Management of Hardcore
Delinquent Accounts
LEGAL ACTIONS
Practical Approaches in Litigation
Objectives
 Understand how to deal with
delinquent Accounts when it comes to
legal actions
 Realize when and how to take actions
on cases
WHY SUE?
 Recovery
 Set Example
RECOVERY:WHERE ARE YOUR
HARDCORE ACCOUNTS?
 Loans Receivable - Past Due
 Loans Receivable – Restructured
 Loans Receivable – Items in Litigation
 Written-off Accounts
STEPS IN RECOVERY:
 Continued Visit by Supervisor &/or Manager
 Demand letter from the bank’s lawyer
 Letter of complaint before a Barangay Court*
 FILE A CASE IN THE PROPER COURT
Exemplary Principles
 Teaching a lesson and giving example to
other clients
 “Maintain Bank’s image…
 Image in the community
 Image with other clients
 Image within the industry
…that it is serious in its business of banking.
Agreement to Surrender
Personal Properties
 If a client is now willing to settle but is not
capable at this time;
 If the client has some movable properties
e.g. appliances – that he is willing to
“pawn”.
Agreement to Surrender
Personal Properties
A document signifying the intent of the borrower
to surrender any of his/her valuable item(s) on a
specified period in case he/she fails to forward
the full payment of the loan on an agreed date.
The bank can sell the item(s) in case the
borrower fails to pay the loan 5-10 days after
surrendering the item(s).
Agreement to Surrender
Personal Properties
 Not the usual procedure but nonetheless a
binding legal document.
 Surrendering the item(s) does not extinguish the
loan; loan is considered paid once the bank
receives cash from the proceeds of the sale in
payment for the loan.
 The essence of securing payment through this
technique lies on the Authority to Sell that the
client signs;
Agreement to Surrender
Personal Properties
 Keep visiting the clients to collect and remind him
to pay the loan;
 Loan payment is effected once the bank receives
cash.
Filing in Court:
Are you serious in taking this step?
Filing in Court : What Cases?
 “Sum of Money”
 Court action to recover the loan
 “Estafa” thru violation of Batas Pambansa Bilang 22
 Court action under the circumstances where the borrower issues a
bouncing check
Filing in Court : Where to file?
 Sum of Money – Metropolitan/Municipal Trial Court for
Cases below PhP 300K
 Violation of BP 22 – Metropolitan/Municipal Trial Court
for all BP 22 Cases; Preliminary step involves filing of
“Information” before the Prosecutors Office of proper
jurisdiction
Filing in Court : How much?
 Sum of Money
For claims ranging from PhP 20K – PhP 100K
Estimate : PhP 2,620.00, exclusive of Lawyers Acceptance Fee
which ranges from PhP 20,000 – PhP 50,000* + PhP 2,000 per
appearance (if the bank has not retained legal services)
Details : Docket Fee
Per defendant
Legal Research
Compensation Fund
Mediation Fee
Sheriff Trust Fund
PhP 875
PhP 230
PhP 10
PhP 5
PhP 500
PhP 1,000
Filing in Court : How much?
 BP 22
For amounts below PhP 100K
Estimate : PhP 1,535.00, exclusive of Lawyers Acceptance Fee
which ranges from PhP 20,000 – PhP 50,000* + PhP2,000 per
appearance (public prosecutor can pursue the case even without
private lawyers)
Details : Filing Fee-Prosecutor
Docket Fee
Legal Research
Mediation Fee
PhP 150
PhP 875
PhP 10
PhP 500
Filing in Court :
How long would it last?
…It depends on the load of cases of the court where
your case was filed!
 BP 22 – minimum of two (2) years
 Sum of Money – minimum of two (2) years
LEGAL ACTIONS
Practical Approaches in Litigation
TO
SUMMARIZE
Reasons why the
Account is Delinquent :




The client forgot to pay
Frequent reminder
Frequent visit
Principle of “TDK”
 The client is unable to pay
 Debt Recovery Program
 The client is unwilling to pay
Reasons why the
Account is Delinquent :
 The client is unwilling to pay
LEGAL ACTION
Some Tips on How to Speed up
Your Filing of the Case :
 File complaints only, against clients/co-makers that have the
following characteristics:




Can still be located or residing at their given address
Has the capacity to pay
Has permanent sources of income
Has leviable properties
 Ask your lawyers for the following:




Bank staff prepares and files the ‘Complaint’ formats;
Let your legal consultants (lawyers) sign the complaints as notaries, or any
other person authorized to notarize legal documents;
After filing the ‘Complaint’, request for a deputization of bank staff in
facilitating the service of summons to client-defendants.
Keep constant follow up of your court cases schedules with the courts
Thank you.