G.R. No. 192986.January 15, 2013.

ADVOCATES FOR TRUTH IN LENDING, INC. and

EDUARDO B. OLAGUER, petitioners, vs. BANGKO
SENTRAL MONETARY BOARD, represented by its
Chairman, GOVERNOR ARMANDO M. TETANGCO, JR.,
and its incumbent members: JUANITA D. AMATONG,
ALFREDO C. ANTONIO, PETER FAVILA, NELLY F.
VILLAFUERTE, IGNACIO R. BUNYE and CESAR V.
PURISIMA, respondents.

Remedial Law; Special Civil Actions; Certiorari; A petition for

certiorari being an extraordinary remedy, the party seeking to avail
of the same must strictly observe the procedural rules laid down by
law, and non-observance thereof may not be brushed aside as mere
technicality.The decision on whether or not to accept a petition for
certiorari, as well as to grant due course thereto, is addressed to the
sound discretion of the court. A petition for certiorari being an
extraordinary remedy, the party seeking to avail of the same must
strictly observe the procedural rules laid down by law, and non-
observance thereof may not be brushed aside as mere technicality.
As provided in Section 1 of Rule 65, a writ of certiorari is directed
against a tribunal exercising judicial or quasi-judicial functions.
Judicial functions are exercised by a body or officer clothed with
authority to determine what the law is and what the legal rights of
the parties are with respect to the matter in controversy. Quasi-
judicial function is a term that applies to the action or discretion of
public administrative officers or bodies given the authority to
investigate facts or ascertain the existence of facts, hold hearings,
and draw conclusions from them as a basis for their official action
using discretion of a judicial nature.
Same; Civil Procedure; Locus Standi; Words and Phrases; Locus
standi is defined as a right of appearance in a court of justice on a
given question.Locus standi is defined as a right of appearance in
a court of justice on a given question. In private suits, Section 2,
Rule 3 of the 1997 Rules of Civil Procedure provides that every
action must be prosecuted or defended in the name of the real party
in interest, who is the party who stands to be benefited or injured
 _______________

* EN BANC.

531

VOL. 688, JANUARY 15, 2013 531

Advocates for Truth in Lending, Inc. vs. Bangko Sentral Monetary

Board

by the judgment in the suit or the party entitled to the avails of the
suit. Succinctly put, a partys standing is based on his own right to
the relief sought.
Same; Same; Same; In Prof. David v. Pres. Macapagal-Arroyo,
489 SCRA 160 (2006), the Supreme Court summarized the
requirements before taxpayers, voters, concerned citizens, and
legislators can be accorded a standing to sue.In Prof. David v.
Pres. Macapagal-Arroyo, 489 SCRA 160 (2006), the Court
summarized the requirements before taxpayers, voters, concerned
citizens, and legislators can be accorded a standing to sue, viz.: (1)
the cases involve constitutional issues; (2) for taxpayers, there must
be a claim of illegal disbursement of public funds or that the tax
measure is unconstitutional; (3) for voters, there must be a showing
of obvious interest in the validity of the election law in question; (4)
for concerned citizens, there must be a showing that the issues
raised are of transcendental importance which must be settled
early; and (5) for legislators, there must be a claim that the official
action complained of infringes upon their prerogatives as
legislators.
Usury Law; Central Bank (CB) Circular No. 905; Central Bank
(CB) Circular No. 905 did not repeal nor in anyway amend the
Usury Law but simply suspended the latters effectivity; that a
Central Bank (CB) Circular cannot repeal a law, for only a law can
repeal another law; that by virtue of CB Circular No. 905, the Usury
Law has been rendered ineffective; and Usury Law has been legally
non-existent in our jurisdiction.The power of the CB to effectively
suspend the Usury Law pursuant to P.D. No. 1684 has long been
recognized and upheld in many cases. As the Court explained in the
landmark case of Medel v. CA, 299 SCRA 481 (1998), citing several
cases, CB Circular No. 905 did not repeal nor in anyway amend the
Usury Law but simply suspended the latters effectivity; that a
[CB] Circular cannot repeal a law, [for] only a law can repeal
another law; that by virtue of CB Circular No. 905, the Usury Law
has been rendered ineffective; and Usury has been legally non-
existent in our jurisdiction. Interest can now be charged as lender
and borrower may agree upon.
Same; Section 109 of R.A. No. 265 covered only loans extended
by banks, whereas under Section 1-a of the Usury Law, as amended,
the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) may

