Disclosure of Fice Charges in Credit Extensions

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Republic Act No. 3765: Disclosure of Fice Charges in Credit Extensions

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Title Source: Supreme Court: Disclosure of Fice Charges in Credit Extensions

Law: Republic Act No. 3765

Decision Date: Jun 22, 1963

The Truth in Lending Act is a Philippine law that requires creditors to provide clear written statements to borrowers, disclosing the true cost of credit, in order to protect citizens from uninformed use of credit that may harm the national economy.

Policy Declaration

State policy to prevent uninformed credit use detrimental to the economy.
Emphasizes full disclosure to inform borrowers.

Definitions

"Board": Monetary Board of the Central Bank of the Philippines.
"Credit": Broadly includes loans, conditional sales, leases, options, and similar transactions involving deferred payment.
"Finance charge": Interest, fees, service charges, and other incidental credit extension costs as regulated.
"Creditor": Any person or entity regularly engaged in extending credit and charging finance fees.
"Person": Individuals, corporations, associations, government entities, and legal successors.

Disclosure Requirements

Creditors must provide clear written statements before transaction completion.
Statement must include:
1. Cash or delivered price of goods/services.
2. Down payments or trade-in amounts credited.
3. Difference between price and credited amounts.
4. Itemized non-credit related charges.
5. Total amount financed.
6. Finance charge in pesos and centavos.
7. Annual percentage rate of finance charge on unpaid balance.

Regulatory Authority

The Monetary Board prescribes rules for implementation.
Rules may include classifications and measures to prevent circumvention.

Violations and Penalties

Failure to disclose:
- Penalty of P100 or twice the finance charge, capped at P2,000.
- Recovery action possible within one year.
- Creditor liable for attorney's fees and court costs.
Contract validity remains unaffected except as specified.
Willful violations punishable by fines between P1,000 to P5,000, imprisonment from 6 months to 1 year, or both.
Government entities exempt from penalties.
Final criminal convictions serve as prima facie evidence in civil actions.

Effectivity

Law becomes effective upon approval.

END