Title XI.

– LOAN
Introductory Comment
Credit – refers to belief or trust by a person in another’s ability to comply with an
obligation.
Credit Transactions – refers to the contracts or agreements based on said trust
or credit.
SCOPE OF CREDIT TRANSACTIONS
PRINCIPAL CONTRACTS OF LOAN (Both commodatum and mutuum) and
deposit (these are of course founded on “belief” or “faith” or “trust”).
ACCESSORY CONTRACTS – which generally depend on the existence of the
aforementioned contracts and which tends to strengthen said “belief” or “trust”
because of the security given:
1.personal guaranty (a person’s personal credit is involved as in guaranty
proper and suretyship)
2. real guaranty (here the “belief” is strengthened with the use of property
– if real property, the contracts of real mortgage and antichresis; if
personal property, the contracts of pledge and chattel mortgage).
C. PREFERENCE AND CONCURRENCE OF CREDITS.
GENERAL PROVISIONS

Art. 1933. By the contract of loan, one of the parties delivers to another,
either something not consumable so that the latter may use the same
for a certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the condition
that the same amount of the same kind and quality shall be paid, in
which case the contract is simply called a loan or mutuum.

Commodatum is essentially gratuitous.

Simple loan may be gratuitous or with a stipulation to pay interest.

In commodatum the bailor retains the ownership of the thing loaned,

while in simple loan, ownership passes to the borrower.

Two Kinds of Loans

Mutuum or simple loan

Commodatum
MUTUUM COMMODATUM
a. same thing to be returned
a. equivalent amount to be (subject matr is non-fungible)
returned (subject matter is
fungible)

b. may be gratuitous or b. essentially gratuitous (if

onerous (with interest) there is compensation it
ceases to be commodatum.

c. ownership goes to c. ownership retained by

borrower or bailee. lender or bailor.

d. refers to personal property d. may involve real and

only. personal property.

e. referred to as loan for e. referred to as a loan for

consumption. use or temporary possession.
f. lender, because of his
f. borrower, because of his ownership, bears risk of loss.
ownership, bears risks of
loss.

g. can be generally obliged g. while generally obliged to

to pay only at end of period.
h. not personal in character.
return object at the end of
period, still in some cases
the return can be demanded
even before the end of the
period.
h. personal in character.

Art. 1934. An accepted promise to deliver something by way of

commodatum or simple loan is binding upon parties, but the
commodatum or simple loan itself shall not be perfected until the
delivery of the object of the contract. (n)

Nature of the Contract of Loan

Commodatum and loan are real contracts. They are perfected by the delivery of
the object loaned. On the other hand, consensual contracts are perfected by mere
consent. (Art. 1316, Civil Code)
Need for Delivery
To effect either a commodatum or a mutuum, a delivery, either real or
constructive, is essential. This is so because unless there is delivery, the borrower
in commodatum (for example) cannot exercise due diligence over the thing
loaned.
Consent of the Parties
The borrower and the lender must of course consent either personally or through
an authorized agent, as in every obligation founded upon a contact. However, the
necessary acceptance need not be actual but may be implied from circumstances.
Consensual Contract of Future Loans
Aside from the real contracts of commodatum and loan, there can also be a
consensual contract created by an accepted promise to deliver something by way
of commodatum or simple loan.
Example: A promised to lend P1,000,000 to B. The promise was accepted by B.
This contract (consensual) is already binding upon the parties so that if A does not
fulfill his promise, B has the right to demand compliance thereof. But note here
that the real contract of loan does not yet exist.

CHAPTER 1
COMMODATUM
SECTION 1 - Nature of Commodatum

Art. 1935. The bailee in commodatum acquires the used of the thing
loaned but not its fruits; if any compensation is to be paid by him who
acquires the use, the contract ceases to be a commodatum.
Commodatum – a real, principal, essentially gratuitous and personal contract
where one of the parties (called the bailor or lender) delivers to another (called
the bailee or borrower) a non-consumable object, so that the latter may USE the
same for a certain period and later return it.
The term is derived from the Latin “commodum” (usefulness) or “commodo”
(particular usefulness to a borrower.)
Features or characteristics of Commodatum as a Contract
Real (because perfected by delivery)
Principal (because it can stand alone by itself)
Gratuitous (otherwise, the contract is one of lease)
Personal in Nature (because of the trust.
What Bailee (Borrower) in Commodatum Acquires
Commodatum gives the right to:
The use (just utendi)
And not to the fruits (jus fruendi)
Otherwise, the contract may be one of usufruct. But of course a stipulation that
the bailee may make use of the fruits of the thing loaned is valid. (Art. 1940) In
such a case, however, the right to get the fruits is merely incidental and not the
main cause of the contract.
Spanish Terms
Comodatario – bailor (lender)
Comodante – bailee (borrower)