532

532 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral Monetary

Board

prescribe the maximum rate or rates of interest for all loans or

renewals thereof or the forebearance of any money, goods or credits,
including those for loans of low priority such as consumer loans, as
well as such loans made by pawnshops, finance companies and
similar credit institutions.A closer perusal shows that Section 109
of R.A. No. 265 covered only loans extended by banks, whereas
under Section 1-a of the Usury Law, as amended, the BSP-MB may
prescribe the maximum rate or rates of interest for all loans or
renewals thereof or the forbearance of any money, goods or credits,
including those for loans of low priority such as consumer loans, as
well as such loans made by pawnshops, finance companies and
similar credit institutions. It even authorizes the BSP-MB to
prescribe different maximum rate or rates for different types of
borrowings, including deposits and deposit substitutes, or loans of
financial intermediaries. Act No. 2655, an earlier law, is much
broader in scope, whereas R.A. No. 265, now R.A. No. 7653, merely
supplemented it as it concerns loans by banks and other financial
institutions. Had R.A. No. 7653 been intended to repeal Section 1-a
of Act No. 2655, it would have so stated in unequivocal terms.
Statutes; Implied Repeals; Repeals by implication are not
favored, because laws are presumed to be passed with deliberation
and full knowledge of all laws existing pertaining to the subject.
The rule is settled that repeals by implication are not favored,
because laws are presumed to be passed with deliberation and full
knowledge of all laws existing pertaining to the subject. An implied
repeal is predicated upon the condition that a substantial conflict or
repugnancy is found between the new and prior laws. Thus, in the
absence of an express repeal, a subsequent law cannot be construed
as repealing a prior law unless an irreconcilable inconsistency and
repugnancy exists in the terms of the new and old laws. We find no
such conflict between the provisions of Act 2655 and R.A. No. 7653.
Usury Law; Interest Rates; Stipulations authorizing iniquitous
or unconscionable interests have been invariably struck down for
being contrary to morals, if not against the law; In a usurious loan
with mortgage, the right to foreclose the mortgage subsists, and this
right can be exercised by the creditor upon failure by the debtor to
pay the debt due. The debt due is considered as without the
stipulated excessive interest, and the legal interest of 12% per annum
will be added in place of the excessive interest formerly imposed.It
is set-

533

VOL. 688, JANUARY 15, 2013 533

Advocates for Truth in Lending, Inc. vs. Bangko Sentral Monetary

Board

tled that nothing in CB Circular No. 905 grants lenders a carte

blanche authority to raise interest rates to levels which will either
enslave their borrowers or lead to a hemorrhaging of their assets.
As held in Castro v. Tan, 605 SCRA 231 (2009): The imposition of an
unconscionable rate of interest on a money debt, even if knowingly
and voluntarily assumed, is immoral and unjust. It is tantamount
to a repugnant spoliation and an iniquitous deprivation of property,
repulsive to the common sense of man. It has no support in law, in
principles of justice, or in the human conscience nor is there any
reason whatsoever which may justify such imposition as righteous
and as one that may be sustained within the sphere of public or
private morals. Stipulations authorizing iniquitous or
unconscionable interests have been invariably struck down for
being contrary to morals, if not against the law. Indeed, under
Article 1409 of the Civil Code, these contracts are deemed
inexistent and void ab initio, and therefore cannot be ratified, nor
may the right to set up their illegality as a defense be waived.
Nonetheless, the nullity of the stipulation of usurious interest does
not affect the lenders right to recover the principal of a loan, nor
affect the other terms thereof. Thus, in a usurious loan with
mortgage, the right to foreclose the mortgage subsists, and this
right can be exercised by the creditor upon failure by the debtor to
pay the debt due. The debt due is considered as without the
stipulated excessive interest, and a legal interest of 12% per annum
will be added in place of the excessive interest formerly imposed.

SPECIAL CIVIL ACTION in the Supreme Court.

 Certiorari.
The facts are stated in the opinion of the Court.
Nathaniel A. Lobigas for petitioners.
The Solicitor General for respondents.

REYES,J.:
Petitioners, claiming that they are raising issues of
transcendental importance to the public, filed directly with
this Court this Petition for Certiorari under Rule 65 of the
1997 Rules of Court, seeking to declare that the Bangko
Sentral ng Pilipinas Monetary Board (BSP-MB), replacing
the Central
534

534 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

Bank Monetary Board (CB-MB) by virtue of Republic Act

(R.A.) No. 7653, has no authority to continue enforcing
Central Bank Circular No. 905,1 issued by the CB-MB in
1982, which suspended Act No. 2655, or the Usury Law of
1916.

Factual Antecedents

Petitioner Advocates for Truth in Lending, Inc.

(AFTIL) is a nonprofit, non-stock corporation organized to
engage in pro bono concerns and activities relating to
money lending issues. It was incorporated on July 9, 2010,2
and a month later, it filed this petition, joined by its
founder and president, Eduardo B. Olaguer, suing as a
taxpayer and a citizen.
R.A. No. 265, which created the Central Bank (CB) of
the Philippines on June 15, 1948, empowered the CB-MB
to, among others, set the maximum interest rates which
banks may charge for all types of loans and other credit
operations, within limits prescribed by the Usury Law.
Section 109 of R.A. No. 265 reads:

Sec.109.Interest Rates, Commissions and Charges.The

Monetary Board may fix the maximum rates of interest which
banks may pay on deposits and on other obligations.
The Monetary Board may, within the limits prescribed in the
Usury Law fix the maximum rates of interest which banks may
charge for different types of loans and for any other credit
operations, or may fix the maximum differences which may exist
between the interest or rediscount rates of the Central Bank and
the rates which the banks may charge their customers if the
respective credit documents are not to lose their eligibility for
rediscount or advances in the Central Bank.
Any modifications in the maximum interest rates permitted for
the borrowing or lending operations of the banks shall apply only to
future operations and not to those made prior to the date on which
the modification becomes effective.

