Question & AnswerQ&A (Act No. 3998)
The maximum interest rate that can be charged for unsecured loans under Act No. 3998 is fourteen percent per annum.
Pawnbrokers may charge a maximum interest rate of two and one-half percent per month when the loan amount is less than one hundred pesos.
Pawnbrokers can charge a maximum interest rate of two percent per month for loans of one hundred pesos or more but not exceeding five hundred pesos.
No, it is unlawful for pawnbrokers or their agents to divide the pawn offered into two or more fractions in order to collect greater interest than permitted.
No, it is unlawful for pawnbrokers to require additional charges as insurance premiums for the safekeeping and conservation of the pawned article.
Persons may recover the entire amount of interest, commissions, premiums, penalties, and surcharges paid or delivered, plus costs and attorneys' fees, provided the action is brought within two years after payment.
The creditor is not obliged to return interest, commissions, and premiums collected in advance for a period not exceeding one year if these do not exceed the rates fixed by the Act.
All such covenants or stipulations are void, except for clerical errors made without intent to evade the law and purchases by innocent purchasers of negotiable mercantile papers before maturity.
Violators may be fined from fifty to five hundred pesos, or imprisoned for thirty days to one year, or both. They must also return the entire interest received and face subsidiary imprisonment for nonpayment at one day per two pesos.
The manager, administrator, gerente, or person in charge of management or administration of the business is criminally responsible for violations committed by corporations, associations, societies, or companies.