Below is a comprehensive, practice-oriented primer on complaining about excessive (usurious) interest on loans obtained from relatives in the Philippines. It synthesises the relevant statutes, regulations, jurisprudence, procedural rules, and practical considerations as of 10 July 2025. Use it as an educational guide only—always consult a Philippine lawyer for case-specific advice.

1. Why “usury” still matters after Central Bank Circular 905

Key point	Short explanation
Usury Law (Act 2655, 1916)	Fixed ceilings (12% p.a. on secured loans, 14% on unsecured).
Central Bank (now BSP) Circular 905, s. 1982	Suspended those ceilings, allowing parties to stipulate any rate.
Effect	Usury is no longer criminal per se, but courts may still strike down “unconscionable or oppressive” rates as VOID for being contrary to public policy and Article 1306 of the Civil Code.

Bottom line: You can no longer send a relative to jail for usury, but you can sue to cancel or reduce an inordinate interest clause and recover the excess.

2. Governing legal sources

Civil Code Art. 1956 – Interest must be in writing. Art. 2209 – If interest is due and payable, legal interest may be imposed. Arts. 1306, 1409, 1390 – Autonomy of contracts vs. void/unlawful stipulations.
Bangko Sentral ng Pilipinas (BSP) issuances MB Circular 799 (2013) and later circulars set the legal interest at 6% per annum for “forbearance of money.” Courts routinely apply 6 % after invalidating an excessive rate.
Special laws touching informal lending RA 9474 (2007) – Regulates micro-finance; caps effective interest per Microfinance Council guidelines. RA 11765 (Financial Products and Services Consumer Protection Act, 2022) – Empowers BSP/SEC to curb abusive collection and “unfair” interest practices. RA 3765 (Truth in Lending Act) – Requires full disclosure of finance charges.
Barangay Justice System Act (RA 7160, ch. VII) – Most family-to-family money claims ≤ ₱400,000 must first undergo Katarungang Pambarangay mediation.

3. Jurisprudence: how the Supreme Court defines “unconscionable”

Case	Interest struck down	Court’s approach
Medel v. Court of Appeals, G.R. 131622 (Nov 27 1998)	5.5 % monthly (≈66 % p.a.)	Declared void; applied 12 % legal rate (then prevailing).
Spouses Abella v. Spouses Abella, G.R. 164548 (Oct 20 2021)	10 % monthly (120 % p.a.)	Reduced to 6 % p.a.; excess deemed usurious.
Nacar v. Gallery Frames, G.R. 189871 (Jul 13 2013)	reset legal rate from 12 % to 6 % p.a. starting 1 Jul 2013	Established the modern legal-interest benchmark.
Spouses Castro v. Tan, G.R. 190545 (Aug 3 2016)	7 % monthly (84 % p.a.)	Applied equitable reduction to 6 %.
Penta Capital v. Loren, G.R. 176633 (Feb 12 2018)	3 % monthly compounded	Allowed agreed 3 % simple, voided compounding as unconscionable.

Practical yardstick Anything above 24–30 % per annum routinely gets voided. Courts have frowned on rates as “low” as 36 % p.a. where parties are unsophisticated, and on compounding without clear disclosure.

4. The special wrinkle of family loans

Form may be informal – Oral agreements, text messages, chats, or unsigned promissory notes are common. Article 1956 still requires interest stipulations to be written; oral interest is unenforceable.
Undue influence & moral pressure – Courts scrutinise whether a lender-relative leveraged family bonds or borrower’s distress, bolstering an “unconscionable” finding.
Evidence pitfalls
- Proof of principal and payments: deposit slips, GCash screenshots, Viber chats.
- Admissions: “utang acknowledgement” posts on social media can be used (Rule 130, Sec. 32 Rules of Court).
Relationship does not bar suit – A civil action may proceed even among ascendants/descendants (except when seeking civil damages under Art. RPC 332).

