Unless stipulated, interest on loan may not be collected from borrower

Dear PAO,
My friend friend’s borrowed P50,000 from me. We have an agreement with that person that she is going to pay the amount within 6 months with P5,000 interest each month. She executed a promissory note but failed to include the payment of the interest. The borrower stopped paying the interest after 6 months and kept on promising to pay the principal debt of P50,000. It has been two years now and the borrower has not paid her debt and interest. Can I still collect the debt and the accrued interest?
Belinda

Dear Belinda,
You may still collect the money that was borrowed from you by your friend’s friend two years ago. Considering that the borrower executed a promissory note, you may claim the principal debt of P50,000 from her within ten (10) years from the time of its execution pursuant to Article 1144 of the Civil Code, which provides that:

The following actions must be brought within ten (10) years from the time the right of action accrues:

1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment.
(Emphasis supplied)

As for the interest, which you stated to be P5,000 per month, the same may not be legally collected considering that the payment thereof was not stated in writing or embodied in the promissory note. This is pursuant to Article 1956 of the Civil Code, which provides that “no interest shall be due unless it has been expressly stipulated in writing.”

In the collection of the amount of P50,000, you may file a small claim case with the Metropolitan Trial Court, Municipal Trial Court in Cities, Municipal Trial Court, or Municipal Circuit Trial Court at the place of your residence or that of the borrower attaching the promissory note that she has executed (A.M. No. 08-8-7-SC, The Rule of Procedure for Small Claims Cases). Since two years have lapsed after you lent your money, however, we suggest that you send, first, a demand letter to the borrower to remind her of her existing debt or you may seek the assistance of barangay (village) officials for a possible amicable settlement.

We hope that we have answered your query. Our legal opinion may vary if other facts are stated or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net