Professional Documents
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-versus- Case:
No.______________________
For Violation of letter (e)
Banko Sentral ng Pilipinas (BSP) Sec. 3 RA 3019
BSP Governor
CARLOS G. DOMINGUEZ III,
FELIPE M. MEDALLA,
JUAN DE ZUNIGA, JR.,
PETER B. FAVILA,
ANTONIO S. ABACAN JR. and
V. BRUCE J. TOLINTINO
Plaintiff-Respondent.
X----------------------------------------------------x
MEMORANDUM
STATEMENT OF FACTS
1. On May 30, 2018 Defendant MOLINA wrote BSP Governor a letter dated May 30,
2018 regarding the legality of 3.5%
2. In a letter dated August 10, 2018 respondent BSP Officer PIA BERNADETTE
ROMAN TAYAG replied that respondent BSP under sections x305 and x305-1
(MORB) lifted the interest rates imposed by financial institutions
3. In a letter dated September 10, 2018 MOLINA wrote BSP Governor a letter disputing
the position of BSP officer TAYAG
4. In a letter dated October 4, 2018 MOLINA wrote all the respondents requesting to
abrogate Sec. x305 of the Manual of Regulations for Banks for being contrary to
public interest.
5. In a letter dated November 23, 2018 BSP assistant Governor and General Counsel
ELMORE O. CAPULE reiterated respondents position for the lifting of the ceiling on
interest rates.
6. In a letter dated January 7, 2019 MOLINA affirmed his position that the lifting og the
ceiling on interest rates is prejudicial to public interest.
2
ROMUALDO A. MENZON JR 2012-0330
LEGAL ISSUES
ARGUMENTS
A. Section x305 is valid, legal, and is in line with the intent of ACT No. 2655 as
amended by Presidential decree 116.
B. BSP is not guilty of violating Letter (e) of RA 3019 simply because it is not giving
undue advantage, benfefit, and preference to any financial institution.
DISCUSSION
Section x305 is valid, legal, and is in line with the intent of ACT No. 2655 as amended by
Presidential decree 116.
The section is not and has not been declared illegal or unconstitutional as such
there is no basis for complainant’s desire to remove it, which became the basis for
this complaint.
We however reiterate our stance in our response to complainant in Nov. 23, 2018
(Annex E) that pursuant to the Bank Circular No. 905 the Usury Law has been
1 (e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his official administrative or judicial functions through
manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and
employees of offices or government corporations charged with the grant of licenses or permits or other
concessions.
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ROMUALDO A. MENZON JR 2012-0330
suspended and currently the parties are allowed to stipulate their own interest
rates unregulated by BSP. However, there will be instances when the interest rates
agreed upon become truly unconscionable and for these instances “Jurisprudence
empowers courts to equitably reduce interest rates” when it is necessary and that
this is the current remedy to unconscionable interest rates.
“While the Court recognizes the right of the parties to enter into contracts
and who are expected to comply with their terms and obligations, this rule
is not absolute. Stipulated interest rates are illegal if they are
unconscionable and the Court is allowed to temper interest rates when
necessary. In exercising this vested power to determine what is iniquitous
and unconscionable, the Court must consider the circumstances of each
case. What may be iniquitous and unconscionable in one case, may be just
in another.”
BSP is not guilty of violating Letter (e) of RA 3019 simply because it is not giving undue
advantage, benfefit, and preference to any financial institution.
2 Prisma Construction & Development Corporation v. Menchavez, G.R. No. 160545, March 9, 2010, 614 SCRA 590,
599
3 SPS Poltan vs. BPI Family Savings Bank Inc, GR No 164307, March5, 2007
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ROMUALDO A. MENZON JR 2012-0330
Complainant’s allegation that BSP has violated RA 3019 Sec 3 (e) is unsupported.
“(e) Causing any undue injury to any party, including the Government, or
giving any private party any unwarranted benefits, advantage or
preference in the discharge of his official administrative or judicial
functions through manifest partiality, evident bad faith or gross
inexcusable negligence. This provision shall apply to officers and
employees of offices or government corporations charged with the grant of
licenses or permits or other concessions.”
The complainant fails to provide sufficient proof that the existence of the section
305 of the Manual od Regulation for Banks (MORB) actually results in the
violation of the above section. He merely makes a general claim that it causes
“undue injury to countless numbers of credit card holders” and it gives
unwarranted benefits to financial institutions, however there is no actual evidence
presented to support this claim.
RELIEF
WHEREFORE, premise considered, it respectfully prayed for that this Honorable Court that
Defendant-Petitioner’s complaint be DENIED for having no cause of action and the petition
DISMISSED for being clearly unmeritorious.
Other just and equitable relief under the foregoing are likewise being prayed for.
Respectfully submitted.
By:
Copy Furnished: