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TRUTH IN LENDING (RA 3765)

AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT I. PURPOSE
It is the policy of the State to protect its citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy.

". F #$#%e C&$r'e Includes interest, fees, service charges, discounts, and such other charges incident to the e!tension of credit. C. Cred !(r Any person engaged in the business of e!tending credit "including any person who as a regular business practice make loans or sells or rents property or services on a time, credit, or installment basis, either as principal or as agent# who requires as an incident to the e!tension of credit, the payment of a finance charge.

III. O"LIGATIONS OF CREDITORS

Any creditor shall furnish to each person to whom credit is e!tended, prior to the consummation of the transaction, a clear statement in writing setting forth the following information$ "%# the cash price or delivered price of the property or service to be acquired; "&# the amounts, if any, to be credited as down payment and'or trade in; "(# the difference between the amounts under clauses "%# and "&# ")# the charges which are paid or to be paid by such person in connection with the transaction but which are not incident to the e!tension of credit; "*# the total amount to be financed; "+# the finance charge e!pressed in terms of pesos and centavos; and ",# the percentage that the finance bears to the total amount to be financed e!pressed as a simple annual rate on the outstanding unpaid balance of the obligation. Consolidated Bank vs CA (1995) As to handling charges, banks are authorized under Central Bank Circular No. 504 to collect such charges on loans over P500,000.00 with a maturit o! "#0 da s or less at the rate o! $% per annum

II. DEFINITION OF TERMS

A. Cred ! Any loan, mortgage, deed of trust, advance, or discount; any conditional sales contract; any contract to sell, or sale or contract of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale or contract; any rental purchase contract; any contract or arrangement for the hire, bailment, or leasing of property; any option, demand, lien, pledge, or other claim against, or for the delivery of, property or money; any purchase, or other acquisition of, or any credit upon the security of, any obligation of claim arising out of any of the foregoing; and any transaction or series of transactions having a similar purpose or effect.

-.orybeth/0aldrias.&e$d1 -2ayna/3alayang.de)*!+1 -4ionne/Sanchez.$%$d,1 -5am/5acob.de, '#1 -0obbie/Sta3aria.)r #! #'1 -3iles 3alaya.-e%!*re,1 -5apee/4e.eon.)(- .-$/1 -Ascheia/6umul.re0.-$/1 -7aul/Sorino'5udy/8ipol.% 1.-$/ 1 -9ya/8afael'3ac/3acapagal.%r 0.-$/1 -:ivian/;an'5ustin/3endoza.-$2(r.-$/1 -3iguel/4e5esus.-e'$-.e!& %,1 -.ianne/<ervasio.%(00.-$/1 -=es/Sicangco'8owena/8omero. !$3.-$/1

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on the &rinci&al or the outstanding balance thereo!, whichever is lower' (."5% on loans over P500,000.00 but not over P(,000,000.00' (.50% on loans over P(,000,000.00 but not over $,000,000.00, etc. )ection " o! the same Circular, however, &rovides that all banks and non*bank !inancial intermediaries authorized to engage in +uasi*banking !unctions are re+uired to strictl adhere to the &rovisions o! ,e&ublic Act No. #"-5 otherwise known as the ./ruth in 0ending Act. and shall make the true and e!!ective cost o! borrowing an integral &art o! ever loan contract.

I4. CONSEQUENCES OF NON5COMPLIANCE

Any creditor who fails to disclose to any person any information in violation of this shall be liable to such person in the amount of 7%>> or in an amount equal to twice the finance charged required by such creditor in connection with such transaction, whichever is the greater ?!cept that such liability shall not e!ceed 7&,>>> on any credit transaction. Action to recover such penalty may be brought within one year from the date of the occurrence of the violation, in any court of competent @urisdiction. ;he creditor shall be liable for reasonable attorneyAs fees and court costs as determined by the court. Any person who wilfully violates any provision of this Act shall be fined by not less than 7%,>>> or more than 7*,>>> or imprisonment for not less than + months, nor more than one year or both. 2o punishment or penalty provided by this Act shall apply to the 7hilippine <overnment or any agency or any political subdivision thereof.

-.orybeth/0aldrias.&e$d1 -2ayna/3alayang.de)*!+1 -4ionne/Sanchez.$%$d,1 -5am/5acob.de, '#1 -0obbie/Sta3aria.)r #! #'1 -3iles 3alaya.-e%!*re,1 -5apee/4e.eon.)(- .-$/1 -Ascheia/6umul.re0.-$/1 -7aul/Sorino'5udy/8ipol.% 1.-$/ 1 -9ya/8afael'3ac/3acapagal.%r 0.-$/1 -:ivian/;an'5ustin/3endoza.-$2(r.-$/1 -3iguel/4e5esus.-e'$-.e!& %,1 -.ianne/<ervasio.%(00.-$/1 -=es/Sicangco'8owena/8omero. !$3.-$/1

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