With the suspension of the Usury Law and the removal of interest ceilings, the parties are generally free to stipulate the interest rates to be imposed on monetary obligations. As a rule, the interest rate agreed by the creditor and the debtor is binding upon them. This rule, however, is not absolute.
In a recent case, the SC again dealt with the validity of interest agreed by the parties, stating that stipulated interest rates are illegal if they are unconscionable and the Court is allowed to temper interest rates when necessary. In exercising this vested power to determine what is iniquitous and unconscionable, the Court must consider the circumstances of each case. What may be iniquitous and unconscionable in one case, may be just in another.
[See also Excessive and Unconscionable Interest Rates in the Philippines]
In that case, the SC reduced the interest rate from 18% to 12% per annum, noting, among others, that the amount involved has ballooned to an outrageous amount four times the principal debt.
Indeed, there is no hard and fast rule to determne the reasonableness of interest rates. Stipulated interest rates of 21%, 23% and 24% per annum had been sustained in certain cases.
On the other hand, there are plenty of cases when the SC equitably reduced the stipulated interest rates; for instance, from 18% to 10% per annum. The SC also voided the stipulated interest of 5.5% per month (or 66% per annum), for being “excessive, iniquitous, unconscionable and exorbitant, hence, contrary to morals (“contra bonos mores”), if not against the law”. The same is true with cases involving 36% per annum, 6% per month (or 72% per annum), and 10% and 8% per month. In these instances, the SC imposed the legal interest of 12%.
Just to be clear, “legal interest” doesn’t mean that anything beyond 12% is “illegal”. It simply means that in a loan or forbearance of money, the interest due should be that stipulated in writing, and in the absence thereof, the rate shall be 12% per annum.
——————–
Sources: Trade & Investment Development Corporation of the Philippines vs. Roblett Industrial Construction Corporation (G.R. No. 139290, 9 May 2006); Development Bank of the Philippines vs. Court of Appeal; Garcia vs. Court of Appeals; Medel vs. Court of Appeals; Security Bank and Trust Company vs. RTC Makati; Spouses Solangon vs. Salazar; Cuaton vs. Salud; Ruiz vs. CA; Eastern Shipping vs. Court of Appeals, G.R. No. 97412 July 12, 1994.
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Good day
Dear atty.Fred
My problema po akung hinaharap ngaun.Umutang po ako sa tao ng 100.000 with in 6months po nkpagbigay n po ako ng 160.000.may notaryo po kmi n pingawa 10% lang po ang tubo every month.Pero nung nagpaggawa po kmi d po siya sumama pinadala lng po niya ung id niya s amin para ipakita s attny.Ngaun po nkalimutan k po papirmahan s kanya.ang nangyari po umalis na po ako sa amin pero hinahanap po niya ako dahil hindi p dw p ako byad lhat daw po ng binayad k ai interest lang dahil ang patakaran dw po niya ay 20% per month.Pinapabyad po niya ako higit 200.000 kasama po ang prinsipal.Tapus idedemanda na daw pi niya ako.ngaun po nadadamay po ang kapatid k dahil atm po niya ang ginamit k dahil po pumapasuk ang remittance k at un po ang isinanla ko sa kanya.Atty.Fred di ko n po kasi kaya bayaran ung hinihingi niya.Baun n baun na po kasi ako s utang para may maibayad sa kanya umuutang po ako sa iba para ibayad k s kanya.Anu po b ang laban ko at makukulong po b ako?pls po advise niyo po ako.Salamat po.
please let me know standard penalties for late payment from government bank, i have loan of 94,700 housing loan
Good day po, I have a problem with the lending company. I barrowed a money amounting to 25k ang natanggap ko po ay 22k binawasan agad ng interest. Before po na manghiram ako I asked yung breakdown ng payment, the employee told me saka na idiclose pag naapproved na. I need to open a bank account for the check issuance. Cla po ang nagprovide ng mga affiliate banks nila. Ng irerelease na yung loan amount ang sabi po kailangan payable for 12 months with an interest of 4 percent per month so umabot po ng 45k ang babayaran ko, 1880 per check. Nakabayad po ako ng 4 months, at na close account yung check ko after, I need to pay an interest of 1 percent per check per day at 1500 per check for the late charges. Bago po ako pumirma gusto ko umatras pero sinabi po nung employee nila di daw pwede or magbabayad ako ng 5k for processing fees. Ang ginawa ko tinuloy ko. Ngayon po do ko sila binayaran, gusto ko pong ilaban ang kaso na ito dahil baka hindi lang ako ang biktima nila. Lahat po ng referral ko pati yung sa co maker ko hinaharassed nila sa text. May laban po ba ako?
