Is there a Philippine Law that prescribes Credit Card Debt claims ?

Which law can we cite to point out the conditions or timeframe beyond which a Credit Card alleged debt balance may no longer be collected ?

Which law can we cite to justify fraudulent claims of Credit Card companies?

Which law can we cite to justify filing a damages suit against Credit Card companies?

1) 10 years of no demand
2) depends if and why it is fraudulent
3) depends on what is the basis for damages

Atty. LLL, thank you for the reply. If I may follow up, can you cite the Legal Reference for that provision that says 10 years of no demand ?

What if the demand is baseless and proven to be baseless? Let me not embarrass a bank by mentioning the name. But I managed to get a Statement of Account just recently after requesting for proof over 11 years ago. In the process of inspecting, I now have evidence to show the full amount of the Principal was paid within 13 months of transactions over 11 years ago, plus my payments provided for a 16% interest for the bank within that period of time. I had also pointed out Fortuitous Event due to Economic Crisis which forced my business to close sometime then.

The bank records allowed me to discover it is hoping to collect 2,000,000 % (percent) interest and penalties for a fully paid Principal.

Thus, aside from having a baseless demand that has been under investigation for already 11 years (because they have failed to produce my records for that length of time), that bank wants to be the greatest LOAN SHARK in the whole world.

payments are applied to interest first before principal. and isn't interest of credit card 3.25% per month? compounded?

look up prescription in the civil code. 10 years when based on a written contract.

The monthly interest does apply if the credit cardholder did not encounter a fortuitous event leading to forced settlement in court or out of court. Legal Interest refers to annual bank interest, is it not? Although there is no Usury Law, during need for settlement under circumstances beyond control, the court recognizes only the Legal Interest Rate. I have not heard of a court allowing Usurious or Illegal Interest Rates in the settlement of debts. Or do we live in a society that condones exploitation of the less privileged ?

The consideration is fairness for both parties. In the case of aomeone who lost a business, there was a major loss. But what did the bank lose? Nothing if the Principal got paid with Legal Interest Rate. Justice is served when the bank is able to recover its investment with the leagl interest rate.

Is there a law that runs contrary to that understanding?

Thank you for the Law on Prescription reference. I will look into that also.

My further research led me to discover that a contract is void from the very begining if it is cloaked and intended to circumvent the law --e.g. to circumvent the Usury Law.

(Reference: Civil Code Article 1409, 1957, and 1961 ; Usury Law Act 2655 as amended by PD 116 versus Central Bank Circular 905; also see Senate Bill 796)

Central Bank temporarily allowed stipulated interest rates to take effect. But Central Bank Acts cannot overide Laws created by Congress. Central Bank is not a Law Making body. On the other hand, Congress is even headed towards imposing a limit to the interest rates on borrowings and has not yet amended a Usury Law.

Stipulated Interest Rates and Interest on Interest are not the ABSOLUTE basis for deciding what should be paid. The situation has to be weighed. If a debtor simply refuses to pay for lack of valid reason, it will be upheld as Supreme Court did under Justice Puno. If debtor cannot pay or failed to pay because of valid reasons, the Usury Law will apply. Or the contract must have been void from the very begining.

Your legal stand, interpretation, analysis or arguments will be welcome here.

http://www.lawphil.net/statutes/presdecs/pd1973/pd_116_1973.html - amending law allows monetary board to suspend usury law

you'll have better legal standing if you argue that the interest rate is unconscionable.

In actual cases, Supreme Court had ruled against 3% per month or more interest rates. The court declared 1% per month and NOT compounded should be the acceptable interest rate. Here is a list I found.

