- Statute
- Civil Code
- Article
- Art. 1959
- Topic
- Simple Loan or Mutuum
- Status
- In force, as amended
- Book
- BOOK IV Obligations and Contracts
- Title
- TITLE XI LOAN General Provisions
- Chapter
- CHAPTER 2 Simple Loan or Mutuum
- Year
- 1949
- Cited by
- Multiple Supreme Court decisions
The provision
Without prejudice to the provisions of article 2212, interest due and unpaid shall not earn interest. However, the contracting parties may by stipulation capitalize the interest due and unpaid, which as added principal, shall earn new interest. (n)
Intellegal Wiki · In plain terms
As a rule, interest that is already due but unpaid does not itself earn further interest, except in the situations the law otherwise allows. However, the parties may agree to add the unpaid interest to the principal (capitalize it), and that combined amount then earns new interest.
An editorially maintained plain-language explanation of this provision — not legal advice.
Note on current application: this provision remains in force. The interest-rate ceilings of the Usury Law were suspended by Central Bank Circular No. 905 (1982), so there is no fixed statutory ceiling; Philippine courts may still reduce interest rates found to be unconscionable or iniquitous.
Cases applying this article
- Vicente Gomez Garcia v. Jacinta Hipolito
- Lucia Perez v. Domingo Cortes
- Commissioner of Internal Revenue v. Isabela Cultural Corporation
- Recoletos v. Crisostomo G.R. No. 10031
Related provisions in this Chapter
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Research aid — not legal advice. Verify the current text against the Official Gazette. Provisions may have been amended or repealed. Using this page creates no attorney-client relationship. For legal advice, consult a Philippine lawyer.