Laws on interest rates to loans, forbearance of money

In Sec. of the Dep't. of Public Works and Highways v. Sps. Tecson (758 Phil. 604, 634 2015, at 639), the Supreme Court summarized the applicable rates of interest to loans or forbearance of money in the absence of an express contract as to such rate of interest, for the period of 1940 to present as follows:

Law, Rule and Regulations,
BSP Issuances


Date of Effectivity


Interest Rate
Act No. 2655 May 1, 1916

6%
Central Bank (CB) Circular No. 416 July 29, 1974

12%
CB Circular No. 905 December 22, 1982

12%
BSP Circular No. 799 July 1, 2013

6%

The twelve percent (12%) per annum rate of legal interest is only applicable until June 30, 2013. Thereafter, legal interest shall be at six percent (6%) p.a. in line with BSP-MB Circular No. 799, Series of 2013.

Prevailing jurisprudence[1] has upheld the applicability of BSP-MB Circular No. 799, Series of 2013 to forbearances of money in expropriation cases. The cases of Sy v. Local Government of Quezon City[2] and Land Bank of the Philippines v. Wycoco[3] were all decided prior to the effectivity of BSP-MB Circular No. 799, Series of 2013 on July 1, 2013.[1] See Evergreen Manufacturing Corp. v. Republic, supra note 30; Land Bank of the Philippines v. Omengan, G.R. No. 196412, July 19, 2017; Republic v. Cebuan, supra note 30; National Power Corporation v. Heirs of Ramoran, G.R. No. 193455, June 13, 2016, 793 SCRA 211; and Republic v. Mupas.
[2] 710 Phil. 549 (2013).
[3] 464 Phil. 83 (2004).

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