Hi,we have the same problem as yours po.s keycash nmn kmi ngloan.nirefer kc sakin ng friend q dhil 1% nga lng dw ang interest per month.so nag go aq.ngpabriefing muna aq bgo mgpirma ng kung ano2.sbi ni mam khaye nun 1.1 ung fixed rate nla ng conversion ng taiwan dollar to peso(fixed n dw ung 1.1).So s PHP100,000 n niloan,NT$8565 ung bbyaran monthly x 1.1= PHP9421.50 dw per month ung bbyaran.9421.50 x 12(1year to pay)=PHP113,058.bale 13,058 ang tubo ng niloan s isang taon.natuwa p aq kc totoo na n 1%/month ang interest.inulit ulit q p sknya n “so ang 100k,13k ang tubo”.oo dw. Kinonfirm q p s mama q un(ksama q kc mama q dat tym kaso nsa lbas xa ng office) kc nga kung dun p s sinasanlaan nia ng ATM kmi kukuha,mas mlaki ng konti ung tubo.kya nagloan n q s keycash.nung huling blik q s keycash,tatanungin q sna pra san p ung barcode kc nga peso to peso aq,pgkarinig nung staff ngulat xa.d dw pwedeng peso to peso.sbi q sbi nun ni mam khaye pwede.taz sbi nia cge pwede dw peso pero kung mgkano dw sexchange rate ng taiwan dollar to peso,un dn babayaran.e d ngulat aq.kc kung 8565 taz 1.47 plitan e d nsa 12k mhigit mkukuha nlang tubo per month.kya sbi q dun s staff,hindi n 1% un.xaka kako sbi nla nun e 1.1 ung fixedrate nla ng exchange rate ng nt to peso.taz ngulat ung babae,ipapasa nnmn aq s ibang staff.e ang tgal.d q n hinintay umuwi n aq.kc bgo p ung last n punta qng un,nkausap q n ung cashier nun n peso nga ibabayad ni mama.inulit ulit q nga n ung 100k,13k ang tubo.oo dw.sbi q anong nid dalhin ng mama q.id lng dw nia.taz tinanong q kung un lng b.oo dw.kya sobrang naloka tlga aq s cnbi ng isang staff nun n kung mgkno dw plitan ng nt to peso e un ang ibabayad nmin.sorry s npakahabang kwento.sna msabi mo kung anong ngyari syo s pinaglendingan mo.thanks!super naiistress n kmi ng friend q n ngrefer dn skin dun dhil nga s gnung style nla.
Parang sa asialink lang yan same issue
Atty
Magloan po ako sa isang lending compny makapagloan ako ng 25k taz ibinwas yung pagoopen ng checking account, natural 22k nalang yung interest po ng 25k sa loob ng isang taon ay 19k or suma total ang interest ay nasa 76% per annum taz pag napas ng due date ay 2200 ang penalty , ito po ba ay tama, pwede ko po b sila kasohan dahil sobra sobra naman yung kanilang paningl sa interest at penalty , may Laban po ba ako kung sakali magfile ako dito sa binigay sa amin kopya hindi nakasaad kung ilan percent Interst. Dahil sa pangangailangam at papunta nga po ako abroad eh kinuha ko na, pero when I realize napakali ng tubo nila
Pwde po b nyo ako bigyan ng advice .. Kung sakali man po may Laban hindi lang ako nakikinabang dito pati yung ibang manungutang at ibang uutang
Hi I have borrowed frm a friend amounting to 250000 and has agreed to have a 8%interest monthly last mar 2015. I Paid almost 73,000 from mar to dec 2015. When I ask her how much is my loan she said it was 460,000 already Jan 2016. I ask her not to add interest anymore and I will pay my debt to her but she refuses. She said she will file legal action and Will do her best to get me into jail. Can I ask what can I do? And will I really go to jail? I really need some help from a lawyer
Dear Atty.
I loaned from a financing company sometime in 2014 amounting to 30k. I issued the checks payable for 5 months equally divided to weekly payments including the interests. However, something came up, my small rtw business collapsed and my heart conditioned worsened. I prioritize my medication and my payment for the balance of 18,000k plus ( 7 checks ) have been defaulted. But, i tried my best to pay my balance by depositing staggered thru the bank account of the lending company plus my remaining savings with them. As my knowledge if ever there still a balance because i lost my record of my savings with the lending company, my outstanding balance would only be 2,000 pesos. To my surprise, they sent me a final demand letter demanding me to pay withhin 5 days and the amount already ballooned to more than 150,000.00. And, i am being harassed to bring the matter in court.
Thank you and any advise you can give will be highly aprreciated
Good day!
My grandmother invested in Palm Oil Plantation and it was financed by a cooperative. Is it legal that the interest rate imposed on the 5 year contract was 24% per annum?
Sir, I want to cancel a loan due to misrepresentation but already signed the disclosure statement. The bank manager demanded for a 6% processing fee. Actually gusto ko po sanang epabuy out yung previous loan ko from other bank without knowing my loan balance. Ginawa po nila nagcompute po sila ng amount na mas malaki yung magiging net proceeds ko sa kanila without asking for my statement of accounts and only to find out later na hindi po pala accurate yung computations nila. Gusto ko po syang e cancel but had signed the disclosure statement. Is there no way out for me?
Gud morning po, nagutang po ako sa isang lending company, 30k+ tapos po may nangyari sa asawa ko na empleyado sa lending company kung san po ako naglending naghiram kame ulit ng 15k, instead na magdeduct sa sahod nya, ang ginawa nagfuse as one, so ang nangyari, lumaki ang utang ko naging 52,224- nagkapagbayad po ako almost 15k palang kasi nawalan po ako ng trabaho, so kung isummarize 37k nalang kulang ko, sa ngayon meron akong konting pera na gusto kong isettle na, kasi colateral ang land title ng mga magulang ko, gusto konang kunin, ang land title ngswap po sa unang laptop na colateral, sa ngayon yung 30K plus nanatirang utang ko umabot na ng 160k. tulungan nyo po ako. salamat
Dear Atty.,
I’m a government employee. I would like to be enlightened if the 30 percent per annum is still legal because this is the rate that the money lender charges me. Also, they do not issue any official receipt every time payment is made through my ATM card used as a collateral for my loan. I hope you can give me an advice regarding this issue becuase this may not only be useful for me but also for the others. Thank you so much.