Below is a practitioner-level primer on excessive interest in Philippine online-lending apps. It weaves together the statutes, regulations, jurisprudence, and recent enforcement that now define what counts as “too much” and what borrowers and lenders can (and must) do about it.
1 | From Usury to FinTech: the legislative backdrop
| Era | Key Rule | Practical upshot |
|---|---|---|
| 1916-1982 | Usury Law (Act 2655) fixed ceilings (12% p.a. on ordinary loans). | Superseded in 1982. |
| 1982 | Central Bank Circular 905 suspended all statutory ceilings, giving parties freedom to stipulate any rate but still subject to civil-law “unconscionability.” (Pinay Jurist) | |
| 2007 / 1998 | Lending Company Regulation Act (RA 9474) & Financing Company Act (RA 8556): SEC licensing, ₱1 M paid-in capital, bans “fraudulent, misleading or oppressive” terms. (RESPICIO & CO., Credit Information Corporation) | |
| 2022 | Financial Consumer Protection Act (RA 11765): empowers BSP, SEC, IC & CDA to cap rates, issue cease-and-desist orders, fine up to ₱10 M, and adjudicate disputes in-house. (eLibrary) | |
| 1963 / 2013 | Truth in Lending Act (RA 3765) & BSP Circular 799 (2013): interest must be disclosed; when none is stipulated, legal interest is 6 % p.a. (Lawphil) | |
| 2012-2024 | Data Privacy Act (RA 10173) + NPC Circular 20-01 (loan-data guidelines, amended 2023) govern contact scraping, call-blast and “doxxing.” (National Privacy Commission) | |
| 2012 | Cybercrime Prevention Act (RA 10175) criminalises on-line libel, threats, identity theft often seen in abusive collections. |
2 | Sector-specific rate ceilings now in force
Small-value cash-loan cap (LCs/FCs & OLPs). BSP Circular 1133-2021 & SEC Memorandum Circular 3-2022 apply to unsecured loans ≤ ₱10 000 and ≤ 4 months:
- 6 % nominal per month (≈ 0.20 %/day)
- 15 % effective per month (interest + all fees)
- 5 % cap on late-payment penalties
- 100 % “total-cost” ceiling (all charges may never exceed principal) (Ocampo & Suralvo Law Offices)
Credit cards. BSP Circular 1165-2023 caps revolving balances at 3 %/month (36 % p.a.) and instalments at 1 % add-on/month; cash-advance fee max ₱200. (Bureau of the Treasury)
Moratorium on new on-line platforms. SEC MC 10-2021 freezes registration of additional OLP brands until further notice, after a spike in predatory apps. (Inquirer Business)
Outside those buckets there is still no fixed numeric ceiling—but the courts and regulators treat anything above ~3 %/month (36 % p.a.) with suspicion.
3 | Case law on “unconscionable” interest
| Case | Stipulated rate | Court action |
|---|---|---|
| Medel v. CA, G.R. 131622 (1998) | 5.5 %/month (66 % p.a.) | Struck down as “iniquitous,” recomputed at 12 % p.a. (Lawphil) |
| Spouses Abellera v. Napoles, G.R. 217525 (2016) | 9 %/month | Reduced to 12 % p.a.; willingness of debtor irrelevant. (RESPICIO & CO.) |
| Nacar v. Gallery Frames, G.R. 189871 (2013) | none (legal interest) | Reset the legal interest baseline to 6 % p.a. from 1 July 2013. (Lawphil) |
| Recent (2024-2025) lower-court writs | 3–8 %/month app loans | Preliminary injunctions against call-blast & “contact-doxxing.” (RESPICIO & CO.) |
Doctrine distilled: even after Circular 905, courts may void or lower rates that “shock the conscience” under Arts. 19, 1229 & 1306 of the Civil Code.
4 | Regulatory enforcement snapshot (2023-2025)
SEC.
- MC 18-2019 bans threats, public shaming and non-consensual contact-scraping; fines start at ₱25 k/₱50 k and climb to ₱1 M plus licence revocation. (Credit Information Corporation)
- Licences revoked: Populus Lending (Pesopop) 2023 and Surity Cash 2025 for abusive collections and rate violations. (Inquirer Business, National Privacy Commission)
- 33 unregistered apps delisted from Google Play in 2023 alone. (Credit Information Corporation)
National Privacy Commission.
