I.

Governing legal interest rate in loans or forbearance of money (in the absence
of stipulation):
BSP Circular No. 799 – 6% Legal interest/annum beginning July 1, 2013
CB Circular No. 905 – 13% Legal interest/annum beginning December 22, 1982
until June 30, 2013
II. Stipulated interest rate between the parties:
Article 1956. No interest shall be due unless it has been expressly stipulated in
writing. (read in conjunction w/ existing BSP Circulars w/ respect to loan or
forbearance of money)
III. Compounded Interest by stipulation of the parties (and basis for straight line
interest – 1st sentence):

Article 1959. 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.
 
IV. Compounded Interest by judicial demand:
Article 2212. Interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point