ACT NO.

2655 AN ACT FIXING RATES OF INTEREST UPON LOANS AND DECLARING THE EFFECT OF RECEIVING OR TAKING USURIOUS RATES AND FOR OTHER PURPOSES

SECTION 1. The rate of interest for the loan or forbearance of any money goods, or credits and the rate allowed in judgments, in the absence of e !ress contract as to such rate of interest, shall be si !er centum !er annum or such rate as may be !rescribed by the "onetary #oard of the Central #an$ of the %hili!!ines for that !ur!ose in accordance with the authority hereby granted. SECTION 1&a. The "onetary #oard is hereby authori'ed to !rescribe the ma imum rate or rates of interest for the loan or renewal thereof or the forbearance of any money, goods or credits, and to change such rate or rates whene(er warranted by !re(ailing economic and social conditions. In the e ercise of the authority herein granted, the "onetary #oard may !rescribe higher ma imum rates for loans of low !riority, such as consumer loans or renewals thereof as well as such loans made by !awnsho!s finance com!anies and other similar credit institutions although the rates !rescribed for these institutions need not necessarily be uniform. The "onetary #oard is also authori'ed to !rescribe different ma imum rate or rates for different ty!es of borrowings, including de!osits and de!osit substitutes, or loans of financial intermediaries. SECTION ). No !erson or cor!oration shall directly or indirectly ta$e or recei(e in money or other !ro!erty, real or !ersonal, or choses in action, a higher rate of interest or greater sum or (alue, including commissions, !remiums, fines and !enalties, for the loan or renewal thereof or forbearance of money, goods, or credits, where such loan or renewal or forbearance is secured in whole or in !art by a mortgage u!on real estate the title to which is duly registered, or by any document con(eying such real estate or an interest therein, than twel(e !er centum !er annum or the ma imum rate !rescribed by the "onetary #oard and in force at the time the loan or renewal thereof or forbearance is granted* %ro(ided, That the rate of interest under this section or the ma imum rate of interest that may be !rescribed by the "onetary #oard under this section may li$ewise a!!ly to loans secured by other ty!es of security as may be s!ecified by the "onetary #oard. SECTION +. No !erson or cor!oration shall directly or indirectly demand, ta$e, recei(e or agree to charge in money or other !ro!erty, real or !ersonal, a higher rate or greater sum or (alue for the loan or forbearance of money, goods, or credits where such loan or forbearance is not secured as !ro(ided in Section two hereof, than fourteen !er centum !er annum or the ma imum rate or rates !rescribed by the "onetary #oard and in force at the time the loan or forbearance is granted. SECTION ,. No !awnbro$er or !awnbro$er-s agent shall directly or indirectly sti!ulate, charge, demand, ta$e or recei(e any higher rate or greater sum or (alue for any loan or forbearance than two and one&half !er centum !er month when the sum lent is less than one hundred !esos. two !er centum !er month when the sum lent is one hundred !esos or more, but not e ceeding fi(e hundred !esos. and fourteen !er centum !er annum when it is more than the amount last mentioned. or the ma imum rate or rates !rescribed by the "onetary #oard and in force at the time the loan or forbearance is granted. / !awnbro$er or !awnbro$er-s agent shall be considered such, for the benefits of this /ct, only if he be duly licensed and has an establishment o!en to the !ublic. It shall be unlawful for a !awnbro$er or !awnbro$er-s agent to di(ide the !awn offered by a !erson into two or more fractions in order to collect greater interest than the !ermitted by this section. It shall also be unlawful for a !awnbro$er or !awnbro$er-s agent to re0uire the !awner to !ay an additional charge as insurance !remium for the safe$ee!ing and conser(ation of the article !awned. SECTION ,&a. The "onetary #oard may eliminate, e em!t from, or sus!end the effecti(ity of, interest rate ceilings on certain ty!es of loans or renewals thereof or forbearances of money, goods, or credit, whene(er warranted by !re(ailing economic and social conditions s('N"1N2#. SECTION ,&b. In the e ercise of its authority to fi the ma imum rate or rates of interest under this /ct, the "onetary #oard shall be guided by the following* 1. The e isting economic conditions in the country and the general re0uirements of the national economy.