- NPC Circular 20-01 (as amended 2023) requires purpose, proportionality & consent for all data taken by lenders; 60 + apps ordered offline, fines up to ₱5 M/violation. (Respicio & Co., National Privacy Commission)
Bangko Sentral ng Pilipinas.
- Routine six-month reviews of the credit-card cap (BSP press release 2024). (Bureau of the Treasury)
5 | Borrower remedies — three tracks
Administrative
- SEC Enforcement and Investor Protection Dept. (on-line portal) for rate and collection abuses.
- BSP Consumer Assistance Mechanism for banks/e-money issuers.
- NPC Complaints and Investigation Division for privacy breaches. (Credit Information Corporation, Credit Information Corporation)
Civil
- Action to annul or reform the loan; courts usually recompute at 6 % or 12 % p.a.
- Small-claims up to ₱400 k; no lawyer required (A.M. 08-8-7-SC).
Criminal
- Estafa (Art. 315 RPC) for advance-fee scams.
- Grave threats (Art. 282 RPC) or on-line libel (RA 10175) for harassing messages.
Under RA 11765 a borrower may also file directly with the regulator for adjudication; orders are executable as court judgments. (ACCRALAW)
6 | Compliance checklist for legitimate online lenders
| Requirement | Source & details |
|---|---|
| Primary/secondary SEC registration & Certificate of Authority | RA 9474; OLP must be registered as a separate “doing-business-as” brand. (RESPICIO & CO.) |
| Observe BSP/SEC rate caps | Circular 1133-2021 & MC 3-2022 (small loans); Circular 1165-2023 (credit cards). (Ocampo & Suralvo Law Offices, Bureau of the Treasury) |
| Key Information Statement before draw-down (nominal, EIR, all fees, total cost) | RA 11765, Sec. 39. (Chambers and Partners) |
| Data-privacy compliance (purpose limitation; no scraping of entire phonebook) | NPC Circular 20-01. (National Privacy Commission) |
| Fair-collection conduct (no threats, profanity, 10 pm-6 am calls, or shaming posts) | SEC MC 18-2019. (Credit Information Corporation) |
| Cap penalties to 5 %/month for covered loans; total charges ≤ 100 % principal | BSP Circ. 1133. |
| Record-keeping: digital audit trails for 5 years; submit annual impact-evaluation to SEC/BSP | MC 3-2022 §8. (Ocampo & Suralvo Law Offices) |
Failure triggers fines, daily penalties, suspension or permanent revocation of the licence—as Surity Cash discovered in March 2025. (Inquirer Business)
7 | Practical advice
For borrowers.
- Verify the company in the SEC Lending/Financing List.
- Never send “processing fees” to a personal GCash account.
- Compute the effective rate; if > 15 %/month on a ≤ ₱10 k, ≤4-month loan, cap has been breached—screenshot everything and complain. (RESPICIO & CO.)
For lenders & platforms.
- Treat 3 %/month as a soft ceiling even for bigger loans; anything higher risks being labelled unconscionable and void.
- Build privacy-by-design: collect only name, ID, device data and two contact references, not the entire phonebook.
- Use BSP CAM–style internal dispute desks to cut regulatory liability.
8 | Take-aways
- Numeric caps have returned for the most abuse-prone products; exceeding them is a regulatory offence.
- Courts still police everything else under the unconscionability doctrine.
- Data-privacy and debt-collection rules matter as much as the rate itself—harassment can cost a lender its licence even if the interest is within the cap.
- RA 11765 gives teeth: on-the-spot penalties, disgorgement, and administrative adjudication without full-blown litigation.
- Compliance is now multi-agency: SEC (lending companies/OLPs), BSP (banks & credit cards), NPC (data), and CIC (credit reporting) all coordinate.
In short, the era of “anything goes” interest rates on Philippine online lending apps is over. Responsible lenders keep charges below the regulatory caps and below jurisprudential red-lines; borrowers who feel trapped by exorbitant, opaque, or harassing terms now have clear, multi-layered remedies.