Art. 1936. Consumable goods may be the subject of commodatum if the

purpose of the contract is not the consumption of the object, as when it
is merely for exhibition.

Subject matter of Commodatum

Usually, only non-consumable goods may be the object of a commodatum for the
thing itself should not be consumed and must be returned, but when a jar of
vinegar is given merely for exhibition, the thing itself is not consumed. It is only
use ad ostentationem. Note that the vinegar in this case is non-fungible, for the
same vinegar must be returned.

Art. 1937. Movable or immovable property may be the object of

commodatum.

Art. 1938. The bailor in commodatum need not be the owner of the thing
loaned.

Reason for the Law

The contract of commodatum does not transfer ownership. All that is acquired is
that the bailor has the right to the use of the property which he is lending, and
that he be allowed to alienate this right to use. Hence, in lease, for example, a
lessee may become a sub-lessor, unless he has been expressly prohibited to do so
in the contract of lease. (Art. 1650, Civil Code)

Art. 1939. Commodatum is purely personal in character. Consequently:

(1) The death of either the bailor or the bailee extinguishes the
contract;

(2) The bailee can neither lend nor lease the object of the contract
to a third person. However, the members of the bailee's household
may make use of the thing loaned, unless there is a stipulation to
the contrary, or unless the nature of the thing forbids such use.
Art. 1940. A stipulation that the bailee may make use of the fruits of the
thing loaned is valid.
Does bailee have right to use the fruits?
a.As a rule, the bailee is not entitled to the fruits, otherwise the contract may be
one of usufruct. It should be noted that the right to use is distinct from the right to
enjoy the fruits, since under the law fruits should as a rule pertain to the owner of
the thing producing the fruits. (Art. 441, Civil Code)
b.However, to stipulate that the bailee makes use of the fruits would not destroy
the essence of a commodatum, for liberality is still the actual cause or
consideration of the contract.
SECTION 2. - Obligations of the Bailee

Art. 1941. The bailee is obliged to pay for the ordinary expenses for the
use and preservation of the thing loaned.

Reason for the Law

The bailee is supposed to return the identical thing (Art. 1933), so he is obliged to
take care of the thing with, as a rule, the diligence of a good father of a family.
(Art. 1163). It follows necessarily that ordinary expenses for the use and
preservation of the thing loaned must be borne the bailee.
NOTE: The rule is different in the case of extraordinary expenses.

Art. 1942. The bailee is liable for the loss of the thing, even if it should
be through a fortuitous event:

If he devotes the thing to any purpose different from that for which it
has been loaned;
Reason for the Law - This amounts to bad faith or abuse of generosity
considering the fact that commodatum is gratuitous.

If he keeps it longer than the period stipulated, or after the

accomplishment of the use for which the commodatum has been
constituted;

Reason for the Law – He is guilty of a certain kind of default. (mora)

If the thing loaned has been delivered with appraisal of its value, unless
there is a stipulation exemption the bailee from responsibility in case of
a fortuitous event;

Reason for the Law – Evidently, the giving of the value was made to hold the
bailee liable for after all this is not a sale, and neither is ownership transferred in
commodatum.
Exception – when there is a stipulation to the contrary. It may in a sense be said
that the appraisal converts the commodatum into a mutuum.

(4) If he lends or leases the thing to a third person, who is not a

member of his household;

Reason for the Law – This is prohibited by the law for it amounts to a violation
of the personal character of a commodatum.

(5) If, being able to save either the thing borrowed or his own
thing, he chose to save the latter.

Reason for the Law – This amounts to an act of ingratitude and to a failure to
exercise due diligence, considering the fact that commodatum is gratuitous.