_______________
1 Rollo, pp. 48-56.
2 Id., at pp. 40-45.

535

VOL. 688, JANUARY 15, 2013 535

Advocates for Truth in Lending, Inc. vs. Bangko Sentral Monetary
Board

In order to avoid possible evasion of maximum interest rates set

by the Monetary Board, the Board may also fix the maximum rates
that banks may pay to or collect from their customers in the form of
commissions, discounts, charges, fees or payments of any sort.
(Underlining ours)

On March 17, 1980, the Usury Law was amended by

Presidential Decree (P.D.) No. 1684, giving the CB-MB
authority to prescribe different maximum rates of interest
which may be imposed for a loan or renewal thereof or the
forbearance of any money, goods or credits, provided that
the changes are effected gradually and announced in
advance. Thus, Section 1-a of Act No. 2655 now reads:

Sec.1-a.The Monetary Board is hereby authorized to prescribe

the maximum rate or rates of interest for the loan or renewal
thereof or the forbearance of any money, goods or credits, and to
change such rate or rates whenever warranted by prevailing
economic and social conditions: Provided, That changes in such rate
or rates may be effected gradually on scheduled dates announced in
advance.
In the exercise of the authority herein granted the Monetary
Board may prescribe higher maximum rates for loans of low
priority, such as consumer loans or renewals thereof as well as such
loans made by pawnshops, finance companies and other similar
credit institutions although the rates prescribed for these
institutions need not necessarily be uniform. The Monetary Board
is also authorized to prescribe different maximum rate or rates for
different types of borrowings, including deposits and deposit
substitutes, or loans of financial intermediaries. (Underlining and
emphasis ours)

In its Resolution No. 2224 dated December 3, 1982,3 the

CB-MB issued CB Circular No. 905, Series of 1982,
effective on January 1, 1983. Section 1 of the Circular,
under its General Provisions, removed the ceilings on
interest rates on loans or forbearance of any money, goods
or credits, to wit:

_______________
3 Id., at pp. 48-56.

536

536 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

Sec.1.The rate of interest, including commissions, premiums,

fees and other charges, on a loan or forbearance of any money,
goods, or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether
natural or juridical, shall not be subject to any ceiling prescribed
under or pursuant to the Usury Law, as amended. (Underscoring
and emphasis ours)

The Circular then went on to amend Books I to IV of the

CBs Manual of Regulations for Banks and Other
Financial Intermediaries (Manual of Regulations) by
removing the applicable ceilings on specific interest rates.
Thus, Sections 5, 9 and 10 of CB Circular No. 905 amended
Book I, Subsections 1303, 1349, 1388.1 of the Manual of
Regulations, by removing the ceilings for interest and other
charges, commissions, premiums, and fees applicable to
commercial banks; Sections 12 and 17 removed the interest
ceilings for thrift banks (Book II, Subsections 2303, 2349);
Sections 19 and 21 removed the ceilings applicable to rural
banks (Book III, Subsection 3152.3-c); and, Sections 26, 28,
30 and 32 removed the ceilings for non-bank financial
intermediaries (Book IV, Subsections 4303Q.1 to 4303Q.9,
4303N.1, 4303P).4
On June 14, 1993, President Fidel V. Ramos signed into
law R.A. No. 7653 establishing the Bangko Sentral ng
Pilipinas (BSP) to replace the CB. The repealing clause
thereof, Section 135, reads:

Sec.135.Repealing Clause.Except as may be provided for in

Sections 46 and 132 of this Act, Republic Act No. 265, as amended,
the provisions of any other law, special charters, rule or regulation
issued pursuant to said Republic Act No. 265, as amended, or parts
thereof, which may be inconsistent with the provisions of this Act
are hereby repealed. Presidential Decree No. 1792 is likewise
repealed.

