Leader: Javier, Ishie Nicole Faye F.

Members:
De Guzman, Owen J.
Gagalang, John Patrick M.
Malveda, Kimberly

ARTICLE 1175
Introduction

So Article 1175 states that usurious transactions shall be governed by special laws. What exactly is a
usurious transaction? This is the excessive imposition and collection of interest that exceeds the limit of
the amount of interest allowed by law and it is governed by special laws specifically the usury law.

 Usury - usury is the excessive collection and imposition of interest on a loan that has exceeded the
limit of interest allowed by law.

 Simple Loan - One of the parties delivers to another, which can be either money or consumable
things that are replaceable with the same amount, same kind and quality. The most common object
here is money.

Example 1

 Gagalang borrowed money to me, then i charged an interest rate of 30% for the loan he made. How
can we say that this example is a usury? Prior to the date of issuance of Central Bank Circular
No.799 series of 2013 there is a legal rate interest of 12% to 6% per annum imposed and any
interest excess in that 12-6% is considered as unsury or unsurious transaction.

Example 2

 One example for this is borrowing of money . If the subject in the contract is money then it must
replaced or must be paid by paper currency since it was stated it should be paid by same amount,
same kind and quality.

Justification

 Usury law states that those usurers who impose a higher interest rate on a loan which exceeds the
limit of amount of interest by law will be criminally liable or they will be charged or sentenced for
charging high interest rate.

 But it says here that Usury law is repealed which means that it is non-existing and suspended by
Central Bank Circular No.905, therefore people will not be punished for imposing high interest rate
even if they exceeds the legal rate of interest, so if we go back to De Guzman's example earlier on
the usury that De Guzman imposed 30% interest which is higher than the legal interest rate on the
debt owed to him by Gagalang, it is not valid since it is contrary to law even it its not existing. But
despite the fact that lenders can charge an interest rate higher than the legal rate, the Supreme
 Court can equitably reduce the imposed interest rate of debtors in case the interest rate is found to
be iniquitous or unfairly, unconscionable, or inequitable.

 If someone put an interest rate of 90%, it is not valid since it says in this article if the interest is
usurious it is contrary to law and anything that is contrary to law is void.