Dear PAO,
Someone offered me a loan of P20,000. The interest is 30 percent every week for six weeks. The problem is that my payments do not go to the principal amount; they only cover the interest. So even if I pay, the amount I owe remains at P20,000. I have been paying her P6,000 every week for six weeks now. That means I have already paid P36,000, but my debt is still P20,000. I told her that I will pay and that I just need time. But she keeps harassing me. She says awful things and even threatens to post about me on social media if I do not pay. Can I report her or file a complaint against her? She is making my life difficult.
Marinel Soriano
Dear Ms. Soriano,
Under our jurisdiction, loans with excessive and unconscionable interest rates are prohibited. While there is no specific law against usury, the Supreme Court has consistently held and struck down, in a series of cases, high interest which is considered usurious and unconscionable. Specifically, in the case of Pabalan v. Sabnani (GR 211363, Feb. 21, 2023, penned by Associate Justice Samuel Gaerlan), the Supreme Court held that interest will be considered unconscionable when:
“… [t]he maximum interest rate that will not cross the line of conscionability is ‘not more than twice the prevailing legal rate of interest.’ If the stipulated interest exceeds this standard, the creditor must show that the rate is necessary under current market conditions.”
In your case, the interest rate of 30 percent per week would be equivalent to an interest rate of 1440 percent per annum, which is well beyond what is considered acceptable and is clearly unconscionable.
As to your second question, the practice of credit collection is a tightly regulated act. Bangko Sentral ng Pilipinas (BSP) Circular 454 dated Sept. 24, 2004, and its allied and related regulations state the use of threat of violence, obscene language, or insults; publication of names of borrowers who refuse to pay or contacting the borrower’s contact list; or false representations are all prohibited. (Sec. 7) Therefore, the threat of your creditor to shame you into paying by posting your details on social media is a prohibited act and can be reported to the BSP.
Furthermore, the threat of making public your unpaid debt to shame you may also be considered as Grave Threat, a crime defined and punished under the Revised Penal Code (RPC). Grave Threat is defined as any act which shall threaten another with the infliction upon the person, honor or property of the latter or of his family of any wrong amounting to a crime. (Art. 282) Considering that publication of a person on social media to shame or vilify him or her may be considered as cyberlibel under Section 4(c)(4) of Republic Act (RA) 10175, otherwise known as the Cybercrime Prevention Act of 2012, your creditor’s action may violate the RPC.
We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net
