Art.
1175 Usurious Transactions shall be
governed by special laws.
What is a usury?
- It is defined as contracting for or receiving
something in excess of the amount allowed
by law for taking the loan or forbearance of
money, goods or chattels.
What is a mutuum?
- It is a simple loan which is governed by the
following provisions:
 Art. 1953: A person who receives a
loan of money or any other fungible
thing acquires ownership thereof,
and is bound to pay the creditor an
equal amount of the same kind and
quality
 Art. 1954 A contract whereby one
person transfers the ownership of a
non-fungible thigs to another with
the obligation on the part of the
latter to give things of the the same
kind, quantity and quality shall be
considered a BARTER
 Art. 1955 If what was loaned is a
fungible thing other than money,
the debtor owes another thing of the
same kind, quantity and quality
even if it should change value. In
case if impossible to comply, its
value at the time of the perfection of
the loan shall be paid. The following
provisions will also apply:
o 1249: payment should be in
currency stipulated or if not,
it must be a legal tender in
the Philippines.
 Except: PN payable
to order, bills of
exchange or other
mercantile docs shall
produce same effect
only when cashed or
through fault of
creditor have been
impaired
o 1250 In case of
extraordinary inflation or
deflation of currency
stipulated, the value of the
currency at the time of the
establishment of the
obligation shall be the basis.
 except: stipulation
of parties
 Art. 1956 No interest shall be due
unless expressly stipulated in
writing
 Art. 1957 contracts and
stipulations intended to circumvent
the laws against usury shall be void.
The borrower may recover in
accordance with usury law.
Security Bank and Trust Co vs RTC
Makati
In this case, the principal contract, the
credit line agreement between petitioner
and respondent corporation was solely for
the benefit of the latter. The accessory
contract (indemnity agreement) under
which said respondent assumed the
obligation of a surety for respondent
corporation was similarly for the latter’s
benefit. He failed; however, to prove that
the conjugal partnership was benefited. To
hold it liable defeats the objective of the
Civil Code to protect the solidarity and
well-being of the family as a unit.
ACT 2655 Usury Law
KINDS:
 Simple: rates are stipulated by
parties
  Compound: interest earned is
upon interest due

 Legal: intended by the parties is

presumed by law such a s when loan
does not specify interest rate thereof

 Lawful: within maximum allowed

by law

 Unlawful: beyond maximum

General Rule: Legal rate is 12% per

annum for loan or forbearance of money,
goods or credits
Exception: 6% if other kinds of
transaction
Note: to be counted from filing of
complaint until fully paid