Below is a comprehensive discussion of the legal framework surrounding daily interest rates for online lending in the Philippines, including historical background, current laws and regulations, and practical implications. Please note that this information is for general reference only, and it is recommended to seek personalized legal counsel for specific circumstances.

1. Overview: “Daily Legal Interest Rate” vs. “Legal Interest Rate” in General

In Philippine law, the term “legal interest rate” traditionally refers to the rate of interest imposed by law when (1) there is no agreement on the rate of interest in a loan or forbearance of money, or (2) when the obligation becomes subject to judicial proceedings, and the court imposes interest. This is distinct from:

Contractual Interest Rate: Interest agreed upon by the parties in a loan contract.
Judicial Interest: The rate of interest the court imposes on money judgments (e.g., unpaid debt after a court decision).

Crucially, Philippine statutes and jurisprudence speak mostly of annual rates (per annum). While lenders—particularly some informal or online lenders—might quote or charge “daily” interest rates, the law itself does not explicitly prescribe a daily legal interest rate. Instead, it provides guidelines, maximum caps (in some contexts), and jurisprudential tests (particularly on what is “unconscionable”).

Thus, if someone refers to a “daily legal interest rate,” it often means the daily breakdown of an agreed (or effectively charged) interest rate. But there is no specific law in the Philippines that stipulates a flat, uniform “daily legal interest rate” applicable across the board to online loans.

2. Historical Background: The Usury Law and Its Suspension

Usury Law (Act No. 2655, as amended)
Historically, the Philippines had specific ceilings on interest rates under the Usury Law. The maximum rates varied depending on the transaction, and lenders exceeding these ceilings risked criminal liability for usury.
Suspension of the Usury Law Ceilings
In the late 1980s, through Central Bank Circulars (notably Circular No. 905, Series of 1982), the government effectively lifted or suspended the rigid interest rate ceilings set by the Usury Law. This does not mean that usury was decriminalized entirely, but rather that the specific interest rate caps were lifted.
- As a result, parties can in principle stipulate their own interest rates in a loan agreement, subject to the requirement that these rates must not be unconscionable or contrary to morals, public order, or public policy. Courts in the Philippines have repeatedly struck down as void any interest rate they deem “excessive” or “unconscionable.”
Modern Implications
Because of this suspension, there is no uniform maximum interest rate imposed by law for all loans. If a contract’s interest rate is challenged in court, the judge must determine—based on jurisprudential guidelines (e.g., those established in Medel v. Court of Appeals and Ruiz v. Court of Appeals)—whether the stipulated interest is so high as to be unconscionable and must be reduced.

3. The Current Legal Interest Rate (Annual)

General Legal Interest Rate (Judicial)
The Supreme Court’s prevailing guideline (as clarified in Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013) is that the legal interest rate for:
- Loans or forbearances of money, goods, or credits in the absence of any stipulation is 6% per annum.
- Judgments (i.e., final monetary awards) are also subject to a 6% per annum interest from the date of finality of judgment until fully paid.
No Official Daily Legal Interest
Although a lender might attempt to compute or present an interest “by the day,” legally, the recognized figure is almost always expressed as an annual rate. Breaking down that annual rate into a daily figure is a matter of arithmetic or a contractual clause but is not a separate daily legal interest mandated by law.

4. Online Lending in the Philippines

Growth of Online Lending
With the rise of mobile apps and digital platforms offering quick microloans, “online lending” has expanded rapidly. Many lenders quote daily interest rates or fees to reflect shorter borrowing periods—sometimes as little as a week or two.
Regulatory Authorities
- Securities and Exchange Commission (SEC): Primary regulator for lending and financing companies under Republic Act No. 9474 (the Lending Company Regulation Act of 2007) and its Implementing Rules and Regulations, as well as subsequent SEC Memorandum Circulars (e.g., MC No. 18, S. 2019) dealing with disclosure requirements, abusive debt collection practices, etc.
- Bangko Sentral ng Pilipinas (BSP): Oversees banks and quasi-banks (some online lending platforms affiliate with banks or are run by banks). BSP sets certain rules for interest rates in credit card transactions, deposit products, and microfinance loans offered by banks.
- Department of Trade and Industry (DTI): Sometimes involved in consumer protection aspects related to loan advertisements or marketing claims.
Interest Rate Caps for Certain Sectors
While there is no universal cap for all online loans, there can be specific caps for certain products or sectors:
- For example, credit cards in the Philippines have had caps (per BSP Circular 1098, as updated), currently limiting interest rates to no more than 3% per month (36% per annum) on unpaid balances.
- Microfinance or consumer loan programs sometimes have negotiated or recommended ceilings.
  However, these do not necessarily apply uniformly to all online lending platforms, especially if they are non-bank entities.
Unconscionable Rates and Court Intervention
If an online lender charges extremely high interest—whether stated daily, weekly, or monthly—and the borrower challenges this in court, the judge may deem it unconscionable and reduce it to a more reasonable level. The Supreme Court has in various cases reduced contracted rates of 60% per annum, 5% per month, or more when they found them to be excessive.