5. How to complain: step-by-step procedure

Stage	What to do	Notes
1. Demand letter	Give the lender written notice to reduce the rate or refund excess.	Sends a judicial demand (Civil Code Art. 1169) and interrupts prescription.
2. Barangay conciliation	Required if both parties reside in the same barangay and the claim ≤ ₱400,000.	File “Complaint for Sum of Money with Prayer to Annul Interest.” If mediation fails, get a Certification to File Action.
3. Choice of forum	• Small Claims Court (first-level courts) if total claim ≤ ₱400,000 (excl. interest). • Regular civil action in RTC/MTC if > ₱400,000 or if you want damages.	Rule SC 16-03-01-SC (2020 Small Claims Rules); no lawyers required in hearings.
4. Cause of action	(a) Nullity of unconscionable interest clause (b) Sum of money (principal minus payments + legal interest) (c) Damages/attorney’s fees (Art. 2208)	Plead both alternative and cumulative remedies.
5. Prayer for relief	• Declare the interest rate void. • Order refund of excess interest paid (Civil Code Art. 1398). • Impose 6 % p.a. legal interest on the adjudged amount from date of demand (per Nacar).
6. Enforcement	After judgment, seek writ of execution; garnish bank deposits, levy on property.	Consider negotiating a payment plan during execution.

6. Defences a lender-relative might raise

“Voluntary agreement” / freedom of contract – Overcome by showing rate is grossly one-sided.
Estoppel – Borrower accepted benefits; rebut by emphasizing inequality of bargaining power.
Prescription – Written loans prescribe in 10 years (Art. 1144), oral in 6 years (Art. 1145). Demand letters and partial payments interrupt the period.
Payment/novation – Lender may allege the debt was restructured; require documentary proof.

7. Computing the claim

Identify total payments made toward interest.
Apply legal interest (6 % p.a.) on principal from default date.
Deduct payments applied to principal.
Excess interest paid = Actual interest paid – 6 % legal interest; seek refund or set-off.

(Tip: attach an amortisation schedule to your complaint; courts appreciate clear math.)

8. Criminal angles (often inapplicable to kin loans)

Statute	Possible application
Revised Penal Code, Art. 315 (Estafa)	If lender procured signature through fraud or misrepresentation (rare in family context).
Fair Debt Collection rules (BSP, SEC)	Harassment by third-party collectors, not typical in intrafamily loans.
RA 11765 Sec. 13	Civil, not criminal, penalties for unfair lending by “financial service providers,” which a private relative usually is not.

Thus, most disputes stay in the civil realm.

9. Practical drafting tips for the complaint

Caption: “For: Nullification of Unconscionable Interest and Sum of Money (Small Claims)”
Allegations:
- Dates and amounts of each advance.
- The written interest stipulation (or absence thereof).
- Family relationship (relevant but not jurisdictional).
- Efforts to settle (demand letter, barangay conciliation).
Attachments: Proof of loan, proof of payments, demand letter, barangay certificate.
Verification & Certification of Non-Forum Shopping: Required even in small claims (Rule SC 16-03-01-SC, Sec. 5).

10. Best practices to prevent or resolve future family-loan friction

Put everything in writing—principal, interest, due date, payment schedule.
Keep rates within 12–18 % p.a. if you want to avoid later challenge.
Disclose APR plainly (mimic RA 3765 forms).
Consider notarisation or at least two witnesses.
Offer mediation early; relationships often matter more than money.

11. Key take-aways

Usury ceilings are lifted, but courts still void “unconscionable” rates—a powerful shield for borrowers, even against relatives.
6 % per annum is today’s default legal rate once the stipulated rate is annulled.
Barangay conciliation and small claims make the process inexpensive; lawyer representation is optional until appeal.
Documentary evidence—screenshots, chats, receipts—often decides the case; gather them early.
While the dispute is civil, maintaining family harmony may call for mediation or payment restructuring before litigation.

Disclaimer

This article is for informational purposes only and does not constitute legal advice or create a lawyer-client relationship. Laws and jurisprudence may change; always verify current rules and consult qualified counsel.