REPUBLIC ACT No. 3765
AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT.
Section 1. This Act shall be known as the "Truth in Lending Act."
Section 2. Declaration of Policy. It is hereby declared to be 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.
Section 3. As used in this Act, the term
(1) "Board" means the Monetary Board of the Central Bank of the Philippines.
(2) "Credit" means 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...
Details
Amends
n/a
Amended by
n/a
Republic Acts
AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT.
Republic Act No. 3765
Summary of Republic Act No. 3765 (Truth in Lending Act)
Objective and Policy
- To protect citizens from lack of awareness of the true cost of credit by ensuring full disclosure of such cost, preventing uninformed use of credit detrimental to the national economy. (Section 2)
Definitions
- "Board" means the Monetary Board of the Central Bank of the Philippines. (Section 3(1))
- "Credit" is defined broadly to include loans, mortgages, conditional sales contracts, rental-purchase contracts, and other transactions involving deferred payment. (Section 3(2))
- "Finance charge" includes interest, fees, service charges, discounts, and other charges related to credit extension as prescribed by the Board. (Section 3(3))
- "Creditor" means any person engaged in the business of extending credit and requiring payment of a finance charge. (Section 3(4))
- "Person" includes individuals, corporations, partnerships, associations, government entities, and their legal successors or representatives. (Section 3(5))
Disclosure Requirements
- Creditors must provide a clear written statement to borrowers before consummating a credit transaction, disclosing: (Section 4)
- The cash or delivered price of the property or service. (Section 4(1))
- Amounts credited as down payment and/or trade-in. (Section 4(2))
- The difference between the amounts in (1) and (2). (Section 4(3))
- Charges not incident to the credit extension, itemized. (Section 4(4))
- The total amount to be financed. (Section 4(5))
- The finance charge in pesos and centavos. (Section 4(6))
- The percentage that the finance charge bears to the total amount financed, expressed as a simple annual rate on the outstanding unpaid balance. (Section 4(7))
Regulatory Authority
- The Monetary Board shall prescribe necessary rules and regulations to carry out the Act, including classifications and differentiations to effectuate the purposes, prevent circumvention or evasion, or facilitate enforcement. (Section 5)
Penalties
- Creditors who fail to disclose required information shall be liable to the borrower for P100 or twice the finance charge, whichever is greater, up to a maximum of P2,000 per transaction. The borrower may bring an action within one year, and the creditor shall be liable for reasonable attorney's fees and court costs. (Section 6(a))
- The Act does not affect the validity or enforceability of any contract or transaction, except as specified in Section 6(a). (Section 6(b))
- Willful violation of the Act or regulations is punishable by a fine of P1,000 to P5,000, imprisonment for 6 months to 1 year, or both. (Section 6(c))
- The penalties do not apply to the Philippine Government or its agencies or political subdivisions. (Section 6(d))
- A final criminal judgment of willful violation shall be prima facie evidence in any other proceeding brought under the Act. (Section 6(e))
Effective Date
- The Act became effective upon approval on June 22, 1963. (Section 7)
Objective and Policy
- To protect citizens from lack of awareness of the true cost of credit by ensuring full disclosure of such cost, preventing uninformed use of credit detrimental to the national economy. (Section 2)
Definitions
- "Board" means the Monetary Board of the Central Bank of the Philippines. (Section 3(1))
- "Credit" is defined broadly to include loans, mortgages, conditional sales contracts, rental-purchase contracts, and other transactions involving deferred payment. (Section 3(2))
- "Finance charge" includes interest, fees, service charges, discounts, and other charges related to credit extension as prescribed by the Board. (Section 3(3))
- "Creditor" means any person engaged in the business of extending credit and requiring payment of a finance charge. (Section 3(4))
- "Person" includes individuals, corporations, partnerships, associations, government entities, and their legal successors or representatives. (Section 3(5))
Disclosure Requirements
- Creditors must provide a clear written statement to borrowers before consummating a credit transaction, disclosing: (Section 4)
- The cash or delivered price of the property or service. (Section 4(1))
- Amounts credited as down payment and/or trade-in. (Section 4(2))
- The difference between the amounts in (1) and (2). (Section 4(3))
- Charges not incident to the credit extension, itemized. (Section 4(4))
- The total amount to be financed. (Section 4(5))
- The finance charge in pesos and centavos. (Section 4(6))
- The percentage that the finance charge bears to the total amount financed, expressed as a simple annual rate on the outstanding unpaid balance. (Section 4(7))
Regulatory Authority
- The Monetary Board shall prescribe necessary rules and regulations to carry out the Act, including classifications and differentiations to effectuate the purposes, prevent circumvention or evasion, or facilitate enforcement. (Section 5)
Penalties
- Creditors who fail to disclose required information shall be liable to the borrower for P100 or twice the finance charge, whichever is greater, up to a maximum of P2,000 per transaction. The borrower may bring an action within one year, and the creditor shall be liable for reasonable attorney's fees and court costs. (Section 6(a))
- The Act does not affect the validity or enforceability of any contract or transaction, except as specified in Section 6(a). (Section 6(b))
- Willful violation of the Act or regulations is punishable by a fine of P1,000 to P5,000, imprisonment for 6 months to 1 year, or both. (Section 6(c))
- The penalties do not apply to the Philippine Government or its agencies or political subdivisions. (Section 6(d))
- A final criminal judgment of willful violation shall be prima facie evidence in any other proceeding brought under the Act. (Section 6(e))
Effective Date
- The Act became effective upon approval on June 22, 1963. (Section 7)