Misuse or Abuse

A misuse or abuse of the property is ordinarily a conversion for which the bailee is
generally held responsible, to the full extent of the loss. (Fros v. Plumb)

Art. 1943. The bailee does not answer for the deterioration of the thing
loaned due only to the use thereof and without his fault.
Non-liability for Deterioration without fault.

Art. 1944. The bailee cannot retain the thing loaned on the ground that
the bailor owes him something, even though it may be by reason of
expenses. However, the bailee has a right of retention for damages
mentioned in Article 1951.

Generally, Borrower Cannot Retain.

Reason for the Law – Bailment implies a trust that as soon as the time has
expired, or the purpose accomplished, the bailed property must be restored to the
bailor. (Cobb v. Wallace)

Art. 1945. When there are two or more bailees to whom a thing is loaned
in the same contract, they are liable solidarily.

This is one more instance when solidary liability is imposed by law.

SECTION 3. - Obligations of the Bailor

Art. 1946. The bailor cannot demand the return of the thing loaned till
after the expiration of the period stipulated, or after the
accomplishment of the use for which the commodatum has been
constituted. However, if in the meantime, he should have urgent need of
the thing, he may demand its return or temporary use.

In case of temporary use by the bailor, the contract of commodatum is

suspended while the thing is in the possession of the bailor.

Generally, Bailor cannot demand immediate return

A commodatum is for a certain time. (art. 1933). This is the reason for the first
sentence, first par. of Art. 1946. This is based on equitable ground for otherwise,
the bailee may not be able to make proper use of the thing borrowed.

Reason for second sentence, first par. (Urgent Necessity)

A bailor usually lends his property because he does not need. It. Hence, the
reason for the exception. Note that the return may be only temporary, but it can
also be permanent.

Art. 1947. The bailor may demand the thing at will, and the contractual
relation is called a precarium, in the following cases:

(1) If neither the duration of the contract nor the use to which the
thing loaned should be devoted, has been stipulated; or

(2) If the use of the thing is merely tolerated by the owner.

Precarium

a. Precarium is a special form of commodatum. In a true commodatum, the

possession of the borrower is more secure.

b. The possession of the borrower in precariumis precarious, that is, dependent on

the lender’s will, hence the name precarium.

Art. 1948. The bailor may demand the immediate return of the thing if
the bailee commits any act of ingratitude specified in Article 765.
Effect of Commission of Act of Ingratitude
The bailor can demand IMMEDIATE RETURN.
Art. 765. The donation may also be revoked at the instance of the donor, by
reason of ingratitude in the following cases:

(1) If the donee should commit some offense against the person, the honor or the
property of the donor, or of his wife or children under his parental authority;

(2) If the donee imputes to the donor any criminal offense, or any act involving
moral turpitude, even though he should prove it, unless the crime or the act has
been committed against the donee himself, his wife or children under his
authority;

(3) If he unduly refuses him support when the donee is legally or morally bound to
give support to the donor.

Art. 1949. The bailor shall refund the extraordinary expenses during the
contract for the preservation of the thing loaned, provided the bailee
brings the same to the knowledge of the bailor before incurring them,
except when they are so urgent that the reply to the notification cannot
be awaited without danger.

If the extraordinary expenses arise on the occasion of the actual use of

the thing by the bailee, even though he acted without fault, they shall
be borne equally by both the bailor and the bailee, unless there is a
stipulation to the contrary.

Extraordinary Expenses

a.As a rule, the extraordinary expenses should be paid by the bailor because it is
he who profits by said expenses; otherwise, the thing borrowed would be
destroyed.

b.Generally, notice is required because the bailor should be given discretion as to

what he wants to do with his own property.

Reason for the second par. (Actual Use by Bailee)

This is an equitable solution. The bailee pays one half because of the benefit
derived from the use of the thing loaned to him, and the bailor pays the other half
because he is the owner and the thing will be returned to him.

Example: A borrowed a motorbike from B. While A was riding on it, he met an

accident which greatly damaged the bike. A was not at fault for he was driving
carefully. Both A and B should share equally in the extraordinary expenses unless
there is a stipulation to the contrary.
Art. 1950. If, for the purpose of making use of the thing, the bailee
incurs expenses other than those referred to in Articles 1941 and 1949,
he is not entitled to reimbursement.

Example: (Other Expenses)

The borrower of a car buys an extra jack to be used as a reserve on a trip. Here,
he is not entitled to reimbursement.

