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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Batasan Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL No. _____ 
-------------------------------------------------------------------------------------------------------- 
Introduced by  
ACT Teachers Party-List Rep. FRANCE L. CASTRO,  
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,  
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL 
-------------------------------------------------------------------------------------------------------- 
AN ACT 
PROVIDING FOR LIMITATION OF LOAN INTEREST RATES, 
ITEMIZATION OF LOAN CONTRACTS AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
“The State of Banking and Financial Wellness in Asia Pacific,” a survey 
commissioned by banking software solutions company Backbase and conducted by 
Forrester Consulting, noted that “managing debt was the main concern of Filipinos; 
more so than the rest of APAC.”  According to the 2021 study, 67% of the Filipino 
respondents said that they feel overwhelmed by debt while 60% said that debt 
negatively impacts their abilities to pay bills⁠—which leads to more debts. Meanwhile 
63% said debt makes building savings difficult.1 
Perennially low salaries and high cost of living force many Filipinos to take loans 
from loan sharks despite the existence of rules that limit interest rates.  Indeed, one can 
still easily be burdened by interest rates when one fails to promptly pay an installment 
or more, under current regulations. 
Teachers are among the most heavily burdened by debts.  According to the data 
of the Department of Education, in 2019, public school teachers collectively owe “a 
combined debt of at least ₱319 billion, an increase of ₱18 billion in just over two years.”  
Of this amount, teachers owed ₱157.4 billion to the Government Service Insurance 
1https://www.backbase.com/press/16084/financial-wellness-and-money-management-apps-could-be-
the- antidote-to-the-philippines-crippling-consumer-debt/ 
July 11, 2022
2:43 pm
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System (GSIS) as of May 29 while ₱162 billion in outstanding loans to accredited 
private lenders as of June 6. 
 
In one instance, a private lending firm filed cases against 200 teachers in Central 
Luzon, leading to their unfortunate and unnecessary arrest. Public school teachers filed 
counter-charges against the said lending firm.  Many teachers are dragged to the 
Professional Regulation Commission (PRC), their teaching licenses and source of 
livelihood in jeopardy, by lenders, loan sharks among them. 
 
The entry of vulture-like big corporate debt collectors in the Philippines should 
also be a cause for alarm.  Alongside the demands for higher wages and salaries, the 
Philippine government should ensure to protect the Filipino people from exorbitant 
interest rates and any form of harassment, filing of cases, and arrests. 
 
Thus, the immediate passage of this Bill is earnestly sought. 
 
 
 
 
 
 
________________________________ 
Rep. FRANCE L. CASTRO 
ACT Teachers Party-List 
 
 
 
 
________________________________ 
Rep. ARLENE D. BROSAS 
GABRIELA Women’s Party 
 
 
________________________________ 
Rep. RAOUL DANNIEL A. MANUEL 
KABATAAN Party-List 
 
 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Batasan Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL No. _____ 
-------------------------------------------------------------------------------------------------------- 
Introduced by  
ACT Teachers Party-List Rep. FRANCE L. CASTRO,  
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,  
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL 
-------------------------------------------------------------------------------------------------------- 
AN ACT 
PROVIDING FOR LIMITATION OF LOAN INTEREST RATES, 
ITEMIZATION OF LOAN CONTRACTS AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines 
assembled. 
SECTION 1. Short Title. - This Act shall be known as the “Loan Interest Limitation 
and Itemization (LILIIT) Law.” 
SEC. 2. Declaration of State Policy. - The policy of the State to protect citizens from 
exorbitant or usurious interest rates and oppressive debts is hereby affirmed, recognized 
and implemented. 
The policy of the State to protect its citizens from a lack of awareness of the true 
cost of credit to the user by assuring a full disclosure of such cost, with a view of 
preventing the uninformed use of credit to the detriment of the national economy, is 
hereby reiterated. 
SEC. 3. Covered Firms. - This Act shall cover all lending firms and institutions, banks, 
financial institutions, debt collection firms, government-owned and -controlled 
corporations, including the Social Security System, the Government Service Insurance 
System, the Home Development Mutual Fund, and other similar entities. 
SEC. 4. Covered Loans. - The interest rates on the following types of loans shall be 
regulated to protect citizens from usurious rates: 
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(a) personal loan; 
(b) salary loan; 
(c) housing loan; 
(d) multi-purpose loan; 
(e) educational loan; 
(f) credit card transactions, including cash advances; and 
(g) other similar loans as defined in the implementing rules and regulations. 
 
