DOJ Opinion No. 069, s. 1993

DOJ OPINION NO. 069 , s. 1993 June 3, 1993 Undersecretary Ernesto M. Ordoez Department of Trade and Industry Trade and Industry Building Makati, Metro Manila Sir : This refers to your request for opinion on certain issues affecting consumer credit transactions. You state that commercial credit transactions are governed by the Truth in Lending Act (R.A. No. 3765), which is implemented by the Central Bank, and the Financing Company Act (R.A. 5980), which is enforced by the Securities and Exchange Commission; that with the recent enactment of the Consumer Act of the Philippines (R.A. No. 7394), consumer credit transactions now fall within the coverage of said law, particularly Articles 131-147 thereof; and that the Consumer Act does not however, specify which agency of the government shall execute provisions of said articles. You now raise the following queries; "(1) Does the Consumer Act repeal the provisions of the Truth in Lending Act and the Financing Company Act insofar as consumer credit transactions are concerned? If so, to what extent?; "(2) Which agency shall implement the provisions of the Consumer Act on consumer credit transactions?; and "(3) What is the extent of jurisdiction of the central Bank and the Securities and Exchange Commission on matters concerning consumer credit transactions?" With respect to the first question, Article 170 of the Consumer Act reads: "All laws, executive orders, rules and regulations or parts thereof which are inconsistent with this Act are hereby repealed or amended accordingly". prcd The foregoing provision of law constitutes a general repealing clause, if has been said, however, that such a clause does not operate as an express repeal because it fails to indicate or designate the act or acts which it intends to abrogate. Repeal thereby is predicated upon the condition that a substantial and irreconcilable conflict between an existing and a prior act of the same subject matter. The failure of the legislature to mention the statutes to be repealed indicates that it had no intention to repeal any existing law on the matter, unless an irremediable inconsistency and clear repugnancy exist in the terms of the new and the old laws (Iloilo Palay and Corn Planters' Association, Inc. v. Feliciano, 13 SCRA 377; Lechoco vs. Civil Aeronautics Board, 43 SCRA 670), 71 SCRA 176). Examination of the Consumer Act reveals that its provision on consumer credit transactions, i.e., Articles 131 to 147 thereof, are not inconsistent with either the Truth in Lending Act or the Financing Company Act. In the case of the Truth in Lending Act, its principal provisions are found in the Consumer Act. Thus, for instance, Article 140 of the latter appears to have been based upon Section 4 of the former. What is more, the declared policy of Title IV of the Consumer Act (Art. 131) and that of the Truth in Lending Act (Sec. 2) are similar; indeed, the former appears to be an expanded version of the latter. Hence, it can be safely concluded that the Consumer Act did not repeal or even modify the Truth in Lending Act. Neither do we see the supersession of the Financing Company Act by the Consumer Act. This is because both statutes do not necessarily deal on the same subject matter. The former primarily deals with the regulation of the activities of financing companies in order to place their operations on a sound, stable and efficient basis, so that they may be in better position to extent effective service in a fair manner to the general public and to industry, commerce and agriculture (Sec. 2). On the other hand, the latter provides for the protection of the interests of the consumer, the promotion of his general welfare and the establishment of standards of conduct for business and industry (Se. 2). Evidently, there can be no conflict between these two laws. prcd As regards the second query, it is observed that the Consumer Act fails to specify the implementing agency for its provisions on consumer credit transactions. This failure appears to have been deliberate since the Department of Health is explicitly mentioned as enforcement arm for the provisions on food, drugs, cosmetics, devices and substances, the Department of Agriculture, with respect to those on agricultural products, and the Department of Trade and Industry, as regards those on the other consumer products not mentioned among the foregoing (See Art. 6, R.A. 7394). We believe such uncertainty in the law could be clarified by the pertinent provisions of the Truth in Lending Act, Section 5 of which tasks the Monetary Board of the Central Bank with its implementation. It is noted that the clauses on consumer credit transactions of the Consumer Act and those of the Truth in Lending Act deal on the same subject, hence they are in pare materia . As such, both statutes should be read together as if they constitute one law, it being presume that both were enacted in accord with the same legislative policy (Crawford, Statutory Construction, pp. 433-434; Pasno vs. Ravina, 54 Phil. 378). Moreover, in cases of in pare materia statutes, the latter one should be considered supplementary to, or complementary with, the earlier legislation and that any ambiguity or obscurity in one may be best explained by consideration of analogous provisions in the other (Black, Construction and Interpretation of Laws, and 2nd Ed., pp. 332-333; See also City of Naga vs. Agna, 71 SCRA 176). In addition, it is further noted that Article 155 of the Consumer Act directs the "concerned departments [to] continue to exercise the powers and duties provided to them under existing laws". The Central Bank is not only tasked with enforcing the provisions of the Truth in Lending Act, but is also responsible for the administration of the credit system of the country. (See Sec. 2, R.A. No. 265). Accordingly, it is our view that the Monetary Board of the Central Bank is the proper agency which should enforce the provisions on consumer credit transactions of the Consumer Act. Anent the third query, it is implicit from the foregoing discussion that the respective jurisdictions of the Central Bank and the Securities and Exchange Commission as defined in R.A. No. 3765 and R.A. No. 5986, respectively, have not been affected by the passage of R.A. No. 7394. The Central Bank retains its implementing authority of statutory provisions governing consumer credit transactions, while the Securities and Exchange Commission continues to have regulatory jurisdiction over financing companies engaged in extending credit facilities to consumers or to industrial, commercial or agricultural enterprises. prcd Please be guided accordingly. Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary