QuestionsQuestions (Act No. 3998)
Under the amended Section 3 of Act No. 2655, the maximum is 14% per annum for loans or forbearance not secured as provided in Section 2.
For pawns less than PHP 100, the maximum is 2.5% per month.
For PHP 100 to not exceeding PHP 500, the maximum is 2% per month.
For amounts exceeding PHP 500, the maximum is 14% per annum.
A person is considered a pawnbroker for the Act’s benefits only if he is duly licensed and has an establishment open to the public.
It is unlawful for a pawnbroker to divide the pawn into two or more fractions to collect interest greater than permitted by the section.
It is unlawful for a pawnbroker to require the pawner to pay an additional charge as an insurance premium for safekeeping and conservation of the article pawned.
The payer may recover the whole interest, commissions, premiums, penalties and surcharges paid or delivered with costs and attorneys’ fees, in an action brought within two years after such payment/delivery.
The creditor is not obliged to return interest, commissions and premiums collected in advance for not more than one year, provided the debtor pays the obligation before it is due and the amounts do not exceed the rates fixed in the Act.
All such covenants and stipulations in the enumerated contracts (e.g., conveyances, mortgages, bonds, notes, other evidences of debt, deposits) are void.
A merely clerical error in the computation of interest, made without intent to evade the Act, does not render the contract void.
An innocent purchaser for valuable consideration before maturity, without intent to evade the Act and not part of the original usurious transaction, may be protected in purchase; the maker can recover from the original holder the whole interest paid and, in litigation, costs and attorneys’ fees allowed by the court.
Upon conviction: a fine of not less than PHP 50 nor more than PHP 500, or imprisonment of not less than 30 days nor more than 1 year, or both—plus the return of the entire sum received as interest; and if nonpayment, subsidiary imprisonment at 1 day per PHP 2.
The manager, administrator/gerente, or the person in charge of management or administration of the business is criminally responsible.
Violation of the Act is subject to criminal prosecution without prejudice to the proper civil action.
It takes effect upon its approval (approved on December 5, 1932).