Press Release No. 67/2011

28 July 2011

The Philippine Embassy in Riyadh and the Consulate General in Jeddah continue to receive numerous requests for assistance from Filipinos concerning the problems that they, their family members, or friends encounter with regard to contracting loans or acting as guarantors for the loans of other individuals. Usually, the problem the persons involved are detained due to private rights complaints by the lender.

The Embassy stresses that lending or borrowing money at usurious rates is prohibited in the Kingdom as this is a criminal offense. This is the practice colloquially known as “5-6.” 

To avoid being accused of usury, lenders have resorted to lending cash with the borrower signing a promissory note to pay installments with a greater total than the amount of cash borrowed. This practice comes in different forms, and sometimes the undertakings are for payment of installments for appliances or furniture or other items instead of cash. 

In almost all cases, a guarantor is required who would also be liable for payment of the total amount as the undertaking binds the guarantor to the obligations of the borrower. 

In case that the borrower defaults for any installment and the lender complains to the police, the borrower and/or guarantor are held accountable for this private rights case and face endless imprisonment until the amount is fully settled. 

The Embassy is not authorized to guarantee the obligation and could not settle the amounts demanded for the satisfaction of the loan, as this is the responsibility of the borrower and/or guarantor. 

Given these considerations, the Embassy strongly appeals to Filipinos to avoid engaging in these types of transactions to avoid serious problems in the Kingdom. END