5. Common Pitfalls and Enforcement Issues

Misleading “Daily” Rates
Some online lenders advertise low-sounding daily rates (e.g., “1% a day”) without transparent disclosure of the effective annual percentage rate (APR). When annualized, 1% per day equates to roughly 365% per annum—almost always viewed as exorbitant by any standard.
Abusive Collection Practices
Alongside high daily interest rates, certain online lending platforms have been reported to employ harassing or threatening collection methods. The SEC has cracked down on such apps, revoking licenses and issuing cease-and-desist orders. Borrowers dealing with these issues are advised to file formal complaints with the SEC or the National Privacy Commission if their personal data is being misused.
Legal Remedies for Borrowers
If an online lender files a court case to collect alleged debts with excessive daily interest, the borrower can raise the defense of “unconscionable interest” or “void stipulation.” Courts can re-compute interest at a fair, reasonable rate—often guided by the Supreme Court’s pronouncements on what is acceptable in similar loan transactions.

6. Ongoing Developments and Legislative Proposals

Calls for Stricter Rate Caps
Consumer advocacy groups and legislators have repeatedly called for reintroducing explicit interest rate caps on lending companies, particularly those operating online.
- There have been proposals to create or revive usury-type ceilings or to authorize the SEC or BSP to set maximum rates for all consumer loans.
- Some have suggested capping daily interest rates in line with typical microfinance standards.
Possible SEC Guidelines
The SEC, under its authority to regulate lending and financing companies, periodically issues rules on disclosure, advertising, and maximum fees or charges for certain product categories. Whether there will be a firm, across-the-board cap on interest (daily or annual) remains a subject of legislative and regulatory discussion.

7. Practical Tips for Lenders and Borrowers

For Online Lenders

Compliance with Licensing and SEC Rules: Any entity offering loans via an online platform must register as a lending or financing company with the SEC, comply with disclosure regulations, and follow fair debt collection practices.
Transparent Pricing: Disclose effective annual interest rates, not just daily rates, so borrowers can make informed decisions and avoid allegations of deception.

For Borrowers

Check Lender Registration: Before borrowing, verify that the lender is duly licensed by the SEC (list available on the SEC website).
Compare True Costs: Convert quoted daily or weekly rates to an annual percentage to see if they are reasonable.
Review the Contract Carefully: Look for hidden fees, penalties, or charges that can dramatically increase the effective interest rate.
Seek Legal Help if Necessary: In cases of harassment, privacy violations, or extremely high interest, consult with a lawyer or file a complaint with the SEC or other concerned agencies.

8. Key Takeaways

No Statutory “Daily” Legal Rate
Philippine law does not prescribe a single, fixed “daily legal interest rate” for online lending. The recognized legal interest rate is generally 6% per annum for obligations without stipulations or for court judgments.
Contractual Freedom vs. Unconscionability
In principle, lenders and borrowers are free to agree on interest rates because the old Usury Law ceilings have been suspended. However, courts can declare certain rates void if they are “unconscionable.”
Online Lenders Under Scrutiny
Because some online lenders charge very high rates and sometimes engage in abusive collection practices, the SEC and other regulators have increased oversight. Borrowers should exercise caution, and lenders should ensure compliance with disclosure, registration, and fair practice regulations.
Potential Future Caps
Legislative and regulatory efforts may lead to stricter, more uniform caps on interest rates. This remains an area of active debate.

Final Word

While there is no specific “daily legal interest rate” set by Philippine law, understanding how daily rates factor into the broader legal interest framework is crucial. Online lenders often quote daily charges, but courts and regulators look to the effective annual rate and rely on jurisprudential guidelines to assess reasonableness. As online lending continues to expand, both borrowers and lenders should stay informed about evolving regulations and exercise their rights responsibly.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For guidance tailored to your particular situation, consult a qualified attorney or reach out to the appropriate government agency (e.g., SEC, BSP, DTI).