ACT No. 2655
AN ACT FIXING RATES OF
INTEREST UPON LOANS AND DECLARING THE EFFECT OF RECEIVING OR TAKING USURIOUS
RATES AND FOR OTHER PURPOSES
Section
1
The rate of interest for the loan or
forbearance of any money goods, or credits and the rate allowed in judgments,
in the absence of express contract as to such rate of interest, shall be six
per centum per annum or such rate as may be prescribed by the Monetary Board of
the Central Bank of the Philippines for that purpose in accordance with the
authority hereby granted.
a. The
Monetary Board is hereby authorized to prescribe the maximum rate or rates of
interest for the loan or renewal thereof or the forbearance of any money, goods
or credits, and to change such rate or rates whenever warranted by prevailing
economic and social conditions.
In
the exercise of the authority herein granted, the Monetary Board may prescribe
higher maximum rates for loans of low priority, such as consumer loans or
renewals thereof as well as such loans made by pawnshops finance companies and
other similar credit institutions although the rates prescribed for these
institutions need not necessarily be uniform. The Monetary Board is also
authorized to prescribe different maximum rate or rates for different types of
borrowings, including deposits and deposit substitutes, or loans of financial
intermediaries.
Section
2
No person or corporation shall directly or
indirectly take or receive in money or other property, real or personal, or
choses in action, a higher rate of interest or greater sum or value, including
commissions, premiums, fines and penalties, for the loan or renewal thereof or
forbearance of money, goods, or credits, where such loan or renewal or
forbearance is secured in whole or in part by a mortgage upon real estate the
title to which is duly registered, or by any document conveying such real
estate or an interest therein, than twelve per centum per annum or the maximum
rate prescribed by the Monetary Board and in force at the time the loan or
renewal thereof or forbearance is granted: Provided, That the rate of interest
under this section or the maximum rate of interest that may be prescribed by
the Monetary Board under this section may likewise apply to loans secured by
other types of security as may be specified by the Monetary Board.
Section
3
No person or corporation shall directly or
indirectly demand, take, receive or agree to charge in money or other property,
real or personal, a higher rate or greater sum or value for the loan or
forbearance of money, goods, or credits where such loan or forbearance is not
secured as provided in Section two hereof, than fourteen per centum per annum
or the maximum rate or rates prescribed by the Monetary Board and in force at
the time the loan or forbearance is granted.
Section 4
No pawnbroker or pawnbroker's agent shall
directly or indirectly stipulate, charge, demand, take or receive any higher
rate or greater sum or value for any loan or forbearance than two and one-half
per centum per month when the sum lent is less than one hundred pesos; two per
centum per month when the sum lent is one hundred pesos or more, but not
exceeding five hundred pesos; and fourteen per centum per annum when it is more
than the amount last mentioned; or the maximum rate or rates prescribed by the
Monetary Board and in force at the time the loan or forbearance is granted. A
pawnbroker or pawnbroker's agent shall be considered such, for the benefits of
this Act, only if he be duly licensed and has an establishment open to the
public.
It shall be unlawful for a pawnbroker or
pawnbroker's agent to divide the pawn offered by a person into two or more
fractions in order to collect greater interest than the permitted by this
section.
It shall also be unlawful for a pawnbroker
or pawnbroker's agent to require the pawner to pay an additional charge as
insurance premium for the safekeeping and conservation of the article pawned.
a. The
Monetary Board may eliminate, exempt from, or suspend the effectivity of,
interest rate ceilings on certain types of loans or renewals thereof or
forbearances of money, goods, or credit, whenever warranted by prevailing
economic and social conditions.
b. In
the exercise of its authority to fix the maximum rate or rates of interest
under this Act, the Monetary Board shall be guided by the following:
1. The
existing economic conditions in the country and the general requirements of the
national economy;
2. The
supply of and demand for credit;
3. The
rate of increase in the price levels; and
4. Such
other relevant criteria as the Monetary Board may adopt.
Section
5
In computing the interest on any
obligation, promissory note or other instrument or contract, compound interest
shall not be reckoned, except by agreement: Provided, That whenever compound
interest is agreed upon, the effective rate of interest charged by the creditor
shall not exceed the equivalent of the maximum rate prescribed by the Monetary
Board, or, in default thereof, whenever the debt is judicially claimed, in
which last case it shall draw six per centum per annum interest or such rate as
may be prescribed by the Monetary Board. No person or corporation shall require
interest to be paid in advance for a period of more than one year: Provided,
however, That whenever interest is paid in advance, the effective rate of
interest charged by the creditor shall not exceed the equivalent of the maximum
rate prescribed by the Monetary Board.
