Supreme Court rules 36% per annum interest unconscionable in Manila Credit Corp. v. Viroomal

Summary

In G.R. No. 258526 (Manila Credit Corporation v. Spouses Ramon and Anita Viroomal), the Supreme Court Second Division denied the lender's petition and affirmed the Court of Appeals' ruling that the 3% per month / 36% per annum effective interest rate imposed on the borrowers was void for being patently exorbitant and unconscionable. The Court held that 'while there is no numerical limit on conscionability, the rate of 3% per month or 36% per annum is three times more than the 12% legal interest rate, and therefore excessive and unconscionable.' The Court also held that 'the willingness of the debtor in assuming an unconscionable rate of interest is inconsequential to its validity.' The decision is widely cited in subsequent cases against high-rate lenders.