Disclosure of Fice Charges in Credit Extensions

Section 3(1) defines the Board as the Monetary Board of the Central Bank of the Philippines.
Section 5 empowers the Board to prescribe rules and regulations necessary or proper to carry out the Act.
Section 5 authorizes the Board to issue classifications and differentiations to effectuate the Act’s purposes, prevent circumvention or evasion, and facilitate enforcement of the Act and any rules or regulations issued under it.

Section 3(2) defines “Credit” to include loans, mortgages, deeds of trust, advances, discounts, conditional sales contracts, contracts to sell (including contracts involving property or services for present or future delivery with payment payable after making the contract), rental-purchase contracts, hire/bailment/leasing arrangements, options/demands/liens/pledges/other claims related to delivery of property or money, purchases or other acquisitions secured by credit upon an obligation claim arising from the foregoing, and transaction or series of transactions with similar purpose or effect.
Section 3(3) defines “Finance charge” to include interest, fees, service charges, discounts, and other charges incident to extension of credit that the Board may prescribe by regulation.
Section 3(4) defines “Creditor” as any person engaged in the business of extending credit, including persons who as a regular business practice make loans or sell or rent property or services on a time, credit, or installment basis, whether as principal or agent, who require payment of a finance charge as an incident to the extension of credit.
Section 3(5) defines “Person” to include individuals, corporations, partnerships, associations, other organized groups of persons, their legal successors or representatives, the Philippine Government and any agency thereof, and any other government or its political subdivisions or agencies.

Section 4 requires that any creditor furnish to each person to whom credit is extended a clear statement in writing of required information.
Section 4 requires the disclosure prior to the consummation of the transaction.
Section 4 mandates that the statement set forth the listed items to the extent applicable and in accordance with rules and regulations prescribed by the Board.

Section 4(1) requires disclosure of the cash price or delivered price of the property or service to be acquired.
Section 4(2) requires disclosure of the amounts credited as down payment and/or trade-in, if any.
Section 4(3) requires disclosure of the difference between the amounts stated under Section 4(1) and Section 4(2).
Section 4(4) requires itemized disclosure of the charges, individually listed, paid or to be paid by the person in connection with the transaction but not incident to the extension of credit.
Section 4(5) requires disclosure of the total amount to be financed.
Section 4(6) requires disclosure of the finance charge, expressed in pesos and centavos.
Section 4(7) requires disclosure of the percentage that the finance charge bears to the total amount to be financed, expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

Section 6(a) provides that a creditor who fails to disclose any required information in violation of the Act or any regulation issued under it is liable to the affected person.
Section 6(a) sets the liability as P100 or an amount equal to twice the finance charge required by the creditor in connection with the transaction, whichever is the greater.
Section 6(a) caps the liability at P2,000 on any credit transaction.
Section 6(a) allows recovery by suit within one year from the date of the occurrence of the violation in any court of competent jurisdiction.
Section 6(a) provides that in any action under Section 6(a) where a person is entitled to recovery, the creditor is liable for reasonable attorney’s fees and court costs as determined by the court.

Section 6(b) provides that, except as specified under Section 6(a), nothing in the Act or in any regulation thereunder affects the validity or enforceability of any contract or transaction.

Section 6(c) imposes a fine of not less than P1,000 nor more than P5,000 on any person who willfully violates any provision of the Act or any regulation issued thereunder.
Section 6(c) imposes imprisonment of not less than 6 months nor more than one year, or both fine and imprisonment, for willful violations.
Section 6(e) provides that a final judgment in any criminal proceeding under the Act, finding willful violation by a defendant, is prima facie evidence against that defendant in a subsequent action or proceeding brought by any other party under the Act on all matters as to which the criminal judgment would operate as an estoppel between the parties.

Section 6(d) provides that no punishment or penalty under the Act applies to the Philippine Government or any agency or any political subdivision thereof.