_______________
4 Id., at pp. 10-12.

537

VOL. 688, JANUARY 15, 2013 537

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

Petition for Certiorari

To justify their skipping the hierarchy of courts and
going directly to this Court to secure a writ of certiorari,
petitioners contend that the transcendental importance of
their Petition can readily be seen in the issues raised
therein, to wit:
a)Whether under R.A. No. 265 and/or P.D. No. 1684, the
CB-MB had the statutory or constitutional authority
to prescribe the maximum rates of interest for all
kinds of credit transactions and forbearance of money,
goods or credit beyond the limits prescribed in the
Usury Law;
b)If so, whether the CB-MB exceeded its authority when
it issued CB Circular No. 905, which removed all
interest ceilings and thus suspended Act No. 2655 as
regards usurious interest rates;
c)Whether under R.A. No. 7653, the new BSP-MB may
continue to enforce CB Circular No. 905.5
Petitioners attached to their petition copies of several
Senate Bills and Resolutions of the 10th Congress, which
held its sessions from 1995 to 1998, calling for
investigations by the Senate Committee on Banks and
Financial Institutions into alleged unconscionable
commercial rates of interest imposed by these entities.
Senate Bill (SB) Nos. 376 and 1860,7 filed by Senator
Vicente C. Sotto III and the late Senator Blas F. Ople,
respectively, sought to amend Act No. 2655 by fixing the
rates of interest on loans and forbearance of credit;
Philippine Senate Resolution (SR) No. 1053,8 10739 and
1102,10 filed by Senators Ramon B. Magsaysay, Jr.,
Gregorio B. Honasan and

_______________
5 Id., at p. 13.
6 Id., at pp. 31-32.
7 Id., at p. 33.
8 Id., at pp. 34-35.
9 Id., at pp. 36-37.
10 Id., at p. 38.

538

538 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

Franklin M. Drilon, respectively, urged the aforesaid

Senate Committee to investigate ways to curb the high
commercial interest rates then obtaining in the country;
Senator Ernesto Maceda filed SB No. 1151 to prohibit the
collection of more than two months of advance interest on
any loan of money; and Senator Raul Roco filed SR No.
114411 seeking an investigation into an alleged cartel of
commercial banks, called Club 1821, reportedly behind
the regime of high interest rates. The petitioners also
attached news clippings12 showing that in February 1998
the banks prime lending rates, or interests on loans to
their best borrowers, ranged from 26% to 31%.
Petitioners contend that under Section 1-a of Act No.
2655, as amended by P.D. No. 1684, the CB-MB was
authorized only to prescribe or set the maximum rates of
interest for a loan or renewal thereof or for the forbearance
of any money, goods or credits, and to change such rates
whenever warranted by prevailing economic and social
conditions, the changes to be effected gradually and on
scheduled dates; that nothing in P.D. No. 1684 authorized
the CB-MB to lift or suspend the limits of interest on all
credit transactions, when it issued CB Circular No. 905.
They further insist that under Section 109 of R.A. No. 265,
the authority of the CB-MB was clearly only to fix the
banks maximum rates of interest, but always within the
limits prescribed by the Usury Law.
Thus, according to petitioners, CB Circular No. 905,
which was promulgated without the benefit of any prior
public hearing, is void because it violated Article 5 of the
New Civil Code, which provides that Acts executed against
the provisions of mandatory or prohibitory laws shall be
void, except when the law itself authorizes their validity.
They further claim that just weeks after the issuance of
CB Circular No. 905, the benchmark 91-day Treasury bills
(T-

_______________
11 Id., at p. 30.
12 Id., at pp. 26-29.

539

VOL. 688, JANUARY 15, 2013 539

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

bills),13 then known as Jobo bills14 shot up to 40% per

annum, as a result. The banks immediately followed suit
and re-priced their loans to rates which were even higher
than those of the Jobo bills. Petitioners thus assert that
CB Circular No. 905 is also unconstitutional in light of
Section 1 of the Bill of Rights, which commands that no
person shall be deprived of life, liberty or property without
due process of law, nor shall any person be denied the equal
protection of the laws.
Finally, petitioners point out that R.A. No. 7653 did not
re-enact a provision similar to Section 109 of R.A. No. 265,
and therefore, in view of the repealing clause in Section
135 of R.A. No. 7653, the BSP-MB has been stripped of the
power either to prescribe the maximum rates of interest
which banks may charge for different kinds of loans and
credit transactions, or to suspend Act No. 2655 and
continue enforcing CB Circular No. 905.

Ruling
 The petition must fail.
A.The Petition is procedurally infirm.
The decision on whether or not to accept a petition for
certiorari, as well as to grant due course thereto, is
addressed to the sound discretion of the court.15 A petition
for certiorari being an extraordinary remedy, the party
seeking to avail of the same must strictly observe the
procedural rules laid down by law, and non-observance
thereof may not be brushed aside as mere technicality.16

_______________
13 Treasury bills are government debt securities issued by the Bureau
of the Treasury with maturities of less than 1 year.
14 Named after CB Governor Jose Jobo Fernandez.
15 Chong v. Dela Cruz, G.R. No. 184948, July 21, 2009, 593 SCRA 311,
313-314.
16 Sea Power Shipping Enterprises, Inc. v. Court of Appeals, 412 Phil.
603, 611; 360 SCRA 173, 181 (2001).

