Limits on interest rates for loans by associations

For loans or forbearance not secured by mortgage on real estate, the maximum interest rate that can be charged is 14% per annum.
Building and loan associations, organized under Act No. 1459 Section 171, are specifically limited to charging no more than 12% per annum inclusive of all premiums, fines, penalties, or dues on shares related to loans or forbearance.

The board of directors of a building and loan association may, by majority vote, borrow money temporarily as needed for business operations, as long as borrowing aligns with the association’s objectives.
The total outstanding indebtedness must not exceed 50% of the paid-in capital stock of the association.
Directors or officers of such associations are prohibited from borrowing association funds for personal use unless secured by pledged shares with withdrawal value exceeding the borrowed amount.
They may not serve as guarantors, endorsers, sureties, or obligors for loans from the association unless secured similarly.
Violation of these rules is punishable by imprisonment of up to five years, fines ranging from 1,000 to 5,000 pesos, or both, at the court’s discretion.

Section 178 of Act No. 1459 is repealed by this Act.
The law does not apply to contracts or transactions already existing and in force at the time of the Act’s approval.