual endorsement. Or, to really provide protection to the card holder, the circular
should have required sending the notice by expressregistered mail.

[3] Section 6 states that violations shall be subject to any or all of the following sanctions
depending upon their severity. The phrase any or all of the following sanctions is legally
incorrect since the circular provides that the sanctions are to be imposed on a successive
basis (first offense, second offense, subsequent offense). For example, the sanction of
Prohibition on the bank concerned from the extension of additional credit accommodation against
personal security cannot be imposed if the violation is only a first offense.

The phrase depending on their severity is a misplaced modifier. Does depending on their severity
refer to the sanctions or to the violations? If the phrase refers to the violations, then the sentence
should be edited to read Depending on their severity, violations shall be subject to any or all of the
following sanctions.

Also, the phrase depending upon their severity creates a legal problem. Does it mean, for
example, that making contact at unreasonable/inconvenient times or hours less severe than the
use or threat of violence or other criminal means to harm the physical person, reputation, or
property of any person?

Consider this situation: A credit card company has committed a third offense of unfair collection
practice. The penalty prescribed by the circular is Prohibition on the bank concerned from the
extension of additional credit accommodation against personal security. But if the violation, for
example, is the less severe making contact at unreasonable/inconvenient times or hours, does this
mean the BSP has the discretion to impose the lighter penalty of reprimand even if it is already a
third offense?

[4] Section 3 of the circular requires that the table of fees, penalties and interest rates, and reminder
to the cardholder in disclosure documents and marketing materials must be printed in plain
language and in bold black letters against a white background using the Arial font and a minimum 12
point font size. But aside from the required typography, the circular does not discuss what
plain language is or provide guidelines for the credit card companies to follow. (The circular
itself is not written in plain language; I have posted my Plain Language before and after comparisons
of this circular.)