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Money lender wins collection suit vs 3 Filipina DHs

10 July 2025

 

All money lender's actions are heard at the District Court

In a case that could have far-reaching effects on debt-collection practices of money lenders in Hong Kong, the District Court ruled earlier today that employers could be contacted to confirm the whereabouts of a domestic worker who has defaulted in paying off a loan.

Judge Louis Chan made the ruling in a money lender’s action filed by Pacific Ace Finance Ltd. against three Filipina domestic helpers who failed to repay in full two separate loans they took out from the lending company in 2015.

Judge Chan found that the action of a Pacific Ace collector of going to the house of the employer of one of the defendants, Gilda H. Delay, and afterwards, leaving a letter in their mailbox requesting the helper to contact the money lender, did not violate the Licensing Conditions for money lenders.

Basahin ang detalye!

“I incline to think such arrangement was reasonable for the Plaintiff to locate and confirm if Delay was still under the same employment as specified in her Application Form and to make demand for repayment from Delay. I do not consider there has been any breach of the lenders’ obligation under the Licensing Conditions Condition 10,” said the judge.

In her decision handed down today, Judge Chan allowed Pacific Ace’s bid to collect the unpaid amounts from two separate loans taken out by Delay and two of her friends, plus costs. As the financing company was represented by a lawyer, its legal costs that could be charged to the defendants could be far more than the amount of their unpaid loans.

Delay, who was the only one present in court today to receive the written judgment, said she would appeal.

She also vowed to pursue her opposition to Pacific Ace’s application for the renewal of its license at the Magistrates’ level, which she said was adjourned to a future date pending the decision on the District Court case.

Pacific Ace’s claim was over two separate loans incurred by the three defendants: the first was for $10,000 taken out on March 28, 2015 by Rosalina J. Villasfer with Delay as co-borrower; and the second on May 4, 2015 for $13,000 by Delay, with Andrenee Villasfer as co-borrower.

By the time it filed the writ for compensation in 2018, only the first of four monthly installments amounting to $2,750 was repaid for the first loan, which together with interest of 30% per annum, should have amounted to $11,000.

For the second loan, which should have amounted to a total of $14,874, payable over six months, the amount repaid as of Jan. 17, 2018 was only $13,432.

By this time, the two Villasfers had already gone back to the Philippines, and only Delay had remained in Hong Kong to face the lawsuit.

Delay responded by filing a counter-claim for $10 million in punitive damages, saying that because of the financing company’s “unlawful debts recovery practice,”  she “suffered tremendously for 6 years of fear.” She later reduced her claim to $3 million so it still fell within the DC’s jurisdiction.

In her defense, Delay claimed that the plaintiff had charged excessive interest for the loans (up to 300% by her reckoning), that it employed illegal debt collection tactics like harassment and violation of privacy laws, and had forged documents.

She did not take the witness stand, but chose to rely on the witness statement prepared by one Steven Tam-Ang, whose testimony was all based on information passed on to him by Delay.

The judge dismissed Tam-Ang’s evidence as hearsay, as he had no personal knowledge about any of the allegations made by Delay. He was not present at the time Delay applied for the loans and/ or signed the promissory notes, nor did he witness the alleged harassment.

On the other hand, Pacific Ace presented two witnesses whom the judge found credible. One was Monaliza Bautista who is the company’s director and loan approving officer and has worked with the plaintiff company for 28 years. The other was Aldrin Samoza, who is a collection supervisor and has worked for the company for 29 years.

Bautista told the court that “co-borrowers” act as sureties or guarantors taken out by somebody else, and this is fully explained to all parties concerned before the loan application is approved.

This was to dispute Delay’s claim that the plaintiff runs a debt-trapping scam by having a principal borrower and co-borrower for its loans. She said the co-borrower was “fake” and was made to act as a “human form of securities” in what she called a scam.

The judge dismissed this argument, noting that most financial institutions require borrowers to nominate a security or guarantor, especially when borrowers could not provide any collateral for their loans.

This also does not violate the Money Lender Regulations which prohibits only three forms or security for loans, namely the identity card of a person, bank passbooks or photos of the borrower or surety, or that of their family member.

Judge Chan also dismissed Delay’s allegation that Pacific Ace had charged excessive interest for the loans, noting that the calculations provided the borrowers had clearly indicated that an annual interest rate of 30% was imposed on the first loan, and 28.8% on the second loan.

At the time the loans were provided Delay and her co-defendants, the legal interest rate was 60% although it has been reduced to 48% from Dec 30, 2022.

She said Delay had wrongly calculated the interest for the subsequent month’s instalment based on the remaining balance of the loan instead of the loan principal. Second, she considered all her late repayments over more than three years as settling the total loan amount without calculating the default interest, or what she should have paid in excess because of her late payments.

This kind of calculation, said the judge, is what is often called an “amortized loan” repayment, often agreed upon by a bank and a borrower, where monthly payments chip away at the principal, as well as the accrued interest.

But according to the judge, what the defendants had secured from Pacific Ace were “simple fixed interest loan”, where lenders use the loan principal and the fixed interest rate to calculate the total amount of interest to be paid over the entire instalment period.

This kind of loan “is commonly available among financial institutions (and certainly legal), said the judge.

(The full judgment can be found here: https://legalref.judiciary.hk/lrs/common/ju/newjudgments.jsp

Look for case numbers DCCJ 3298/2018 & DCCJ 3299/2018 )

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