Art. 1951. The bailor who, knowing the flaws of the thing loaned, does
not advise the bailee of the same, shall be liable to the latter for the
damages which he may suffer by reason thereof.

When Bailor knows Flaws

Example: A lent B a Fisher & Paykel, the electric connections of which were
defective. If although he knows said defect, A does not inform B thereof, A will be
liable in case B is injured by reason thereof.

Reason for the Law

When a person lends, he ought to confer a benefit, and not to do a mischief. If he

does not reveal the flaws, he is liable for his bad faith. (Gagnon v. Dana)

NOTE: But the obligation of a gratuitous lender goes no further than this, and he
cannot therefore be made liable for not communicating anything which he did not
know, whether he ought to have known it or not. (Gagnon v. Dana)

Right of Retention

For the damages spoken of in this Article, the bailee has the right of retention until
paid of said damages. (Art. 1944, Civil Code)

Nature of the Flaws

It is evident that the flaws referred to in this Article are hidden defects, not
obvious ones.

Art. 1952. The bailor cannot exempt himself from the payment of
expenses or damages by abandoning the thing to the bailee.

Effect of Bailor’s Abandonment or Giving of the Object

Example: For extraordinary expenses on A’s car, B the borrower spent 125,000. A
cannot exempt himself from payment thereof by just giving B the thing borrowed.

Reason for the Law – The value of the thing borrowed might be less than the
value of the expenses or damages.

CHAPTER 2

SIMPLE LOAN OR MUTUUM

Art. 1953. A person who receives a loan of money or any other fungible
thing acquires the ownership thereof, and is bound to pay to the creditor
an equal amount of the same kind and quality.
Ownership Passes in Mutuum
Ownership passes to the borrower, but, of course, he must pay later.
(Republic v. Jose Grijaldo) The loss of the crops (destroyed as a result of enemy
action) did not extinguish his obligation to pay a generic thing – money
representing the loan with interest, because the account can still be paid from
sources other than said mortgaged crops.
(Carlos Gelano, et. al. v. CA) The conjugal partnership is liable under Art. 161
of the Civil code now Art. 121, last par. of the Family Code. It is wrong to say that
the conjugal partnership is liable jointly and severally, for the conjugal partnership
is a single entity.
(Bonnevie v. CA) 1. A contract of loan is consensual (author believes it to be a
real contract – a borrower of money who has not yet been given the money is not
yet a borrower; he is only a would-be borrower).
2. If a loan (money is given only some time after the execution of a mortgage, the
mortgage is still valid. After all, the promissory note is only evidentiary of the
debt. The late execution of the promissory note does not mean that the mortgage
had no consideration.
- Mutuum is similar to an abnormal usufruct.
Bank Accounts
(Gulas v. PNB) Fixed, savings, and current deposits of money in banks and
similar institutions shall be governed by the provisions concerning simple loans.
Behest Loans
(Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Hon.
Aniano a. Desierto – Recovery of Ill-Gotten Wealth) The behest nature of the
loans could not be reasonably known by a mere eye examination of the mortgage
contracts.

Behest loans are part of the ill-gotten wealth which former President Ferdinand E.
Marcos and his cronies accumulated and which the Government thru the
Presidential Commission on Good Government (PCGG) seeks to recover.

Art. 1954. A contract whereby one person transfers the ownership of

non-fungible things to another with the obligation on the part of the
latter to give things of the same kind, quantity, and quality shall be
considered a barter.

Barter of Non-Consumable Things

Here, the word non-fungible does not really mean non-fungible but non-
consumable. Reason: If the thing were really non-fungible, the identical thing
must be returned. Here, an equivalent thing is returned.

Example: A got a fountain pen from B and he (A) became the owner thereof, with
the obligation of giving another pen of the same kind and quality. This shall be
considered a barter. It is not a commodatum nor a mutuum.

Art. 1955. The obligation of a person who borrows money shall be

governed by the provisions of Articles 1249 and 1250 of this Code.

If what was loaned is a fungible thing other than money, the debtor
owes another thing of the same kind, quantity and quality, even if it
should change in value. In case it is impossible to deliver the same kind,
its value at the time of the perfection of the loan shall be paid.

