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A collection of Philippine laws, statutes and codes not included or cited in the main indices of the Chan Robles Virtual Law Library.
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ACT NO. 2655
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.
Sec. 1-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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 4-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.
Sec. 4-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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 9-a. The Monetary Board shall promulgate such
rules and regulations as may be necessary to implement effectively the
provisions of this Act.
Sec. 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.
Sec. 11. All Acts and parts of Acts inconsistent
with the provisions of this Act are hereby repealed.
Sec. 12. This Act shall take effect on the first
day of May, nineteen hundred and sixteen.
ENACTED, February 24,1916.
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