540

540 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

As provided in Section 1 of Rule 65, a writ of certiorari is

directed against a tribunal exercising judicial or quasi-
judicial functions.17 Judicial functions are exercised by a
body or officer clothed with authority to determine what
the law is and what the legal rights of the parties are with
respect to the matter in controversy. Quasi-judicial function
is a term that applies to the action or discretion of public
administrative officers or bodies given the authority to
investigate facts or ascertain the existence of facts, hold
hearings, and draw conclusions from them as a basis for
their official action using discretion of a judicial nature.18
The CB-MB (now BSP-MB) was created to perform
executive functions with respect to the establishment,
operation or liquidation of banking and credit institutions,
and branches and agencies thereof.19 It does not perform
judicial or quasi-judicial functions. Certainly, the issuance
of CB Circular No. 905 was done in the exercise of an
executive function. Certiorari will not lie in the instant
case.20
 _______________
17 Sec.1.Petition for certiorari.When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, nor
any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
18 Chamber of Real Estate and Builders Associations, Inc. (CREBA) v.
Energy Regulatory Commission (ERC), G.R. No. 174697, July 8, 2010,
624 SCRA 556, 571.
19 Central Bank of the Philippines v. Court of Appeals, 158 Phil. 986,
993; 61 SCRA 348, 355 (1974).
20 In Philnabank Employees Association v. Estanislao (G.R. No.
104209, November 16, 1993, 227 SCRA 804), the Supreme Court refused
to issue a writ of certiorari against the Secretaries of Finance and of
Labor after noting that they did not act in any judicial or

541

VOL. 688, JANUARY 15, 2013 541

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

B.Petitioners have no locus standi

to file the Petition
Locus standi is defined as a right of appearance in a
court of justice on a given question. In private suits,
Section 2, Rule 3 of the 1997 Rules of Civil Procedure
provides that every action must be prosecuted or defended
in the name of the real party in interest, who is the party
who stands to be benefited or injured by the judgment in
the suit or the party entitled to the avails of the suit.
Succinctly put, a partys standing is based on his own right
to the relief sought.21
Even in public interest cases such as this petition, the
Court has generally adopted the direct injury test that
the person who impugns the validity of a statute must have
a personal and substantial interest in the case such that
he has sustained, or will sustain direct injury as a result.22
Thus, while petitioners assert a public right to assail CB
Circular No. 905 as an illegal executive action, it is
nonetheless required of them to make out a sufficient
interest in the vindication of the public order and the
securing of relief. It is significant that in this petition, the
petitioners do not allege that they sustained any personal
injury from the issuance of CB Circular No. 905.
Petitioners also do not claim that public funds were
being misused in the enforcement of CB Circular No. 905.
In Kilosbayan, Inc. v. Morato,23 involving the on-line lottery
contract of the PCSO, there was no allegation that public
funds were

_______________
quasi-judicial capacity but were merely promulgating the
implementing rules of R.A. No. 6971, the Productivity Incentives Act of
1990.
21 Prof. David v. Pres. Macapagal-Arroyo, 522 Phil. 705, 755-756; 489
SCRA 160, 216 (2006). (Citations omitted)
22 People of the Philippines and HSBC v. Vera, 65 Phil. 56, 89 (1937).
23 320 Phil. 171; 246 SCRA 540 (1995); 316 Phil. 652; 250 SCRA 130
(1995).

542

542 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

being misspent, which according to the Court would have

made the action a public one, and justify relaxation of the
requirement that an action must be prosecuted in the name
of the real party-in-interest. The Court held, moreover,
that the status of Kilosbayan as a peoples organization did
not give it the requisite personality to question the validity
of the contract. Thus:

Petitioners do not in fact show what particularized interest they

have for bringing this suit. It does not detract from the high regard
for petitioners as civic leaders to say that their interest falls short of
that required to maintain an action under the Rule 3, Sec. 2.24

C.The Petition raises no issues of

transcendental importance.
In the 1993 case of Joya v. Presidential Commission on
Good Government,25 it was held that no question involving
the constitutionality or validity of a law or governmental
act may be heard and decided by the court unless there is
compliance with the legal requisites for judicial inquiry,
namely: (a) that the question must be raised by the proper
party; (b) that there must be an actual case or controversy;
(c) that the question must be raised at the earliest possible
opportunity; and (d) that the decision on the constitutional
or legal question must be necessary to the determination of
the case itself.
In Prof. David v. Pres. Macapagal-Arroyo,26 the Court
summarized the requirements before taxpayers, voters,
concerned citizens, and legislators can be accorded a
standing to sue, viz.:

_______________
24 Id., at p. 696.
25 G.R. No. 96541, August 24, 1993, 225 SCRA 568.
26 Supra note 21.

543

VOL. 688, JANUARY 15, 2013 543

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

(1)the cases involve constitutional issues;

(2)for taxpayers, there must be a claim of illegal disbursement of public
funds or that the tax measure is unconstitutional;
(3)for voters, there must be a showing of obvious interest in the validity
of the election law in question;
(4)for concerned citizens, there must be a showing that the issues
raised are of transcendental importance which must be settled
early; and
(5)for legislators, there must be a claim that the official action
complained of infringes upon their prerogatives as legislators.