Section
6
Any person or corporation who, for any such
loan or renewal thereof or forbearance, shall have paid or delivered a higher
rate or greater sum or value than is hereinbefore allowed to be taken or
received, may recover the whole interest, commissions, premiums penalties and
surcharges paid or delivered with costs and attorneys' fees in such sum as may
be allowed by the court in an action against the person or corporation who took
or received them if such action is brought within two years after such payment
or delivery: Provided, however, That the creditor shall not be obliged to
return the interest, commissions and premiums for a period of not more than one
year collected by him in advance when the debtor shall have paid the obligation
before it is due, provided such interest, and commissions and premiums do not
exceed the rates fixed in this Act.
Section
7
All covenants and stipulations contained in
conveyances, mortgages, bonds, bills, notes, and other contracts or evidences
of debts, and all deposits of goods or other things, whereupon or whereby there
shall be stipulated, charged, demanded, reserved, secured, taken, or received, directly
or indirectly, a higher rate or greater sum or value for the loan or renewal or
forbearance of money, goods, or credits than is hereinbefore allowed, shall be
void: Provided, however, That no merely clerical error in the computation of
interest, made without intent to evade any of the provisions of this Act, shall
render a contract void: Provided, further, That parties to a loan agreement,
the proceeds of which may be availed of partially or fully at some future time,
may stipulate that the rate of interest agreed upon at the time the loan
agreement is entered into, which rate shall not exceed the maximum allowed by
law, shall prevail notwithstanding subsequent changes in the maximum rates that
may be made by the Monetary Board: And Provided, finally, That nothing herein
contained shall be construed to prevent the purchase by an innocent purchaser
of a negotiable mercantile paper, usurious or otherwise, for valuable
consideration before maturity, when there has been no intention on the part of
said purchaser to evade the provisions of this Act and said purchase was not a
part of the original usurious transaction. In any case, however, the maker of
said note shall have the right to recover from said original holder the whole
interest paid by him thereon and, in case of litigation, also the costs and
such attorney's fees as may be allowed by the court.
Section
8
All loans under which payment is to be made
in agricultural products or seed or in any other kind of commodities shall also
be null and void unless they provide that such products or seed or other
commodities shall 6e appraised at the time when the obligation falls due at the
current local market price: Provided, That unless otherwise stated in a
document written in a language or dialect intelligible to the debtor and
subscribed in the presence of not less than two witnesses, any contract
advancing money to be repaid later in agricultural products or seed or any
other kind of commodities shall be understood to be a loan, and any person or
corporation having paid otherwise shall be entitled in case action is brought
within two years after such payment or delivery to recover all the products or
seed delivered as interest, or the value thereof, together with the costs and
attorney's fees in such sum as may be allowed by the court. Nothing contained
in this section shall be construed to prevent the lender from taking interest
for the money lent, provided such interest be not in excess of the rates herein
fixed.
Section
9
The person or corporation sued shall file
its answer in writing under oath to any complaint brought or filed against said
person or corporation before a competent court to recover the money or other
personal or real property, seeds or agricultural products, charged or received
in violation of the provisions of this Act. The lack of taking an oath to an
answer to a complaint will mean the admission of the facts contained in the
latter.
a. The
Monetary Board shall promulgate such rules and regulations as may be necessary
to implement effectively the provisions of this Act.
Section
10
Without prejudice to the proper civil
action violation of this Act and the implementing rules and regulations
promulgated by the Monetary Board shall be subject to criminal prosecution and
the guilty person shall, upon conviction, be sentenced to a fine of not less
than fifty pesos nor more than five hundred pesos, or to imprisonment for not
less than thirty days nor more than one year, or both, in the discretion of the
court, and to return the entire sum received as interest from the party
aggrieved, and in the case of non-payment, to suffer subsidiary imprisonment at
the rate of one day for every two pesos: Provided, That in case of
corporations, associations, societies, or companies the manager, administrator
or gerent or the person who has charge of the management or administration of
the business shall be criminally responsible for any violation of this
Act.
Section
11
All Acts and parts of Acts inconsistent
with the provisions of this Act are hereby repealed.
Section
12
This Act shall take effect on the first day
of May, nineteen hundred and sixteen.
ENACTED,
February 24, 1916
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