"Previous Supreme Court rulings that 3% monthly interest is excessive

As stated above, the Supreme Court has already ruled in cases before its 2009 Macalinao vs. BPI decision that an interest rate of 3% monthly or 36% per annum is excessive, iniquitous, unconscionable and exorbitant. These cases are the following:

(1) Almeda v. Court of Appeals, G.R. No. 113412, April 17, 1996, 256 SCRA 292, 302

(2) Medel v. Court of Appeals, G.R. No. 131622, November 27, 1998, 299 SCRA 481

(3) Solangon v. Salazar, G.R. No. 125944, June 29, 2001, 360 SCRA 379, 384-385

(4) Ruiz v. Court of Appeals, G.R. No. 146942, April 22, 2003, 401 SCRA 410, 421

(5) Cuaton v. Salud, G.R. No. 158382, January 27, 2004, 421 SCRA 278, 282

(6) Imperial v. Jaucian, G.R. No. 149004, April 14, 2004, 427 SCRA 517, 525-526

(7) Dio v. Japor, G.R. No. 154129, July 8, 2005, 463 SCRA 170, 177

( Dino v. Jardines, G.R. No. 145871, January 31, 2006, 481 SCRA 226

(9) Macalalag v. People, G.R. No. 164358, December 20, 2006, 511 SCRA 400"



Posted by Atty. Gerry T. Galacio at Tuesday, August 17, 2010

( Reposted due to mispost under a different title )

Atty. LLL,

Thank you again for the additional info, RE: link to PD 116. It looks better than another link I read about PD 116.

President Noynoy Aquino should either repeal or confirm that PD 116 because it can be argued to be Null & Void. Why?

It is founded on a defunt basis, that is, Martial Law Regime. And the Philippines has long been freed from Martial Law.

Here is the part I am referring to.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972, and General Order No. 1, dated September 22, 1972, as amended, and in order to effect the desired changes and reforms in the social, economic, and political structure of our society, do hereby order and decree the amendment of Act No. 2655, as amended, as follows:

(PD 116 details not included)

As can be seen, the Order & Decree was "pursuant to Proclamation No. 1081, dated September 21, 1972".

But that foundation no longer exist. Congress already has the upper hand to change the Usury Law, while the old Usury Law should have taken effect upon lifting of Proclamation No. 1081 decades ago.

All laws pertaining to Martial Law and the socio-economic and political structures founded on it should have been reversed to the substance of the latest Philippine Constitution.

As a matter of fact, the Civil Code still refers to the Usury Law enacted by Congress.

What is your legal opinion about this?

you can write to pnoy and members of congress, but PDs are still valid.

but as i said, if the credit card companies sue you, your better defense is that the interest rates are unconscionable.

Out of 11 credit cards, there is only one that has been wondering what went wrong. Others have not even sent a demand after 11 years. In the past, one that tried to go to court got dismissed after I proved regular payments that covered Principal + Interest. Another bank that had tried to go to court failed to even produce my records after I went to their bank.

This most recent effort is headed towards proving the same facts: (1) that I did not miss a single payment after many months of use; (2) that based on the bank's own records, I paid more than the value of purchases; (3)that it was not I who had breached a contract but the bank system error wherein I pointed out the payment I made in April 1999 was posted in their records only in June 1999; (4) that so far the interest they had been charging must have been as a result of the bank system errors; (5) that I had been asking for full disclosure of my records and it is only after over 11 years when finally, the bank sent me a scanned copy of details so I can clear my account of false claims; (6) that there are still missing transactions not yet made available until now; and (7) that the high probability of the bank being in error can be proven as soon as the other transactions are made available.

The logic is this. If a client has been paying monthly according to the bank's prescribed amount or more than that, how can its system charge interest on interest and penalties? The most it can earn per year assuming no payment is done would be 3% per month or 36% per year. With timely and regular payments, it will certainly be less.

How did it amount to 2,000,000 % in say 2 years of regularly paying more than the bank's desired minimum?

Can I say that the bank breached the contract by their system errors? There is proof.

With proof of the bank errors, can I accuse the entity of fraudulent claims? The bank is wasting my time with their system errors.

errors and fraud are different. you will have to prove the deliberate intent.

Gd day.i want to ask is 3%per month interest on my loan ,legal?i had pawned my atm in a lending..pls answer me.tnx

Is 3%monthly inerest in my loan from a lending company,legal?