City dad wants “5-6” loan scheme probed

CEBU, Philippines — Cebu City Council wants the Cebu City Legal Office to look into any possible legal and legislative intervention regarding the excessive loan interest imposed in the "five-six" usury scheme moneylenders impose on ambulant vendors.

This was the resolution approved by the council following the privilege speech of Councilor Pastor "Jun" Alcover during the regular session last Wednesday.

Alcover raised concerns brought to him by some vendors who confided in him the alleged excessive loan interests imposed by some foreign nationals. He said this interest stemmed from the "five-six pautang" scheme mostly by Turkish or Indian moneylenders.

"Ubay-ubay na mga ambulant vendors na sakop sa usa ka hugpong diha sa Carbon Public Market kay nakasuway nag utang aning five-six. Dili pud nato malimud na makadani gayud ang maong susamang sistema," he said.

He added that the ?20-per-day payment entices the vendors to avail of the loan being offered.

Alcover then said in his own study of the complaint of the vendors he came across the Truth in Lending Act in line with the Republic Act 3765 of 1963. Section 2 of the said law stipulates "It is hereby declared to be the policy of the State to protect its citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy."

He added, that in violation of such, Section 6 of the same law also mandates offenders to be fined with not less than ?1,000 or more than ?5,000 or imprisonment of not less than six months or more than one year, or both.

"Mr. Chairman, sayud ako na sa kataas na sa katuigan, kini na sistema sa pagpautang kay murag nahimong normal na lang," said Alcover.

He clarified that this stance is not to discriminate against foreigners who are moneylenders but rather just to seek answers if those engaged in this scheme have existing permits and pay due taxes.

"Kay nahug naman hinuon na informal economy ni siya ug ang nakaapan kay kasagaran sa nag-operate ani kay mga langyaw," said Alcover.

To him, it is high time that social values must be rechecked as some foreign nationals operate in the informal economy without any tax returns or compliance with the national and local rules or regulations.

"Just a qualification, this is not a form of xenophobia against foreign nationals who lend some money towards our constituents," said Alcover.

He added that the issue is more anchored on the permits and compliance in order to prevent excessive loan interests against the ambulant vendors and other borrowers.

In line with this, the council approved Alcover's resolution to request the Cebu City Legal Office to comment on and recommend possible legal and legislative interventions against excessive loan interest imposed in the "five-six" scheme. (CEBU NEWS)