Rosemarie Q. Rey v. Cesar G. Anson

Summary

This landmark case involved private loans with unconscionable interest rates of 7.5% and 7% monthly (90% and 84% annually). Rosemarie Rey borrowed P750,000 total from Cesar Anson in four separate transactions, two secured by real estate mortgages. After making substantial payments, Rey challenged the excessive rates through counsel. The Supreme Court definitively held that despite suspension of the Usury Law, stipulated interest rates that are unconscionable, iniquitous and contrary to morals remain void ab initio under Article 1306 of the Civil Code, regardless of voluntary agreement. The Court applied proper payment allocation under Article 1253 and solutio indebiti principles under Article 2154, ordering return of P269,700.68 in excess payments. The decision reinforces judicial authority to nullify unconscionable contractual terms even in deregulated lending environments, establishing important precedent for protection against predatory lending practices in private transactions.