Below is a comprehensive discussion of what you need to know about filing a complaint for excessive lending interest rates in the Philippines. This includes the legal framework, key laws and doctrines, regulatory guidelines, enforcement mechanisms, and general procedures for filing a formal complaint.

1. Legal Basis and Governing Laws

1.1. The Usury Law (Act No. 2655)

Original Purpose: Enacted during the American colonial period (1916), the Usury Law imposed ceilings on interest rates to protect borrowers from oppressive lending practices.
Suspension of Usury Law Ceilings: By virtue of Central Bank Circular No. 905 (Series of 1982), the monetary board essentially lifted the fixed ceiling under the Usury Law. The statutory interest rate limit was effectively removed, allowing interest rates to be determined by market forces.
Current Status: Although the interest ceiling was lifted, the Usury Law has not been completely repealed. Instead, courts utilize existing jurisprudence and the Civil Code’s provisions on contracts to address complaints of usurious or unconscionable interest rates.

1.2. Civil Code Provisions and Jurisprudence

Article 1306 (Autonomy of Contracts): Parties are generally free to stipulate terms in their agreements, including interest rates.
Article 1229 (Reduction of Penalties and Obligations): Courts may reduce penalties (including interest rates) if found to be iniquitous or unconscionable.
Relevant Supreme Court Decisions:
- Almeda v. Court of Appeals (1995) – Confirmed that the abolition of interest ceilings does not mean courts cannot intervene; courts retain the power to strike down unconscionable rates.
- Medel v. Court of Appeals (1998) – The Supreme Court declared interest rates of 66% per annum “excessive and unconscionable” and reduced them to a more reasonable rate.
- Spouses Bautista v. Pilar Development Corporation (2006) – Reinforced the power of courts to reduce clearly exorbitant or unconscionable interest rates, treating them as contrary to morals and public policy.

1.3. Bangko Sentral ng Pilipinas (BSP) Regulations

BSP Circulars: The BSP issues circulars that regulate banks and other financial institutions. While they do not cap interest rates outright, the BSP can sanction or penalize institutions that engage in predatory lending or other unethical lending practices.
Non-Bank Lending Institutions: Lending companies, microfinance entities, financing companies, and pawnshops are also subject to laws enforced by the Securities and Exchange Commission (SEC) and/or BSP (depending on the nature of their business).

2. What Constitutes Excessive or Unconscionable Interest

2.1. “Excessive” vs. “Unconscionable”

Excessive Rate: A rate that seems unusually or unreasonably high compared to prevailing market lending rates. What is deemed “high” can vary, but if it is obviously above customary commercial practice, it may be open to challenge.
Unconscionable Rate: A rate so disproportionate that it “shocks the conscience.” Such terms violate public policy. Courts interpret unconscionability by looking at circumstances such as:
- Relative bargaining power of the parties.
- Economic compulsion on the part of the borrower.
- Deceptive or misleading lending tactics.
- Comparison with typical market rates at the time of the loan.

2.2. Indicators of Potentially Usurious or Predatory Lending

Hidden Charges and Fees: Some lenders may insert excessive charges, processing fees, or penalties.
Misleading Advertisements: Offering “low monthly amortization” but imposing high annual percentage rates (APR).
Collection Practices: Harsh or abusive methods could indicate a lending operation with disregard for ethical or legal boundaries, leading to closer scrutiny of interest provisions.

3. Possible Venues for Filing Complaints

3.1. Barangay Conciliation

For disputes among residents within the same city or municipality and involving money claims below the jurisdictional amount, the Katarungang Pambarangay (Barangay Justice System) usually requires parties to undergo mediation/conciliation first before they can file a case in court.

3.2. Small Claims Court (Metropolitan/City/Municipal Trial Courts)

If the total amount of the claim (principal plus interest/penalties) falls within the threshold set by the Supreme Court (currently up to PHP 400,000 for small claims, although this may change from time to time), you can file a small claims case.
Advantages: Speedier resolution, lower cost, simplified rules, and no need for a lawyer in most cases.

3.3. Regular Courts

If the claim exceeds the small claims threshold or involves complex legal questions (e.g., the need for declaratory relief on whether an interest rate is unconscionable), you may file a complaint in the Regional Trial Court (RTC).
The RTC can issue a ruling on whether to reduce or annul the excessive interest component of a loan contract.

3.4. Securities and Exchange Commission (SEC)

If the lender is a financing or lending company registered with the SEC, complaints regarding lending practices (especially those that violate the Lending Company Regulation Act of 2007 or the Financing Company Act of 1998) can be lodged with the SEC.
The SEC can impose administrative sanctions, suspend or revoke licenses, and refer cases for criminal prosecution.

3.5. Bangko Sentral ng Pilipinas (BSP)

For banks, quasi-banks, and other financial institutions under BSP supervision, you may file a complaint with the BSP’s Financial Consumer Protection Department.
The BSP typically looks into violations of consumer protection regulations, which may include extremely high or undisclosed interest rates or deceptive lending practices.

