Liability of lending company operating without authority
Can they charge that much interest? Also, if the company has no authority from the SEC to operate. Can you still be made liable?
When a person enters into a contract, he or she is bound to comply with the conditions and obligations set therein as long as these are not contrary to law, morals, good customs, public order, or public policy. The pertinent provisions of the New Civil Code of the Philippines provide:
"Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith....
"Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy."
Since you entered into a contract of loan, you are is bound to pay the amount that you owe, as well as such other lawful charges incidental to said agreement. Insofar as the interest of such loan is concerned, you may be held liable to pay the same provided it has been clearly stipulated in their written contract pursuant to Article 1956 of the said Code which states that: "No interest shall be due unless it has been expressly stipulated in writing." Such obligation subsists even if you think that amount of interest is high. The suspension of the Usury Law, as stated under Central Bank Circular 905 series of 1982, recognizes the capacity of the lender and the borrower to freely agree on the amount of interest and they will be bound by such agreement, unless the courts find the same grossly exorbitant. Hence, the courts will not interfere with the agreement of the parties as to the interest unless it becomes excessive, iniquitous, unconscionable, and exorbitant. In such a case, the stipulation is considered void for being contrary to morals, if not against the law. (Rolando C. Dela Paz v. L & J Development Company, GR 183360, Sept. 8, 2014; Ponente: Associate Justice Mariano del Castillo).
Nevertheless, it bears stressing that while you may be bound to pay your contractual obligation, the person/s responsible for engaging in the lending business without proper authority from the Securities and Exchange Commission (SEC) may be held liable as well. Section 12 of Republic Act 9474, otherwise known as the "Lending Company Regulation Act of 2007," specifically provides:
"SEC. 12. Penalty. - A fine of not less than Ten Thousand Pesos (P10,000.00) and not more than Fifty thousand pesos (P50,000.00) or imprisonment of not less than six months but not more than ten (10) years or both, at the discretion of the court, shall be imposed upon:
"1. Any person who shall engage in the business of a lending company without a validly subsisting authority to operate from the SEC.
"2. The president, treasurer and other officers of the corporation, including the managing officer thereof, who shall knowingly and willingly:
"3. Engage in the business of a lending company without a validly subsisting authority to operate from the SEC;
"4. Hold themselves out to be a lending company, either through advertisement in whatever form, whether in its stationery, commercial paper, or other document, or through other representations without authority;
"5. Make use of a trade or firm name containing the words 'lending company' or 'lending investor' or any other designation that would give the public the impression that it is engaged in the business of a lending company as defined in this Act without authority; x x x"
Source: Manila Times