Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 6678

Introduced by Representative FLORIDA “RIDA” P. ROBES

EXPLANATORY NOTE

The COVID-19 pandemic has caused an unprecedented human and health crisis. It has
likewise triggered an economic downturn that will likely cause a recession in many countries
around the world, including the Philippines. Bangko Sentral ng Pilipinas Governor Benjamin
Diokno had earlier made a GDP forecast for the country of -1% to 0 percent as a result of the
health emergency. Even with the modification or lifting of the Enhanced Community
Quarantine, many Filipinos are expected to lose their jobs as a result of many businesses
closing or slowing down as a result of the pandemic.

Indeed there is great uncertainty for everyone. To help cushion the impact of the
financial instability for all Filipinos and businesses, especially Micro, Small and Medium
Enterprises (MSMEs), there is need to put a limit on interest rates on loans, credits and all
forbearances.

‘The country’s “Usury Law” under Republic Act No. 2655 which caps interest rate to
not more than 12% per annum has been suspended by the Bangko Sentral ng Pilipinas when it
issued Circular No. 902 Series of 1982 which removed the ceiling on interest rates. This
enabled banks and other lending institutions to freely impose higher interest rates that would
cause the amount of the debt to balloon to an outrageous amount, more than three times the
principal debt.

A report by the Securities and Exchange Commission (SEC) showed that because of
the suspension of the Usury Law, lending and financing companies charge as much as 2.5%
interest per day on top of the other fees and charges.

In these tough times, the imposition of usurious and unconscionable interest rates
should be made illegal because it has oftentimes led to abuse and more sufferings to hapless
borrowers.


In other countries, their interest rates are capped. In the United States, where regulations
on interest rates vary across states, several jurisdictions put a limit in their interest rates like
New York (25%), New Jersey (30%), Arkansas (17%), among others.

In these extraordinary and difficult times when every Filipino struggle to survive and
get out of the physical, emotional, psychological and financial quagmire caused by Covid-19,
there is an urgent need to limit the interest rates to provide support to cash-strapped individuals
and protect them from excessive interest rates. This will likewise give relief to businesses,
especially MSMESs, by making loans affordable and accessible to enable them to jumpstart their
operations.

Putting a ceiling on interest rates will put an end to unconscionable and oppressive loan
arrangements especially in these trying times. This will likewise discourage predatory lending
and punish unscrupulous lending firms and individuals who take advantage of the desperation
of people and their misfortunes.

In view of the foregoing, the passage of this bill is earnestly sought.

Rep. ie P. ROBES


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

6678

House Bill Ne

Introduced by Representative FLORIDA “RIDA” P. ROBES

AN ACT
PUTTING A CEILING ON INTEREST RATES UPON LOANS AND
FORBEARANCES AND PRESCRIBING PENALTIES FOR VIOLATION THEREOF

SECTION 1. Short Title. — This Act shall be known as the “Interest Rates Ceiling Act of
2020.”

SECTION 2. Declaration of Policy. — It is the policy of the State to promote a just and
dynamic social order that will ensure the prosperity and independence of the country and free
the people from poverty through policies that provide adequate social services , promote full
employment, a rising standard of living, and an improved quality of life for all. Toward this
end, this Act seeks to set a reasonable and conscionable ceiling on interest rates charged by
lending and financing institutions on loans or forbearance of any money, goods or credit.

SECTION 3. Ceiling on Interest Rates on Business Transactions. — All lending institutions
and financing companies “hall charge an interest of not more than point five percent (.5%) per
month or six: percent (6%) per annum on loans or any forbearance of money, goods or credit.

Charge ate payment and other fees charged by the lending and financing
institutions shall not exceed point five percent (.5%) per month or six percent (6%) per annum
on such loans or any forbearance of money, goods or credit.

For purposes of this Act, lending institutions shall include, but not limited to, banks,
credits card companies, pawnshops, savings and loan associations, brokerage firms, mortgage
companies, investment companies, insurance firms, credit unions, cooperatives, partnerships,
lenders or private individuals engaged in lending.


SECTION 4. Penalties. — Any person who shall violate Section 3 of this Act shall be punished
by imprisonment of not less than six (6) months but not more than six (6) years or a fine of not
less than One Hundred Thousand pesos (P100,000.00) but not more than Two Million pesos
(P2,000,000.00) or both, at the discretion of the court.

If the offender is corporation, partnership, association or any juridical person, the
penalty shall be imposed upon the president, treasurer or any other officer or person responsible
forthe violation. In addition, the license to operate the business establishment shall be canceled
or revoked.

If the offender is an alien, he/she shall, after service of sentence, be deported
immediately without further proceedings.

SECTION 5. Implementing Rules and Regulations. — To implement provisions of this Act,
the National Committee on the Filipino Family, shall promulgate the rules and regulations
within ninety (90) days after the effectivity of this Act.

SECTION 6. Separability Clause.~ If any part or provision of the Act shall be held
unconstitutional or invalid, other Provisions hereof which are not affected hereby shall continue
to be in full force and effect.

SECTION 7. Repealing Clause. — All laws, decrees, rules and regulation inconsistent with
the provision of this Act hereby repealed or modified accordingly.

SECTION 12. Effectivity. — This shall take effect after fifteen (15) days from its publication
in two (2) national newspaper of general circulation.

Approved.