The Filipino borrowing community continues to face significant challenges and vulnerabilities when it comes to abusive and predatory lending practices. This Note delves into complex issues surrounding secured transactions and the longstanding policy of pactum commissorium, which contribute to the prevalence of predatory and usurious lending practices in the country. Additionally, it examines how lenders exploit the Bouncing Checks Law as a tool for coercion and intimidation.
Furthermore, it highlights regulatory gaps by analyzing various special laws, such as Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act of 2022, as well as the rules and principles governing secured and unsecured credit transactions. It also scrutinizes the existing policies related to usurious and predatory lending practices and explores relevant jurisprudence pertaining to exorbitant interest rates.
To address these pressing concerns, proposals for legal reforms are offered, emphasizing the need to modernize outdated procedural and substantive rules governing the enforcement of security arrangements. This Note also advocates for the exploration and promotion of alternative forms of lending that prioritize fairness and protect the rights and interests of borrowers.