Firstly, The Implementing Rules and Regulation (IRR) Cannot Unduly Limit The

credit card revolvers (i.e.
, borrowers that do not pay in full every payment period),

will interest on their outstanding balances continue to accrue during the 30-day
grace period? - Under the IRR, interest will continue to accrue and this will be
payable on the next due date, following the application of the 30-day grace
period, either in lump sum or on staggered basis. 17. For credit card transactors,
will interest accrue on the outstanding balance during the 30-day grace period? -
Credit card transactors will not be charged any interest during the 30-day grace
period if they pay the total outstanding balance on or before the new due date
However, the said IRR provision on accrued interest shall be struck down for the
following reasons:
Firstly, the Implementing Rules and Regulation (IRR) cannot unduly limit the
substantive law on which it is based.
In the recent case of Inmates of the New Bilibid Prison v. De Lima (G.R. Nos.
212719 & 214637, June 25, 2019) the Court made the following
pronouncements:
Clearly, respondents went outside the bounds of their legal mandate when
they provided for rules beyond what was contemplated by the law to be
enforced.
Indeed, administrative IRRs adopted by a particular department of the

Government under legislative authority must be in harmony with the
provisions of the law, and should be for the sole purpose of carrying the
law's general provisions into effect. The law itself cannot be expanded by
such IRRs, because an administrative agency cannot amend an act of
Congress
In the present case, the IRR cannot be construed in a way that it will unduly limit
the coverage of the relief for loans on “interest on interest” when the substantive
law, R.A. No. 11469, unambiguously provides that:
“all banks, quasi-banks, financing companies, lending companies and

other financial institutions, public and private, including the Government
Service Insurance System, Social Security System and Pag-ibig Fund, to
implement a minimum of a thirty (30)-day grace period for the payment of
all loans, including but not limited to salary, personal, housing and motor
vehicle loans, as well as credit card payments, falling due within the period
of the enhanced Community Quarantine without incurring interests,
penalties, fees or other charges, persons with multiple loans shall likewise
be given the minimum thirty (30)-day grace period for every loan
(emphasis supplied)”
Where the law does not distinguish, neither should we.
Secondly, it is proper to adopt a construction based on the avowed policy of the

law.
The pertinent provision of the IRR states:
SECTION 1.03. Interpretation Clause. — These Rules shall be interpreted

to harmonize with Section 4 (n) of the "Bayanihan to Heal as One Act"
which provides that the President shall have the power to "ensure the
availability of credit to the productive sectors of the economy especially in
the countryside through measures such as, but not limited to, lowering the
effective lending rates of interest and reserve requirements of lending
institutions."
Moreover, these rules shall be liberally construed to ensure the fulfillment

of the policy objective of Section 4 (aa) of the "Bayanihan to Heal as One
Act.
Consequently, the policy objective of R.A. No. 11469 provides:
SECTION 3. Declaration of Policy. — The COVID-19 pandemic has

greatly affected nations worldwide, including the Philippines, and has
caused and is continuing to cause loss of lives and disruption to the
economy. Thus, there is an urgent need to: (a) mitigate, if not contain, the
transmission of COVID-19; (b) immediately mobilize assistance in the
provision of basic necessities to families and individuals affected by the
imposition of Community Quarantine, especially indigents and their
families; (c) undertake measures that will prevent the overburdening of the
healthcare system; (d) immediately and amply provide healthcare,
including medical tests and treatments, to COVID-19 patients, persons
under investigation (PUIs), or persons under monitoring (PUMs); (e)
undertake a program for recovery and rehabilitation, including a social
amelioration program and provision of safety nets to all affected sectors;
(f) ensure that there is sufficient, adequate and readily available funding to
undertake the foregoing; (g) partner with the private sector and other
stakeholders to deliver these measures and programs quickly and
efficiently; and (h) promote and protect the collective interests of all
Filipinos in these challenging times (Emphasis supplied)
In these trying times, it would be more consistent with the abovementioned

