FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House BillNo._ 3410
EXPLANATORY NOTE

In the case of Macalinao vs BPI (G.R. No. 175490, September 17, 2009)
decided by the Supreme Court of the Philippines (SC), it was ruled that a 3%
interest rate per month is excessive and unconscionable. The Supreme Court
said that,

“Indeed, in the Terms and Conditions Governing the Issuance and

Use of the BPI Credit Card, there was a stipulation on the 3%

interest rate. Nevertheless, it should be noted that this is not the

first time that this Court has considered the interest rate of 36% per

annum as excessive and unconscionable. We held in Chua vs.

Timan:

The stipulated interest rates of 7% and 5% per month
imposed on respondents’ loans must be equitably
reduced to 1% per month or 12% per annum. We
need not unsettle the principle we had affirmed in
a plethora of cases that stipulated interest rates of
3% per month and higher are excessive,
iniquitous, unconscionable and exorbitant. Such
stipulations are void for being contrary to morals,
if not against the law. While C.B. Circular No. 905-
82, which took effect on January 1, 1983, effectively
removed the ceiling on interest rates for both secured
and unsecured loans, regardless of maturity, nothing
in the said circular could possibly be read as granting
carte blanche authority to lenders to raise interest
rates to levels which would either enslave their
borrowers or lead to a hemorrhaging of their assets.
(Emphasis supplied.)”

Further, in the same case, the SC ruled that “Further, the stipulated
penalty charge of 3% per month or 36% per annum, in addition to regular
interests, is indeed iniquitous and unconscionable.”


While the ruling of the SC is clear, Mr. Jarius Bondoc, in his column in the
Philippine Star has said that, “Sources say the BSP prefers to interpret the SC
decision in favor of the banks and card issuers, instead of the consumer. Despite
the SC’s clear words to the contrary, the BSP insists that there is no more anti-
usury law and the decision is only case-to-case. Neither the BSP nor its policy-
making Monetary Board has moved to enforce the SC ruling. That is why banks
and card companies continue to rake in billions of pesos in “unconscionable,
exorbitant, excessive” fees from the uninformed public.”

It is therefore high time that a law be passed mandating a cap on the
interest rates and penalties that a credit card company may charge in order to

protect the general public who are all helpless against these credit card
companies.

In view of the foregoing, immediate passage of this bill is earnestly
requested

RUFYS B. Ri IGUEZ

Yi)

MAXIMO B. RODRIGUEZ, JR.


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No__3410

AN ACT
PROVIDING FOR THE MAXIMUM RATE OF INTEREST AND PENALTY THAT
CREDIT CARDS COMPANIES MAY CHARGE ITS CUSTOMERS OR CARD
HOLDERS

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Interest rates imposed by credit card companies on purchases and
cash advances made through such facility shall in no case be higher than 2% per
month or 24% per annum without compounding

SEC. 2. Surcharge or penalties shall likewise be limited to a ceiling of 2% per
month or 24% per annum without compounding

SEC. 3. No other costs shall be imposed other than the foregoing except for
reasonable attorney's fees and expenses of collection completely disclosed to,
sufficiently understood and voluntarily agreed upon by the card holder/owner.
Provided, That in no case shall said attorney's fees and expenses of collection
be more than the interest imposed as computed under Sec. 1 of this Act.

SEC. 4. Separability Clause. — If any provision or part hereof, is held invalid or
unconstitutional, the remainder of the law or the provisions not otherwise affected
shall remain valid and subsisting.

SEC. 5. Repealing Clause. - Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation
contrary to or inconsistent with the provisions of the Act is hereby repealed,
modified, or amended accordingly.

SEC. 6. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
Publication in at least two (2) newspapers of general circulation.

Approved,