While the Court may have shown in recent decisions a

certain toughening in its attitude concerning the question
of legal standing, it has nonetheless always made an
exception where the transcendental importance of the
issues has been established, notwithstanding the
petitioners failure to show a direct injury.27 In CREBA v.
ERC,28 the Court set out the following instructive guides as
determinants on whether a matter is of transcendental
importance, namely: (1) the character of the funds or other
assets involved in the case; (2) the presence of a clear case
of disregard of a constitutional or statutory prohibition by
the public respondent agency or instrumentality of the
government; and (3) the lack of any other party with a
more direct and specific interest in the questions being
raised. Further, the Court stated in Anak Mindanao Party-
List Group v. The Executive Secretary29 that the rule on
standing will not be waived where these determinants are
not established.
In the instant case, there is no allegation of misuse of
public funds in the implementation of CB Circular No. 905.
Neither were borrowers who were actually affected by the
sus-

_______________
27 Id.
28 Supra note 18.
29 G.R. No. 166052, August 29, 2007, 531 SCRA 583.

544

544 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

pension of the Usury Law joined in this petition. Absent

any showing of transcendental importance, the petition
must fail.
More importantly, the Court notes that the instant
petition adverted to the regime of high interest rates which
obtained at least 15 years ago, when the banks prime
lending rates ranged from 26% to 31%,30 or even 29 years
ago, when the 91-day Jobo bills reached 40% per annum. In
contrast, according to the BSP, in the first two (2) months
of 2012 the bank lending rates averaged 5.91%, which
implies that the banks prime lending rates were lower;
moreover, deposit interests on savings and long-term
deposits have also gone very low, averaging 1.75% and
1.62%, respectively.31
Judging from the most recent auctions of T-bills, the
savings rates must be approaching 0%. In the auctions held
on November 12, 2012, the rates of 3-month, 6-month and
1-year T-bills have dropped to 0.150%, 0.450% and 0.680%,
respectively.32 According to Manila Bulletin, this very low
interest regime has been attributed to high liquidity and
strong investor demand amid positive economic indicators
of the country.33
 While the Court acknowledges that cases of
transcendental importance demand that they be settled
promptly and definitely, brushing aside, if we must,
technicalities of procedure,34 the delay of at least 15 years
in the filing of the instant

_______________
30 Rollo, p. 27. In contrast, as reported in the October 10, 2012 issue
of the Philippine Daily Inquirer, Section B-2-1, a recent 25-year treasury
bond issue, government securities which mature in more than a year,
carried an annual rate of 6.125%, way below 31%. It fetched P63 billion,
more than double the governments original offer of P30 billion.
31 See www.bsp.gov.ph/statistics.online.asp.
32 Manila Bulletin article, November 13, 2012, p. B-1: Treasury Bill
Yields Tumble to Record Lows, 91-Day at 0.150%
33 Id.
34 Araneta v. Dinglasan, 84 Phil. 368, 373 (1949).

545

VOL. 688, JANUARY 15, 2013 545

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

petition has actually rendered moot and academic the

issues it now raises.
For its part, BSP-MB maintains that the petitioners
allegations of constitutional and statutory violations of CB
Circular No. 905 are really mere challenges made by
petitioners concerning the wisdom of the Circular. It
explains that it was in view of the global economic
downturn in the early 1980s that the executive department
through the CB-MB had to formulate policies to achieve
economic recovery, and among these policies was the
establishment of a market-oriented interest rate structure
which would require the removal of the government-
imposed interest rate ceilings.35
D.The CB-MB merely suspended
the effectivity of the Usury Law
when it issued CB Circular No. 905.
The power of the CB to effectively suspend the Usury
Law pursuant to P.D. No. 1684 has long been recognized
and upheld in many cases. As the Court explained in the
landmark case of Medel v. CA,36 citing several cases, CB
Circular No. 905 did not repeal nor in anyway amend the
Usury Law but simply suspended the latters effectivity;37
that a [CB] Circular cannot repeal a law, [for] only a law
can repeal another law;38 that by virtue of CB Circular
No. 905, the Usury Law has been rendered ineffective;39
and Usury has been legally

_______________
35 Rollo, pp. 79-80, 103-105.
36 359 Phil. 820; 299 SCRA 481 (1998).
37 Security Bank and Trust Co. v. RTC-Makati, Branch 61, 331 Phil.
787, 793; 263 SCRA 483, 488 (1996).
38 Palanca v. Court of Appeals, G.R. No. 106685, December 2, 1994,
238 SCRA 593, 601.
39 Sps. Florendo v. Court of Appeals, 333 Phil. 535, 546; 265 SCRA
678, 687 (1996).