Liability of Borrower of Money

a. Liability is governed by Arts. 1249 and 1250.

b. Art. 1249. The payment of debts in money shall be made in the currency
stipulated, and if it is not possible to deliver such currency, then in the currency
which is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other

mercantile documents shall produce the effect of payment only when they have
been cashed, or when through the fault of the creditor they have been impaired.

c. Art. 1250. In case an extraordinary inflation or deflation of the currency

stipulated should supervene, the value of the currency at the time of the
establishment of the obligation shall be the basis of payment, unless there is an
agreement to the contrary.

2. Example of Second Paragraph (Loan of Things other than Money)

A borrowed from B five sacks of rice. At the time the loan was perfected, each
sack cost P1,800. Even if at the time of payment the price would change, five
sacks of the same kind and quality of rice should be returned. However, if it is
impossible to deliver the same kind, P1,800 should be paid. Note that the value at
the time of PERFECTION (not payment) applies.

Art. 1956. No interest shall be due unless it has been expressly

stipulated in writing.

Formality for Interest (for use of the Money)

The interest must be stipulated in WRITING.

Kinds of Interest

Interest may be paid either as

Compensation for the use of the money (monetary interest); or as

Damages (compensatory interest).

Art. 1956 refers to interest for use of the money.

How Interest Arises

(Barreto v. Santa Marina) The right to interest arises only be virtue of a

contract or by virtue of damages for delay or failure to pay principal on which
interest is demanded.

When Interest Earns Interest

Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point. (Art. 2212, Civil Code)

Interest by Way of Damages

(Lopez v. Del Rosario) In contracts for the payment of a sum of money, the
measure of damages for delay is limited to the interest provided for by law. The
deprivation of an opportunity for making money, which might have proved
beneficial or might have been ruinous is of too uncertain a character to be
weighed in the even balances of the law.

Art. 2209 – If the obligation consists in the payment of a sum of money, and the
debtor incurs in delay, the indemnity for damages, there being no stipulation to
the contrary, shall be the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is six per cent per annum. (The
rate now is 12% per annum.)

Municipal Corporations are Liable for Interest

(Zobel v. City of Manila) A municipal corporation does not enjoy immunity from
liability for interest when assessed as damages for the non-payment of a debt, to
the same extent as the national government.

Interest during the Moratorium Laws

(Warner, Barnes & Co. v. Yasay, et. al.) Interest ran during the moratorium
laws. If debtors had wanted to avoid liability for all the interest falling due during
the time that the moratorium laws were in effect, they could have renounced the
benefits of the said laws and paid the debts, or in the very least paid the interest
as they accrued.

(Republic v. Grijaldo) What the moratorium laws suspended was the running of
the period of prescription of actions. Interest during the war years however can be
eliminated if the creditors were enemies of the Japanese, for their payment to
them could not have been made.

Computations for Compensatory Damages

As already stated, this is interest not imposed for the use of the money, but to
serve as penalty or damages for the breach of contractual obligations. This kind of
interest need not be stipulated in writing, for the law gives the rate (6% per
annum) in the absence of agreement as to the penalty. Art. 2209, Civil Code). In
the following examples, legal interest was computed at 6% per annum. Note
however that today the legal rate is 12% per annum. The examples must,
therefore, be amended correspondingly.

(Monzon, et. al. v. IC and Theo H. Davies & Co., Far East Ltd.) Eliminating
the interest on the various damages from the date of the filing of the suit is
clearly an unwarranted act. It must be borne in mind that interest begins to
accrue upon demand, extrajudicial or judicial. A complain is a judicial demand.

(Antonio Tan v. CA & Cultural Center) The stipulated 14% per annum interest
change until full payment of the loan constitutes the monetary interest on the
note and is allowed under Art. 1956.

In the case at bar, the stipulated 2% per month penalty is in the form of a penalty
charge which is separate and distinct from the monetary interest on the principal
of the loan.

Art. 1957. Contracts and stipulations, under any cloak or device

whatever, intended to circumvent the laws against usury shall be void.
The borrower may recover in accordance with the laws on usury.

Usury Law Should not be Circumvented.

Art. 1958. In the determination of the interest, if it is payable in kind, its

value shall be appraised at the current price of the products or goods at
the time and place of payment.

Determination of Interest if in Kind

Value should be at time and place of PAYMENT.

