Here’s a practical, no-nonsense legal explainer on charging 15% per week interest on personal loans in the Philippines—what the law says, what courts actually do, and how this plays out for lenders and borrowers.

Executive takeaway

There’s no fixed statutory “usury cap” today because Central Bank rules suspended the Usury Law’s ceilings decades ago. Parties may stipulate rates.
But Philippine courts regularly strike down or reduce “unconscionable” rates under the Civil Code and public policy.
15% per week = ~780% per year (simple), and ~143,000% per year (effective, if weekly-compounded)—a rate Philippine courts have consistently treated as shocking and void for being iniquitous, replacing it with a reasonable rate (often the legal rate).
Even when the agreed rate is voided, the principal is still due, and interest may be imposed at the legal rate (generally 6% per annum in modern jurisprudence) from the proper reckoning date.

Core legal framework

1) Usury ceilings are suspended—but not fairness review

The Usury Law (Act No. 2655) still exists, but monetary authorities suspended its interest ceilings. There is no hard, numerical cap for voluntary loans between private parties.
Freedom to contract (Civil Code Art. 1306) allows parties to agree on interest provided it is lawful and not contrary to morals, good customs, public order, or public policy.
Interest must be in writing (Civil Code Art. 1956). If not clearly and expressly stipulated in writing, no interest is due (though courts can award legal interest as damages where appropriate).

2) Courts can nullify or cut down “unconscionable” interest

Even without a statutory cap, courts police abusive rates using Civil Code principles (e.g., Arts. 19–21 on abuse of rights, Art. 1229 on reducing penalties by analogy, and Art. 2227 on reducing unconscionable liquidated damages), plus public policy.
The Supreme Court has repeatedly voided or reduced excessive rates (often monthly rates in the high single digits and above), substituting a reasonable or legal rate. Labels like “penalty,” “service fee,” or “discount” won’t save an excessive effective rate.

3) The “legal interest rate” baseline

For monetary obligations without a valid contractual rate (or where the stipulated rate is voided), modern jurisprudence typically applies 6% per annum as the legal rate (e.g., for loans, forbearance of money, and judgments), with variations on when it starts to run (from default, demand, filing of complaint, or judgment—fact-specific).

How 15% weekly stacks up

Simple annualized: 15% × 52 weeks ≈ 780% per year.
Effective annualized (weekly compounding): $(1 + 0.15)^{52} - 1 \approx 1,432.14$×, i.e., ~143,213% per year.

That’s not just steep—it’s the kind of grossly one-sided rate Philippine courts routinely brand “unconscionable” and refuse to enforce. In practice, courts strike down such a rate and substitute a reasonable (often 6% p.a.) rate instead, sometimes distinguishing regular interest from penalty interest and reducing both.

What courts look at (and how cases usually go)

When a dispute hits court, judges typically examine:

Written stipulation
- Is the interest expressly agreed to in writing? If not, no contractual interest—only legal interest as damages (when justified).
Disclosure & clarity
- Hidden costs, stacked “fees” that mask interest, or math that explodes the effective rate invite judicial skepticism.
Overall effective burden
- Courts compute the effective interest (including “penalties,” “service charges,” “processing,” “rebates/discounts” on proceeds) to see if the real rate is oppressive.
Unconscionability
- The higher the rate (especially multi-digit per month or double-digit per week), the more likely it will be struck down or pared back.
Good faith and conduct
- Abusive collection practices, threats, shaming, or data misuse are separate legal problems (see below) and can undermine a lender’s equities.

Common courtroom outcome:

Principal: still payable.
Contractual interest: void/reduced if unconscionable.
Penalties/late charges: reduced if excessive.
Replacement rate: legal interest (often 6% p.a.) from the proper date (demand, filing, or judgment, depending on facts).
Attorney’s fees/costs: fact-dependent and not automatic.

Regulatory and compliance angles (beyond the rate)

Even if a contract rate survives, lenders still face regulatory duties:

Truth in Lending Act (R.A. 3765) Requires clear disclosure of finance charges and the effective cost of credit. Non-disclosure can trigger administrative/criminal consequences and weigh against the lender in civil cases.
Lending Company Regulation Act (R.A. 9474) and Financing Company Act Lenders must be properly licensed/registered (typically with the SEC) and comply with reporting and conduct rules. Operating without authority or violating rules may result in fines, suspension, or criminal liability.
Debt collection rules The SEC has issued circulars against abusive collection practices (including those used by some online lending apps). Harassment, doxxing, and shaming can lead to penalties and shutdowns—and create separate civil/criminal exposure.
Data Privacy Act (R.A. 10173) Harvesting contacts, blasting messages, or exposing personal data without lawful basis can draw National Privacy Commission action and liability.

Practical implications

For lenders

15% per week is litigation bait. Expect a court to void/reduce it. If you want enforceability:
- Keep rates defensible and fully disclosed (state APR/EIR).
- Avoid stacked fees that balloon the effective rate.
- Use clear, written loan terms; document disbursement and payments.
- Build in reasonable penalty interest (if any), mindful that courts may slash excessive penalties.

For borrowers

If you signed a 15% weekly rate:
- You still owe the principal. But you can challenge the rate as unconscionable and seek substitution with legal interest.
- Save all documents, messages, and proof of payments/charges.
- If you suffered harassment or data abuse, consider complaints with the SEC (for lender conduct) and NPC (for privacy violations), aside from court remedies.
- In demands or pleadings, raise unconscionability, lack of proper disclosure, and any regulatory breaches.

FAQs

Is 15% weekly “illegal” per se? Not by a statutory cap (because ceilings are suspended). But it’s legally vulnerable because courts invalidate or reduce unconscionable rates.

If the rate is voided, do I pay zero interest? Not usually. Courts typically replace the voided rate with legal interest (often 6% p.a.) from the appropriate date.

Can lenders “hide” interest as fees or penalties? Courts look at substance over labels. If the effective burden is oppressive, reduction/voiding is likely.

What if there was no written interest clause? Under Art. 1956, no contractual interest is due. Courts may still impose legal interest as damages depending on the case.

Bottom line

15% per week on a personal loan in the Philippines is almost certain to be struck down as unconscionable if litigated.
The safe, enforceable path is transparent, reasonable pricing.
Borrowers facing such rates have strong legal grounds to seek reduction to legal interest and to challenge abusive collection or privacy violations.

This is general information for educational purposes and not a substitute for legal advice tailored to your facts. If you want, tell me the loan’s exact terms (principal, fees, timing, payments, any demand letters), and I can sketch likely court computations and outcomes for your scenario.