546

546 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

non-existent in our jurisdiction. Interest can now be

charged as lender and borrower may agree upon.40
In First Metro Investment Corp. v. Este Del Sol Mountain
Reserve, Inc.41 cited in DBP v. Perez,42 we also belied the
contention that the CB was engaged in self-legislation.
Thus:

Central Bank Circular No. 905 did not repeal nor in any way amend
the Usury Law but simply suspended the latters effectivity. The
illegality of usury is wholly the creature of legislation. A Central
Bank Circular cannot repeal a law. Only a law can repeal another
law. x x x.43

In PNB v. Court of Appeals,44 an escalation clause in a

loan agreement authorized the PNB to unilaterally
increase the rate of interest to 25% per annum, plus a
penalty of 6% per annum on past dues, then to 30% on
October 15, 1984, and to 42% on October 25, 1984. The
Supreme Court invalidated the rate increases made by the
PNB and upheld the 12% interest imposed by the CA, in
this wise:

P.D. No. 1684 and C.B. Circular No. 905 no more than allow
contracting parties to stipulate freely regarding any subsequent
adjustment in the interest rate that shall accrue on a loan or
forbearance of money, goods or credits. In fine, they can agree to
adjust, upward or downward, the interest previously stipulated.
x x x.45

Thus, according to the Court, by lifting the interest

ceiling, CB Circular No. 905 merely upheld the parties
freedom of

_______________
40 People v. Dizon, 329 Phil. 685, 696; 260 SCRA 851, 859 (1996).
41 420 Phil. 902; 369 SCRA 99 (2001).
42 484 Phil. 843; 442 SCRA 238 (2004).
43 Supra note 41, at p. 914; p. 111, citing Medel v. Court of Appeals,
supra note 36, at p. 829; p. 489; Security Bank and Trust v. RTC Makati,
Branch 61, supra note 37; Palanca v. Court of Appeals, supra note 38.
44 G.R. No. 107569, November 8, 1994, 238 SCRA 20.
45 Id., at p. 25.

547

VOL. 688, JANUARY 15, 2013 547

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

contract to agree freely on the rate of interest. It cited

Article 1306 of the New Civil Code, under which the
contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy.
E.The BSP-MB has authority to
enforce CB Circular No. 905.
Section 1 of CB Circular No. 905 provides that The rate
of interest, including commissions, premiums, fees and
other charges, on a loan or forbearance of any money,
goods, or credits, regardless of maturity and whether
secured or unsecured, that may be charged or collected by
person, whether natural or juridical, shall not be subject to
any ceiling prescribed under or pursuant to the Usury Law,
as amended. It does not purport to suspend the Usury Law
only as it applies to banks, but to all lenders.
Petitioners contend that, granting that the CB had
power to suspend the Usury Law, the new BSP-MB did
not retain this power of its predecessor, in view of Section
135 of R.A. No. 7653, which expressly repealed R.A. No.
265. The petitioners point out that R.A. No. 7653 did not
reenact a provision similar to Section 109 of R.A. No. 265.
A closer perusal shows that Section 109 of R.A. No. 265
covered only loans extended by banks, whereas under
Section 1-a of the Usury Law, as amended, the BSP-MB
may prescribe the maximum rate or rates of interest for all
loans or renewals thereof or the forbearance of any money,
goods or credits, including those for loans of low priority
such as consumer loans, as well as such loans made by
pawnshops, finance companies and similar credit
institutions. It even authorizes the BSP-MB to prescribe
different maximum rate or rates for different types of
borrowings, including deposits and deposit substitutes, or
loans of financial intermediaries.

548

548 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

Act No. 2655, an earlier law, is much broader in scope,

whereas R.A. No. 265, now R.A. No. 7653, merely
supplemented it as it concerns loans by banks and other
financial institutions. Had R.A. No. 7653 been intended to
repeal Section 1-a of Act No. 2655, it would have so stated
in unequivocal terms.
Moreover, the rule is settled that repeals by implication
are not favored, because laws are presumed to be passed
with deliberation and full knowledge of all laws existing
pertaining to the subject.46 An implied repeal is predicated
upon the condition that a substantial conflict or
repugnancy is found between the new and prior laws. Thus,
in the absence of an express repeal, a subsequent law
cannot be construed as repealing a prior law unless an
irreconcilable inconsistency and repugnancy exists in the
terms of the new and old laws.47 We find no such conflict
between the provisions of Act 2655 and R.A. No. 7653.
F.The lifting of the ceilings for in-
terest rates does not authorize stipu-
lations charging excessive, uncon-
scionable, and iniquitous interest.
It is settled that nothing in CB Circular No. 905 grants
lenders a carte blanche authority to raise interest rates to
levels which will either enslave their borrowers or lead to a
hemorrhaging of their assets.48 As held in Castro v. Tan:49

_______________
46 Sps. Recaa, Jr. v. Court of Appeals, 402 Phil. 26, 35; 349 SCRA 24,
33 (2001), citing City Government of San Pablo, Laguna v. Reyes, 364
Phil. 842; 305 SCRA 353 (1999).
47 Berces, Jr. v. Guingona, Jr., 311 Phil. 614, 620; 241 SCRA 539, 544
(1995).
48 Spouses Solangon v. Salazar, 412 Phil. 816, 822; 360 SCRA 379,
384 (2001), citing Sps. Almeda v. Court of Appeals, 326 Phil. 309; 256
SCRA 292 (1996).
49 G.R. No. 168940, November 24, 2009, 605 SCRA 231.