). The su!!ly of and demand for credit. +. The rate of increase in the !rice le(els. and ,. Such other rele(ant criteria as the "onetary #oard may ado!t. SECTION 3. In com!uting the interest on any obligation, !romissory note or other instrument or contract, com!ound interest shall not be rec$oned, e ce!t by agreement* %ro(ided, That whene(er com!ound interest is agreed u!on, the effecti(e rate of interest charged by the creditor shall not e ceed the e0ui(alent of the ma imum rate !rescribed by the "onetary #oard, or, in default thereof, whene(er the debt is judicially claimed, in which last case it shall draw si !er centum !er annum interest or such rate as may be !rescribed by the "onetary #oard. No !erson or cor!oration shall re0uire interest to be !aid in ad(ance for a !eriod of more than one year* %ro(ided, howe(er, That whene(er interest is !aid in ad(ance, the effecti(e rate of interest charged by the creditor shall not e ceed the e0ui(alent of the ma imum rate !rescribed by the "onetary #oard. SECTION 4. /ny !erson or cor!oration who, for any such loan or renewal thereof or forbearance, shall ha(e !aid or deli(ered a higher rate or greater sum or (alue than is hereinbefore allowed to be ta$en or recei(ed, may reco(er the whole interest, commissions, !remiums !enalties and surcharges !aid or deli(ered with costs and attorneys- fees in such sum as may be allowed by the court in an action against the !erson or cor!oration who too$ or recei(ed them if such action is brought within two years after such !ayment or deli(ery* %ro(ided, howe(er, That the creditor shall not be obliged to return the interest, commissions and !remiums for a !eriod of not more than one year collected by him in ad(ance when the debtor shall ha(e !aid the obligation before it is due, !ro(ided such interest, and commissions and !remiums do not e ceed the rates fi ed in this /ct. SECTION 5. /ll co(enants and sti!ulations contained in con(eyances, mortgages, bonds, bills, notes, and other contracts or e(idences of debts, and all de!osits of goods or other things, whereu!on or whereby there shall be sti!ulated, charged, demanded, reser(ed, secured, ta$en, or recei(ed, directly or indirectly, a higher rate or greater sum or (alue for the loan or renewal or forbearance of money, goods, or credits than is hereinbefore allowed, shall be (oid* %ro(ided, howe(er, That no merely clerical error in the com!utation of interest, made without intent to e(ade any of the !ro(isions of this /ct, shall render a contract (oid* %ro(ided, further, That !arties to a loan agreement, the !roceeds of which may be a(ailed of !artially or fully at some future time, may sti!ulate that the rate of interest agreed u!on at the time the loan agreement is entered into, which rate shall not e ceed the ma imum allowed by law, shall !re(ail notwithstanding subse0uent changes in the ma imum rates that may be made by the "onetary #oard* /nd %ro(ided, finally, That nothing herein contained shall be construed to !re(ent the !urchase by an innocent !urchaser of a negotiable mercantile !a!er, usurious or otherwise, for (aluable consideration before maturity, when there has been no intention on the !art of said !urchaser to e(ade the !ro(isions of this /ct and said !urchase was not a !art of the original usurious transaction. In any case, howe(er, the ma$er of said note shall ha(e the right to reco(er from said original holder the whole interest !aid by him thereon and, in case of litigation, also the costs and such attorney-s fees as may be allowed by the court. SECTION 6. /ll loans under which !ayment is to be made in agricultural !roducts or seed or in any other $ind of commodities shall also be null and (oid unless they !ro(ide that such !roducts or seed or other commodities shall 4e a!!raised at the time when the obligation falls due at the current local mar$et !rice* %ro(ided, That unless otherwise stated in a document written in a language or dialect intelligible to the debtor and subscribed in the !resence of not less than two witnesses, any contract ad(ancing money to be re!aid later in agricultural !roducts or seed or any other $ind of commodities shall be understood to be a loan, and any !erson or cor!oration ha(ing !aid otherwise shall be entitled in case action is brought within two years after such !ayment or deli(ery to reco(er all the !roducts or seed deli(ered as interest, or the (alue thereof, together with the costs and attorney-s fees in such sum as may be allowed by the court. Nothing contained in this section shall be construed to !re(ent the lender from ta$ing interest for the money lent, !ro(ided such interest be not in e cess of the rates herein fi ed. SECTION 7. The !erson or cor!oration sued shall file its answer in writing under oath to any com!laint brought or filed against said !erson or cor!oration before a com!etent court to reco(er the money or other !ersonal or real !ro!erty, seeds or agricultural !roducts, charged or recei(ed in (iolation of the !ro(isions of this /ct. The lac$ of ta$ing an oath to an answer to a com!laint will mean the admission of the facts contained in the latter. SECTION 7&a. The "onetary #oard shall !romulgate such rules and regulations as may be necessary to im!lement effecti(ely the !ro(isions of this /ct. SECTION 18. 9ithout !rejudice to the !ro!er ci(il action (iolation of this /ct and the im!lementing rules and regulations

!romulgated by the "onetary #oard shall be subject to criminal !rosecution and the guilty !erson shall, u!on con(iction, be sentenced to a fine of not less than fifty !esos nor more than fi(e hundred !esos, or to im!risonment for not less than thirty days nor more than one year, or both, in the discretion of the court, and to return the entire sum recei(ed as interest from the !arty aggrie(ed, and in the case of non&!ayment, to suffer subsidiary im!risonment at the rate of one day for e(ery two !esos* %ro(ided, That in case of cor!orations, associations, societies, or com!anies the manager, administrator or gerent or the !erson who has charge of the management or administration of the business shall be criminally res!onsible for any (iolation of this /ct. SECTION 11. /ll /cts and !arts of /cts inconsistent with the !ro(isions of this /ct are hereby re!ealed. SECTION 1). This /ct shall ta$e effect on the first day of "ay, nineteen hundred and si teen. Enacted, :ebruary ),, 1714. .