Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRESS
First Regular Session

House Bill No,_ 923

Introduced by Representative GERALDINE B. ROMAN

AN ACT
PRESCRIBING THE RATES OF INTEREST UPON LOANS AND FORBEARANCES.

EXPLANATORY NOTE

BSP Governor Benjamin E, Diokno recently announced that the Monetary Boardhas
approved a cap on credit card rates and fees beginning November3,2020 to allow credit
cardholders more affordable pricing terms. In this time of pandemic, this move is laudable. “The
capping of credit card charges is a timely and much-needed measure to promote responsible
lending and ease the financial burden of consumers and micro, small and medium enterprises
amid the Covid-19 pandemic,” SEC Chairman Emilio B. Aquino said.'

However, this is not enough. In the informal economy, especially in the provinces, the
practice of “5/6” lending is still rampant. At present, the debtor and creditor may enter into a
contract providing for any amount of interest. Consequently, many debtors especially those in
the cusp of emergencies pay interests at 5 to 10% a month. While courts are empowered to
reduce interest rates found unconscionable, the delay in and cost of litigation threaten to negate
the benefit to the debtor resulting from any such reduction.

This Bill addresses the predatory lending practices of persons and entities who are not
even properly licensed by providing for the ceiling of interests they can collect. In doing so, this
Bill hopes to discourage individuals who take advantage of the plight of the poor and charge
them unconscionable interest rates.

As an immediate response to the present pandemic and harsh economic situation in the
country today, immediate passage of this bill is earnestly sought

BL Lb Wor
s 7 GERALDINE B. ROMAN


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRESS
First Regular Session

House Bill No._929

AN ACT
PRESCRIBING THE RATES OF INTEREST UPON LOANS AND
FORBEARANCES

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

Section! Short Title. This Act shall be known as the Anti-Usury Law of 2021.

Sec. 2Unterest Rate. The rate of interest for the loan or forbearance of any money, goods, or
credits, or charges on any form of cash advance arrangements, and the rate allowed in
judgmentsshall not exceed twelve per centum per annum.

Sec.3.Exemptions. The provisions of this Act shall not apply to formal lending institutions,
such as banks, non-bank lending institutions, pawnwhops or pawnbrokers, all of whichmust
be duly licensed and duly authorized to perform lending activities by the Bangko Sentral ng
Pilipinas, and to cooperatives duly registered with the Cooperative Development Authority
and duly authorized by it to perform lending services

Sec. 4. Penalties. Without prejudice to the proper civil action, violation of this Act, shall be
subject to criminal prosecution and the guilty person shall, upon conviction, be sentenced to a
fine of not less than three hundred thousand pesos nor more than five million pesos, or to
imprisonment for not less than six years nor more than twelve years, or both, in the discretion
of the court, and to return the entire sum received as interest from the party aggrieved plus all
costs and expenses incurred in the prosecution of the offense, and in the case of non-payment,
to suffer subsidiary imprisonment at the rate of one day for every eight pesos: provided, that
in case of corporations, associations, societies, or companies the manager, administrator, or
the person who has charge of the management or administration of the business, together
with the board of directors or trustees, or their equivalent, shall be criminally and civilly
responsible for any violation of this Act

The same penalties shall apply to persons or entities performing lending activities as a regular
business concern without the necessary license.


Sec. 5. Repealing Clause. --All laws, presidential decrees or issuances, executive orders,
letters of instruction, administrative orders, rules or regulation inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

Sec.6. Implementing Rules, The Monetary Board shall define what constitutes regular

lending business concern and shall promulgate such rules and regulations as may be
necessary to implement effectively the provisions of this Act.

Sec.7. Separability Clause. Should any part of this Act be declared unconstitutional, the
validity of remaining provision hereof shall remain in full and effect.

Sec.8, Effectivity Clause.— This Act shall take effect fifteen (15) days from its publication in
a newspaper of general circulation.

Approved.