G.R. No. 113926 - Security Bank and Trust Co. vs. Regional Trial Court of Makati, Branch 61

On April 27, 1983, Magtanggol Eusebio executed Promissory Note No. TL/74/748/83 in favor of Security Bank and Trust Company (SBTC) for ₱100,000, payable in six monthly installments, with a stipulated interest rate of 23% per annum; Leila Ventura signed as co-maker.
On July 28, 1983, Eusebio executed Promissory Note No. TL/74/1296/83 for ₱100,000, six monthly installments, 23% per annum interest; Ventura again co-maker.
On August 31, 1983, Eusebio executed Promissory Note No. TL/74/1491/83 for ₱65,000, six monthly installments, 23% per annum interest; Ventura as co-maker.

As of September 27, 1983, outstanding balance on PN TL/74/748/83 was ₱16,665.00.
As of August 28, 1983, outstanding balance on PN TL/74/1296/83 was ₱83,333.00.
As of August 31, 1983, outstanding balance on PN TL/74/1491/83 was ₱65,000.00.

SBTC filed a collection suit. On March 30, 1993, the RTC rendered judgment in SBTC’s favor, ordering Eusebio to pay the outstanding balances with interest at 12% per annum from respective maturity dates, attorney’s fees equivalent to 20% of the total amount due, and costs; Ventura was held jointly and severally liable.
SBTC moved for partial reconsideration, contending it was entitled to: (a) 23% per annum interest as stipulated; (b) quarterly compounding of interest; and (c) confirmation of Ventura’s joint and several liability without prior demand. The RTC denied the motion.

SBTC elevated the case to the Supreme Court via petition for review on certiorari, challenging the reduction of the stipulated 23% interest to the statutory default of 12%.
The central questions were whether a contractual interest rate exceeding the Usury Law ceiling could prevail under Central Bank Circular No. 905 and whether courts may override agreed rates in the absence of justifying evidence.

Whether the 23% per annum interest rate stipulated in the promissory notes is enforceable despite exceeding the ceiling prescribed under or pursuant to the Usury Law and Central Bank Circular No. 905.
Whether courts possess discretion to disregard a valid contractual interest rate and impose the statutory default rate of 12% per annum when no evidence justifies a higher rate.