Interest Rates and Usury Regulation Act

Section 2 prohibits any person or corporation from directly or indirectly taking or receiving more than twelve per centum per annum for the loan or forbearance of money, goods, or credits when the loan is secured in whole or in part by a mortgage upon real estate whose title is duly registered, or by any document conveying such real estate or an interest therein.
Section 2 allows mutual building and loan societies incorporated under the Corporation Act to charge up to eighteen per centum per annum, but not more, including premiums, interest and fines.
Section 2 applies to both the money and goods/credits categories covered by the Act.

Section 3 prohibits any person or corporation from directly or indirectly taking or receiving a higher rate or greater sum or value than fourteen per centum per annum for the loan or forbearance of money, goods, or credits when the loan is not secured as provided in Section 2.
Section 3 applies to both real and personal property taken or received as part of the transaction.

Section 4 prohibits any pawnbroker or pawnbroker agent from directly or indirectly taking or receiving any higher or greater sum or value for any loan or forbearance than the rates set by the Act.
Section 4 sets the pawnbroker limits as follows: three 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 the sum lent is more than five hundred pesos.
Section 4 provides that a pawnbroker or pawnbroker’s agent is considered as such for the benefits of the Act only if the pawnbroker is duly licensed and has an establishment open to the public.

Section 5 bars the reckoning of compound interest in computing interest on any obligation, promissory note, or other instrument or contract.
Section 5 allows compounding only if there is an agreement.
Section 5 provides that in default, whenever the debt is judicially claimed, it shall draw six per centum per annum interest.

Section 6 grants a right of recovery when a creditor has taken or received, for the loan or forbearance, a higher rate or greater sum or value than allowed by the Act.
Section 6 allows the debtor (or person paying) to recover the whole interest paid or delivered with costs and attorney’s fees, in an amount allowed by the court.
Section 6 requires filing the action within two years after the payment or delivery of the usurious interest.
Section 6 prevents the creditor from being obliged to return interest collected in advance if the debtor pays the obligation before it is due, provided the interest does not exceed ten to twelve per centum per annum, depending on whether it falls under Section 2 or Section 3.

Section 7 declares void all conveyances, mortgages, bonds, bills, notes, and other contracts or evidences of debt, and all deposits of goods or other things, where a higher rate or greater sum or value than allowed is reserved, secured, taken, or received for the loan or forbearance.
Section 7 provides an exception: a mere clerical error in the computation of interest made without intent to evade the Act does not render a contract void.
Section 7 protects an innocent purchaser of negotiable mercantile paper purchased for valuable consideration before maturity when there is no intent to evade the Act and the purchase is not part of the original usurious transaction.
Section 7 preserves the maker’s remedy: in any case, the maker may recover from the original holder the whole interest paid and, in case of litigation, also costs and attorney’s fees allowed by the court.

Section 8 declares loans payable in agricultural products or seed or any other commodities null and void unless the obligation provides that such products/seed/commodities shall be appraised at the time the obligation falls due at the current local market price.
Section 8 provides a recovery right when interest is demanded or taken in another form: a person or corporation that paid otherwise may, in an action brought within two years after the payment or delivery, recover all the products or seed delivered as interest or the value thereof, plus costs and attorney’s fees as allowed by the court.
Section 8 allows lenders to take interest for the money lent provided the interest is not in excess of the rates fixed by the Act.

Section 9 requires the person or corporation sued to file its answer in writing under oath to a complaint in a competent court to recover money or other personal or real property, seeds, or agricultural products charged or received in violation of the Act.
Section 9 imposes a consequence for noncompliance: failure to take the oath to the answer results in the admission of the facts contained in the complaint.

Section 10 subjects violations to criminal prosecution without prejudice to proper civil actions.
Section 10 requires that, upon conviction, the guilty person be sentenced to a fine equivalent to the total interest stipulated or to the value of the products or seed agreed upon as interest.
Section 10 mandates that if there is insolvency, subsidiary imprisonment be imposed.
Section 10 provides corporate liability allocation: for corporations, associations, societies or companies, the manager, administrator or gerente or the person in charge of management or administration shall suffer the subsidiary imprisonment upon conviction.

Section 11 repeals all Acts and parts of Acts inconsistent with the provisions of the Act.
Section 12 makes the Act effective on the first day of May, nineteen hundred and sixteen.
The Act was enacted on February 24, 1916.