Practice question
A loan contains no written stipulation for conventional interest. Before maturity and before default, the lender demands an alleged oral monthly rate solely as compensation for use of the money. Which rule applies?
- Article 1956 prevents enforcement of that unwritten conventional-interest stipulation
- Every oral rate is automatically enforceable
- The principal debt necessarily disappears
- The lender may choose any rate later
- The borrower must pay twelve percent monthly
Legal references
- Civil Code Articles 1169, 1956, 1959, 2209 and 2212: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
- Nacar v. Gallery Frames, GR 189871, August 13, 2013, main decision: https://lawphil.net/judjuris/juri2013/aug2013/gr_189871_2013.html
- Lara's Gifts & Decors v. Midtown Industrial Sales, GR 225433, September 20, 2022, main resolution: https://lawphil.net/judjuris/juri2022/sep2022/gr_225433_2022.html
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