Civil Law, 2022 Bar — Question I-10

ESSAY

Laica and Jessica, who are best friends, are both engaged in money lending at predatory interest rates. Running out of funds, Laica borrows Php 2,000,000.00 from Jessica for two months at a monthly interest rate of 10%. Jessica releases the borrowed amount after Laica signs a promissory note. Laica then relends to Monica the borrowed amount of Php 2,000,000.00 for two months, at an interest rate of 30%. After two months, Laica fails to pay Jessica, prompting Jessica to file a collection suit against the former, for the Php 2,000,000.00 principal and 10% interest per month pursuant to their agreement. Laica counters that the monthly interest rate of 10% is exorbitant and should be reduced to the legal rate of interest at 6% per annum. Which between the positions of Laica and Jessica is tenable? Explain briefly. (5 points)

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