4. How to File a Complaint: Step by Step

Gather Documentation:
- Loan agreement or promissory note specifying the interest rate.
- Payment records, receipts, and transaction history.
- Proof of any harassment or misconduct by the lender (if applicable).
- Any correspondence (texts, emails, letters) from the lender discussing payment terms or threats.
Send a Demand Letter (Optional but Recommended):
- You or your counsel may send a demand letter to the lender, outlining the facts, alleging that the interest rate is excessive or unconscionable, and requesting a renegotiation or refund of excessive charges.
- This could also help in potential settlement before formal legal action.
Determine the Proper Venue:
- Check the total claim amount (principal + interest + penalties) to see if it meets the small claims threshold.
- If a barangay conciliation process is required (for local disputes within the same municipality under certain amounts), undergo that first.
Prepare the Necessary Forms and Filings:
- Small Claims: Use the prescribed Statement of Claim form and attach supporting documents.
- Regular Court: File a Complaint with the RTC stating the cause of action (excessive or unconscionable interest) and the relief prayed for (e.g., reduction of interest, damages, attorney’s fees).
Attend Preliminary Conferences / Mediation:
- Courts, especially small claims courts, will usually require mediation or settlement discussions.
- Present evidence of the excessive interest rate and any supporting case law or BSP/SEC regulations.
Court Proceedings and Decision:
- In small claims, decisions can be rendered quickly (often within the same day of the hearing).
- In regular courts, it follows standard civil procedure. The court may issue a judgment reducing the interest to a legal or reasonable rate.
Implement the Judgment:
- If the court reduces or nullifies the excessive interest component, the lender is compelled to comply.
- If the lender refuses, you may proceed with execution of judgment through the court.

5. Penalties and Remedies

5.1. Reduction or Nullification of Excessive Interest

The primary remedy granted by courts is usually to lower the stipulated interest to what the court deems reasonable under the circumstances (often 12% p.a. pre-2013 or 6% p.a. post-2013 guideline from the BSP’s legal interest rates for judgments, though these rates can vary).
In extreme cases, courts may void the entire interest clause if found to be grossly unconscionable.

5.2. Refund and Damages

The court may order a lender to refund any overpaid interest.
Borrowers may also be awarded damages (e.g., moral damages, exemplary damages), depending on the nature of the lender’s wrongdoing.

5.3. Administrative and Criminal Liability

Lenders operating without proper licenses or failing to comply with the Lending Company Regulation Act (R.A. 9474) or Financing Company Act (R.A. 8556) may face SEC or BSP sanctions, including suspension or revocation of authority to operate.
In aggravated situations, the lender could face criminal penalties (though typically the issues revolve around administrative or civil cases).

6. Practical Tips and Considerations

Check the Lender’s Registration and License
- Before filing a complaint, confirm if the lender is duly registered with SEC or supervised by BSP. If the lender is unlicensed, that fact alone may significantly strengthen your case.
Calculate the Effective Interest Rate
- It is not just the nominal interest rate that matters. Some lenders quote low monthly rates but impose steep transaction fees or hidden charges. Compute the annual percentage rate (APR) for a clearer picture.
Document All Interactions
- Save SMS, chats, emails, and letters as potential evidence, especially if there is any indication of intimidation or harassment.
Seek Legal Advice
- While small claims procedures do not require a lawyer, consultation with a knowledgeable attorney or a public legal aid organization (e.g., Public Attorney’s Office) can help you ascertain the strength of your complaint.
Attempt Amicable Settlement
- If possible, try negotiating with the lender to reduce the interest before going to court. Litigation can be time-consuming.
Observe Timelines
- For civil cases, keep in mind the applicable prescriptive periods. If you intend to claim refund or damages, time can be a crucial factor.

7. Frequently Asked Questions

Is there still a usury law limit in the Philippines?
- While the Usury Law (Act No. 2655) technically remains in effect, its interest ceilings have been suspended. However, courts can declare interest rates excessive or unconscionable and reduce them.
What interest rate is “too high”?
- There is no fixed “cutoff.” Courts look at the totality of circumstances. However, Supreme Court cases have repeatedly ruled that rates exceeding 36% per annum may be subject to reduction, depending on the facts.
Can I just stop paying if the interest is too high?
- Not recommended. You remain bound by the valid portion of the obligation and risk default or legal action by the lender. Instead, file a complaint or seek relief in court to adjust the interest rate.
Do I need a lawyer for small claims?
- In small claims court, representation by counsel is generally not allowed or is strictly limited. However, consulting a lawyer beforehand can help you understand and organize your case.
What if the lender is harassing me?
- Harassment or threats may be criminal in nature (grave threats, extortion, or violation of the Fair Debt Collection Practices Act). Maintain a record of all incidents and, if needed, file a separate criminal complaint.

8. Conclusion

Filing a complaint for excessive lending interest rates in the Philippines hinges on demonstrating that the rate is unconscionable or contrary to public policy. Despite the suspension of fixed interest ceilings under the Usury Law, courts retain broad authority to protect borrowers from oppressive or predatory terms. By gathering strong documentation, following proper venue and procedural rules, and citing relevant legal provisions and jurisprudence, borrowers can seek judicial relief to reduce or nullify unjust interest obligations.

It is wise to seek professional legal advice or assistance from accredited government agencies (e.g., SEC, BSP, or Public Attorney’s Office) when dealing with complex lending disputes. Ultimately, vigilance in reviewing loan agreements and timely legal action are key to safeguarding one’s rights against excessive lending interest rates.