Civil Code Art. 1959: Simple Loan or Mutuum

Statute: Civil Code
Article: Art. 1959
Topic: Simple Loan or Mutuum
Book: BOOK IV Obligations and Contracts
Title: TITLE XI LOAN General Provisions
Chapter: CHAPTER 2 Simple Loan or Mutuum
Year: 1949

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)

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 G.R. No. 1449

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