purpose of R.A. No. 11469 to construe the IRR liberally as to cover the
prohibition of the imposition of interest if the principal obligation fell due within the
period of the Enhanced Community Quarantine (ECQ).
Finally, R.A. No. 11469 and its Implementing Rules and Regulations (IRR) shall
be harmonized.
It is a basic tenet of statutory construction that the original statute and the
supplemental act should be read and construed together to make an intelligible
whole.
Based on the aforementioned premise, the IRR shall be construed in a way that it
is meant to clarify that the mandatory grace period includes the prohibition of
imposition of interest on interest. If the payment of interest fell due within the
period of the ECQ, interest on interest shall not accrue even if it is judicially
demanded. It is should be taken as a clarification, instead of taking it as a
limitation of R.A. No. 11469.
It is necessary to make the clarification since R.A. No. 11469 only mentioned the
payment of loans with respect to the non-payment of interest: “… to implement a
minimum of a thirty (30)-day grace period for the payment of all loans, including
but not limited to salary, personal, housing and motor vehicle loans, as well as
credit card payments, falling due within the period of the enhanced Community
Quarantine without incurring interests, penalties, fees or other charges”
On the other hand, the IRR states that “borrowers whose loan/s with principal
and/or interest falling due within the ECQ Period…” It elucidated that the loan
contemplated by law consists of both the payment of (1) principal; and (2)
interest that fell due within the said period.
Finally, Section 5.02 provides for the treatment of accrued interest, to wit:
SECTION 5.02. Treatment of Accrued Interest. — The accrued interest for

the 30-day grace period may be paid by the borrower on staggered basis
over the remaining life of the loan. Nonetheless, this shall not preclude the
borrower from paying the accrued interest in full on the new date following
the application of the 30-day grace period or extended grace period, as
the case may be
Clearly, since the IRR used the term “accrued” interest, it can only contemplate
two situations when compensatory interest may be demanded: (1) the principal
amount fell due before the ECQ; or (2) the principal amount fell due during the
ECQ but was not paid even after applying the mandatory 30-day grace period.
Accrued interest is the amount of loan interest that has already occurred, but has
not yet been paid by the borrower and not yet received by the lender. It is the
amount already incurred.
How can compensatory interest accrue for loans falling due within the period of
ECQ when there is a mandatory 30-day grace period imposed? The period for
payment will automatically be moved and thus, the borrowers cannot be in
default yet. If the borrower is not yet in default, compensatory interest cannot.
Accrue. Hence, imposition of the interest cannot even have a legal basis.
Under the law,

Besides, Bangko Sentral ng Pilipinas (BSP) 1 already clarified that credit card
transactors will not be charged any interest during the 30-day grace period if they
pay the total outstanding balance on or before the new due date.
In light of the foregoing, the bank cannot collect interest on the outstanding
balance which fell due on March 23, 2020.
Since it fell due on the period of Enhanced Community Quarantine (i.e. March
17, 2020 to April 12, 2020 cited in Proclamation No. 929 dated March 16, 2020),
he has a grace period of 30 days to pay the outstanding balance. The new due
date of the outstanding balance, by adding the 30-day mandatory grace period, is
April 23, 2020.
Thus, Abel shall not be charged of any interest during the 30-day grace period if
he will pay the total outstanding balance on or before the new due date (April 23,
2020). If Abel will not pay on April 23, 2020, that is the only time that interest will
accrue.
Argument 2
The interest of Php 2,474.63 on his outstanding balance of Php68,367.03 which
fell due on March 23, 2020 partakes the nature of a monetary interest since it is
an interest imposed for the mere use of money of the Bank.
1
http://www.bsp.gov.ph/downloads/Publications/FAQs/BayanihanActFAQs.pdf

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credit card revolvers (i.e.

, borrowers that do not pay in full every payment period),

Indeed, administrative IRRs adopted by a particular department of the

“all banks, quasi-banks, financing companies, lending companies and

Where the law does not distinguish, neither should we.

Secondly, it is proper to adopt a construction based on the avowed policy of the

The pertinent provision of the IRR states:

SECTION 1.03. Interpretation Clause. — These Rules shall be interpreted

Moreover, these rules shall be liberally construed to ensure the fulfillment

Consequently, the policy objective of R.A. No. 11469 provides:

SECTION 3. Declaration of Policy. — The COVID-19 pandemic has

In these trying times, it would be more consistent with the abovementioned

SECTION 5.02. Treatment of Accrued Interest. — The accrued interest for

Under the law,

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