549

VOL. 688, JANUARY 15, 2013 549

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

The imposition of an unconscionable rate of interest on a money

debt, even if knowingly and voluntarily assumed, is immoral and
unjust. It is tantamount to a repugnant spoliation and an iniquitous
deprivation of property, repulsive to the common sense of man. It
has no support in law, in principles of justice, or in the human
conscience nor is there any reason whatsoever which may justify
such imposition as righteous and as one that may be sustained
within the sphere of public or private morals.50

Stipulations authorizing iniquitous or unconscionable

interests have been invariably struck down for being
contrary to morals, if not against the law.51 Indeed, under
Article 1409 of the Civil Code, these contracts are deemed
inexistent and void ab initio, and therefore cannot be
ratified, nor may the right to set up their illegality as a
defense be waived.
Nonetheless, the nullity of the stipulation of usurious
interest does not affect the lenders right to recover the
principal of a loan, nor affect the other terms thereof.52
Thus, in a usurious loan with mortgage, the right to
foreclose the mortgage subsists, and this right can be
exercised by the creditor upon failure by the debtor to pay
the debt due. The debt due is considered as without the
stipulated excessive interest, and a legal interest of 12%
per annum will be added in place of the excessive interest
formerly imposed,53 following the guidelines laid down in
the landmark case of Eastern Shipping Lines,

_______________
50 Id., at pp. 232-233, citing Ibarra v. Aveyro, 37 Phil. 273, 282 (1917).
51 Medel v. Court of Appeals, supra note 36, at p. 830; p. 489.
52 First Metro Investment Corp. v. Este del Sol Mountain Reserve, Inc.,
supra note 41, at p. 918; p. 115.
53 See Castro v. Tan, supra note 49, at p. 240; Heirs of Zoilo Espiritu v.
Landrito, G.R. No. 169617, April 3, 2007, 520 SCRA 383, 394; Cuaton v.
Salud, 465 Phil. 999; 421 SCRA 278 (2004); Sps. Almeda v. Court of
Appeals, supra note 48; First Metro Investment Corp. v. Este Del Sol
Mountain Reserve, Inc., supra note 41, at p. 918; Ruiz v. Court of
Appeals, 449 Phil. 419, 433-435; 401 SCRA 410, 421 (2003); Spouses
Solangon v. Salazar, supra note 48.

550

550 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

Inc. v. Court of Appeals,54 regarding the manner of

computing legal interest:

II.With regard particularly to an award of interest in the concept

of actual and compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed, as follows:
1.When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil Code.
2.When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case,
be on the amount finally adjudged.
3.When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12%
per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance of
credit.55 (Citations omitted)

_______________
54 G.R. No. 97412, July 12, 1994, 234 SCRA 78.
55 Id., at pp. 95-97.

551

VOL. 688, JANUARY 15, 2013 551

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

The foregoing rules were further clarified in Sunga-

Chan v. Court of Appeals,56 as follows:

Eastern Shipping Lines, Inc. synthesized the rules on the

imposition of interest, if proper, and the applicable rate, as follows:
The 12% per annum rate under CB Circular No. 416 shall apply
only to loans or forbearance of money, goods, or credits, as well as to
judgments involving such loan or forbearance of money, goods, or
credit, while the 6% per annum under Art. 2209 of the Civil Code
applies when the transaction involves the payment of indemnities
in the concept of damage arising from the breach or a delay in the
performance of obligations in general, with the application of both
rates reckoned from the time the complaint was filed until the
[adjudged] amount is fully paid. In either instance, the reckoning
period for the commencement of the running of the legal interest
shall be subject to the condition that the courts are vested with
discretion, depending on the equities of each case, on the award of
interest.57 (Citations omitted)

WHEREFORE, premises considered, the Petition for

certiorari is DISMISSED.
SO ORDERED.
 Sereno (C.J.), Carpio, Velasco, Jr., Leonardo-De Castro,
Peralta, Bersamin, Del Castillo, Abad, Villarama, Jr.,
Perez, Mendoza, Perlas-Bernabe and Leonen, JJ., concur.
Brion, J., On leave.

Petition dismissed.

Notes.Stipulations authorizing iniquitous or

unconscionable interests are contrary to morals if not
against the law. (Castro vs. Tan, 605 SCRA 231 [2009])

_______________
56 G.R. No. 164401, June 25, 2008, 555 SCRA 275.
57 Id., at p. 288.

552

552 SUPREME COURT REPORTS ANNOTATED

Advocates for Truth in Lending, Inc. vs. Bangko Sentral
Monetary Board

The nullity of the stipulation on the usurious interest

does not, however, affect the lenders right to recover the
principal of the loan, nor would it affect the terms of the
real estate mortgage. (Asian Cathay Finance and Leasing
Corporation vs. Gravador, 623 SCRA 517 [2010])
o0o

Copyright 2013 Central Book Supply, Inc. All rights reserved.