Art. 1959. Without prejudice to the provisions of Article 2212, interest

due and unpaid shall not earn interest. However, the contracting parties
may by stipulation capitalize the interest due and unpaid, which as
added principal, shall earn new interest.

When Accrued Interest Earns Interest

The general rule is that accrued interest (interest due and unpaid) will not bear
interest, BUT

a. If there is agreement to this effect (Art. 1959). Pr

b. If there is judicial demand. (Art. 2212)

THEN, such accrued interest will bear interest at the legal rate (Art. 2212) unless,
a different rate is stipulated. (Hodges v. Regalado)

Compound Interest

Compound Interest is interest on accrued interest. It is valid to charge compound

interest, but there must be a written agreement to this effect; otherwise said
compound interest should not be charged. (Nolan v. Majinay) unless it be the
interest charged upon judicial demand. (Art. 2212)

Usury Law not Violated

(Villareal v. Alvayda) The interest on accrued or capitalized interest is not

considered on the original principal, and should not be considered usurious, if,
when added to the original interest, the sum should exceed the rated allowed by
the Usury Law.

When Compound Interest cannot be Damanded

The agreement on compound interest must be expressly made.

Reason why Compound Interest are not Allowed Except in the Cases
provided for by Law

Debts would accumulate with a rapidity beyond all ordinary calculation and
endurance. It would tend also to inflame the avarice and harden the heart of the
creditor. Some allowance must be made for the indolence of mankind.

Art. 1960. If the borrower pays interest when there has been no
stipulation therefor, the provisions of this Code concerning solutio
indebiti, or natural obligations, shall be applied, as the case may be.

Payment of Interest when there is No Stipulation

a. it, where ot A borrower borrowed money. No interest was stipulated. If by

mistake he pays, then this will be a question of undue payment or solution
indebiti. We should then apply the rules on the subject.

b. If a borrower borrows money and orally agrees to pay legal interest at 10% per
annum, there is really no obligation to pay since the interest was not agreed upon
in writing. If he nevertheless pays because he considers it his moral obligation to
pay said interest, he cannot recover the interest that he has given voluntarily. This
will not be a natural obligation, and the provisions on said subject should apply.

Art. 1961. Usurious contracts shall be governed by the Usury Law and
other special laws, so far as they are not inconsistent with this Code.

Usury Law

(U.S. v. Constantino) Act 2655 as amended is our Usury Law, and was enacted
on Feb. 24, 1916. The law was passed to curb usury, since the taking of excessive
interest for the loan of money has been regarded with abhorrence from the
earliest times.

Rules on Construction

(Dickerman v. Pay) Since the Usury Law is penal in nature, it should be

construed strictly.

(U.S. v. Conde) Like other laws, prospective effect should be given to it, where
such construct may be permitted. Laws adopted after the execution of a contract,
changing or altering the rate of interest, cannot apply to such a contract without
violating the provision of the Constitution which prohibits the adoption of a law
impairing the obligations of a contract.

When Usury Law does not Apply

a.A contract for the lease of property is not a loan; hence, the rental paid is not
governed by the Usury Law. (Tolentino v. Gonzales)

b.The increase of the price of a thing sold on credit over its cash sale price is not
interest within the purview of the Usury Law, if the sale is made in good faith and
not as a mere pretext to cover a usurious loan. (Manila Trading v. Tamaraw). Such
price is the selling price for a sale made on the installment plan.

Compound Interest

(Gov’t v. Conde) In one case, it was held that an express agreement to charge
compound interest is not to be taken into consideration in determining whether or
not the stipulated interest exceed the limit prescribed by the Usury Law.

This was changed by a subsequent case which held that charging compound
interest violates the Usury Law when the sums charged as such added to the
stipulated interest exceeds the average rate of interest that may legally be
charged for a loan. (Hodges v. Salas)

In a still later case, the SC reverted to the ruling in the Conde Case. (Gov’t v.
Calderon)

Advance Interest

(Hodges v. Salas) Charging interest in advance is permissible provided said

interest does not correspond to interest for more than one year.

Lawful Interest Rates

Interest rates are now fixed from time to time by the Monetary Board.

Central Bank Circular 416

Central Bank Circular No. 416, fixing the rate of interest at 12% per annum, deals
with:

Loans;
Forbearance of any money, goods or credit; and

Judgments.