20/06/2026
SC defines too much…
SC STRIKES DOWN 96% ANNUAL INTEREST RATE as "excessive, iniquitous, unconscionable, and exorbitant."
On October 30, 1995, Spouses Domasian borrowed ₱75,000.00 from Manuel T. Demdam under a loan agreement carrying interest of 8% per month, or 96% per annum. The loan was payable on or before June 30, 1996.
When the spouses failed to pay, the unpaid interest continued to accumulate. By the time the collection case reached the courts, the accrued interest had ballooned to ₱414,000.00, bringing the total claim to ₱489,000.00—more than six times the original principal obligation.
The Supreme Court ruled that the stipulated interest rate of 8% per month, or 96% per annum, was "excessive, iniquitous, unconscionable, and exorbitant."
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