SEC. 5. Maximum Interest Rates for Covered Loans. - The maximum interest rate on 
the covered loans is 1% monthly and 6% annually.  
 
SEC. 6. Itemization of Monthly or Annual Payments. - All loan contracts shall include 
the following information: 
 
1. 
the amount lent; 
2. 
the amounts, if any, to be credited as down payment; 
3. 
the difference between the amounts set forth under clauses (1) and (2); 
4. 
a full schedule of monthly or annual payments and the monthly or annual 
interest rates; 
5. 
any contract, claim, or obligation arising out of the loan at the time of signing, 
or that will arise therefrom in the future, and the terms and conditions thereof. 
Provided, that this provision shall be without prejudice to the provisions of Republic 
Act 3765 or the “Truth in Lending Act.” 
SEC. 7. Non-revocation and non-suspension of licenses due to debts. - In no case shall 
the Professional Regulation Commission revoke or suspend the license of an individual 
due to default, late payment, or failure to pay the latter’s debts and/or interest or other 
charges. 
 
SEC. 8. Non-imposition of penalties due to debts. - In no case shall an individual incur 
penalties under the Revised Penal Code due to late payment or failure to pay his or her 
debts and/or interest or other charges. 
 
SEC. 9. Prohibited Acts. - Any covered firm who commits any of the following 
prohibited acts shall be held liable and be subjected to the penalties as prescribed in 
Section 10 of this Act: 
 
(a) Imposition of interest rates more than the maximum interest rate provided for in 
Section 5 of this Act; 
(b) Failure to include in loan contracts any of the information required in Section 6 
hereof; 
(c) Withholding or non-issuance of the statement of account by the covered firms 
due to late payment or failure to pay debt; 
(d) Withholding or non-issuance of salaries, in cash or otherwise, or taking 
possession of the same as collateral for debts; 


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(e) Imposition of charges on late payment of debt; 
(f) Imposition of additional charges on debt or interest rate; and 
(g) Filing of criminal charges against the debtors due to failure to pay or late 
payment of debts. 
 
SEC. 10. Penalties. - A covered firm that commits any of the prohibited acts provided 
for in Section 9 of this Act shall be prosecuted and upon conviction shall suffer a fine 
of One Hundred Thousand Pesos (₱100,000.00) for the first offense; Two Hundred 
Thousand Pesos (₱200,000.00) for the second offense; and Five Hundred Thousand 
Pesos (₱500,000.00) and cancellation of business permit for the third offense. 
 
The commission of any of the prohibited acts against at least five (5) persons 
shall warrant the imposition of a fine of Five Hundred Thousand Pesos (₱500,000.00) 
and cancellation of business permit in the first instance. 
 
SEC. 11. Implementing Rules and Regulations. - The Bangko Sentral ng Pilipinas, in 
consultation with representatives of national teachers’ organizations, consumer groups, 
covered firms and other stakeholders, shall promulgate the necessary implementing 
rules and regulations for the effective implementation of this Act no later than ninety 
(90) days upon the effectivity of this Act. 
 
SEC. 12. Separability Clause. - If any part or provision of this Act is held invalid, 
illegal or unconstitutional, the remaining parts or provisions not affected shall remain 
in full force and effect. 
 
SEC. 13. Repealing Clause. - All laws, decrees, executive orders, proclamations, rules 
and regulations, and other issuances, or parts thereof contrary to or inconsistent with 
the provisions of this Act are hereby repealed or amended accordingly. 
 
SEC. 14. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in any two (2) national newspapers of general 
circulation. 
 
 
Approved,