The High Court has ruled in favor of a Filipino domestic worker who became mired in debt after her friends left without paying a loan where they made her their guarantor.
Saying loans with excessive interest rates are “irrecoverable,” Court of First Instance Louis Chan granted the appeal of domestic worker Corriente N.M. against the decision of a Small Claims Tribunal adjudicator ordering her to pay $13,120 to a Filipino friend who lent her only $5,000.
The judge sided with Corriente because the claimant, Morales E.G., imposed an illegal 10 percent monthly interest rate, which exceeds the 60 percent maximum annual interest rate set by the Money Lender’s Ordinance.
“Since the 10 percent rate far exceeded the 60 percent fixed in… the Ordinance, the loan (with excessive interest that Corriente obtained is) irrecoverable,” Chan said in his ruling on January 11.
He noted that the adjudicator awarded $13,120 to Morales with costs at $391.60 “because he thought that he could recalculate the amount of interest at 60.”
“This is an error of law. I therefore set aside the adjudicator’s award and dismiss the claimant’s claim,” Chan said.
“I also order that all sums paid by the defendant into the Small Claims Tribunal with the view, to be released to the claimant, are to be released back to the defendant forthwith with interest thereon if any,” he added.
He said the Morales can claim only the $2,750 interest-free loan that she gave Corriente but then Corriente had already paid her $5,000.
“In the premises, the claimant cannot seek any repayment from (Corriente),” the judge said. Corriente’s travails began in 2010 when she acted as a guarantor for her friends who took out a bank loan. Unfortunately, her friends left without paying the loan.
To pay the bank, Corriente was forced to loan $5,000 from Morales, another Filipino domestic worker and her townmate from Iloilo.
“Kaibigan ko ho iyon. Pilipina din. Nanghiram ako noong 2010 ng $5,000 tapos sabi niya tutubuan niya iyon ng 15 percent kada buwan. Ang nahawakan ko lang sa pera ay $4,250 kasi binawas na agad niya ang tubo na $750 para sa unang buwan,” she told Hong Kong News.
Corriente said he was able to pay the interest for 11 months, which she deposited in her friend’s bank account.
But in December 2011, she failed to pay for the interest and, in the following June, her friend claimed that that unpaid interests had piled up and totaled $10,250.
On top of that, Corriente said her friend also added the $1,880 she owed from the phone cards that she bought from the latter, bringing her total debt to $12,130.
After the new computation, she said her friend reduced the interest to 10 percent.
“Hindi ako nakabayad ng tubo, at sa pag-kwenta niya ulit $26,530 na ulit ang utang ko. Pinirmahan ko, pero noong dinala niya ako sa Small Claims Tribunal, hindi tinanggap ang kwenta niya kasi walang ebidensya,” Corriente said.
“Kinuwenta ng Small Claims (at) pinagbayad ako ng $13,000. Sinunod ang interes niya. Nag-agree ako na magbayad, pero installment na $500 kada buwan,” she added.
Her troubles restarted when she was not able to pay on time after four months of religiously paying $500 on the 28th of the month through the Small Claims Tribunal.
“Na-delay ako ng four days kasi may alaga ako, at ang amo ko flight stewardess. Ngayon, ang ginawa ko na lang hinulog ko sa account niya. Tinatawagan ko siya pero hindi na active ang phone number niya, kahit active pa rin ang account niya,” she said.
Corriente said her friend wanted her to immediately pay the remaining balance of $11,000
“Kaya lang naisip ko, naghulog naman ako sa account niya eh, hindi naman hindi ako nagbayad. Gusto niya iyong $11,000 bayaran ko on the spot,” she said.
Corriente then filed an appeal before the High Court because she felt that she had suffered enough.
“Nag-guarantor lang ako (sa bangko para) sa mga kaibigan ko. Kaya nagpursige ako na manghiram sa kanya dahil sa laki ng interes na binabayad ko sa bangko. Naloko ako ng mga kaibigan ko,” Corriente said.
“Grabe ang ginawa niya sa akin, sinulatan niya ang kapitan namin doon sa Pilipinas at tinatakot ako na ipapa-media daw niya ako,” she added.
Corriente said her employer supported her and had even called the Small Claims Tribunal to complain about the arrangement that its adjudicator approved regarding the Filipina’s debt.