MANILA, Philippines — Lending or borrowing money at usurious rates, a practice popularly called “5-6,” is prohibited in the Kingdom of Saudi Arabia, the Philippine Embassy in Riyadh Friday advised overseas Filipino workers (OFWs) deployed in the Kingdom.
The embassy said the practice is a criminal offense.
The advisory was issued amid numerous requests for assistance from OFWs that the embassy and the Philippine Consulate General in Jeddah continuously receive concerning the problems that these Filipinos, their family members, or friends, are encountering with regard to contracting loans or acting as guarantors for the loans of other individuals.
To avoid being accused of usury, lenders have resorted to giving cash with the borrower signing a promissory note to pay in installments with a sum greater than the amount of cash borrowed.
This practice comes in different forms, the embassy explained, and sometimes the undertakings are for payment in 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," the embassy said in its advisory.
In case 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.
"Usually, the persons involved in the loan are detained due to the private rights complaints by the lender," the embassy said.
It informs Filipinos that it is not authorized to guarantee the obligation and could not settle the amount demanded for the satisfaction of the loan, as this is the responsibility of the borrower and/or guarantor.
The embassy appealed to Filipinos to avoid engaging in these types of transactions to avoid serious problems in the Kingdom.
Saturday, July 30, 2011
Saudi OFWs advised vs '5-6'