Amendment to Usury Law Interest Limits

Ask AI

Acts No. 4070: Amendment to Usury Law Interest Limits

Getting related questions...
What do you want to know about the law?
Your conversations and searches stay on your device. We do not store or track your activity on our servers. To know more about our privacy commitment see jur.ph/privacy Ask AI provides quick answers grounded in full case texts to avoid mistakes. Always verify with the original text.

Ask AI

Title Supreme Court: Amendment to Usury Law Interest Limits

Law: Acts No. 4070

Decision Date: Oct 12, 1933

The amendment to the Usury Law in the Philippines, known as Act No. 4070, prohibits individuals and corporations from receiving higher interest rates or sums for loans, with an exception for building and loan societies.

A

Interest Rate Cap

The maximum interest rate that can be charged or received, whether directly or indirectly, is 12% per annum.
This cap includes not only interest itself but also any other sums such as commissions, premiums, fines, and penalties connected to the loan, renewal, or forbearance of money, goods, or credits.

Premium Rates for Building and Loan Societies

Building and loan societies are permitted to charge an additional premium, not to exceed 1% per annum over the 12% interest rate, on loans secured by real estate.
The additional premium must be divided into 12 equal monthly quotas for each year.
Collection of the premium can only be done monthly, corresponding to each month of the loan contract period.

Prohibitions and Penalties

Charging or receiving interest or related charges exceeding the prescribed limits is prohibited.
These restrictions apply regardless of whether the interest or charges are taken directly or by indirect means.

Repeal of Inconsistent Laws

Any prior laws or parts thereof inconsistent with the provisions of this amendment are repealed.

Effectivity

The amendments take effect immediately upon approval of the Act on October 12, 1933.

END