Art. 131. Declaration of Policy. - The State shall simplify, clarify
and modernize the laws governing credit transactions and encourage the development of fair and economically sound consumer
credit practices. To protect the consumer from lack of awareness of the true cost of credit to the user, the State shall assure
the full disclosure of the true cost of credit.
Art. 132. Determination
of Finance Charges. - Except as otherwise provided, the amount of the finance charges in connection with any consumer
credit transaction shall be determined as the sum of all charges, payable directly or indirectly by the person to whom the
credit is extended and imposed directly or indirectly by the creditor as an accident to the extension of credit, including
any of the following type of charges which are applicable:
interest or time price differential and any amount payable under point or other system of additional charges;
fees which include finder's fees or similar charges;
(c) credit investigation fees;
(d) notarial fees,
(e) premium or other charges for any guarantee or insurance protecting the creditor against the obligor's
default or other credit loss. The implementing agency shall determine what items shall be exempted from the computation of
the finance charges.
Art. 133. Determination of Simple Annual Rate. - The simple annual
rate applicable to any extension of consumer credit shall be determined in accordance with the rules and regulations promulgated
by the implementing agency.
Art. 134. Delinquency Charges. - With
respect to a consumer credit transaction other than one pursuant to an open-end credit plan, the parties may agree to a delinquency
charge on any installment not paid in full on or before the tenth day after its scheduled or deferred due date.
135. Deferral Charges. - The parties in a consumer credit transaction may at any
time agree in writing to a deferral of all or part of one or more unpaid installments and the creditor may make and collect
a charge which shall not exceed the rate previously disclosed pursuant to the provisions on disclosure. A deferral charge
may be collected at the time it is assessed.
Art. 136. Finance
Charge on Refinancing. - The parties may agree on a finance charge in an open-end credit plan based on the amount
financed resulting from the refinancing or consolidation at a rate not exceeding that permitted by the rules promulgated by
the implementing agency.
Art. 137. Right to Prepay. - The person
to whom credit is extended may prepay in full or in part, at any time without penalty, the unpaid balance of any consumer
Art. 138. Rebate on Prepayment. - Upon
prepayment in full of the unpaid balance of a precomputed consumer credit transaction, refinancing or consolidation, an amount
not less than the unearned portion of the finance charge calculated according to this Article shall be rebated to the person
to whom credit is extended.
The unearned portion of the precomputed finance charge on consumer transactions repayable in substantially
equal successive installments shall be equal to at least that portion of finance charge which the sums of the installment
balances of the obligation scheduled to be outstanding after the installment date nearest the date of prepayment bears to
the sum of all installment balances originally scheduled to be outstanding under the obligation.
For the purpose
of determining the installment date nearest the date of prepayment when payments are monthly, any payment made on or before
the fifteenth day following an installment due date shall be deemed to have been made as of the installment due date, and
if prepayment occurs after the fifteenth day, it shall be deemed to have been made on the succeeding installment due date.
This method of calculating rebates may be referred to as the "rule of 78" or "sum of the digits" method.
agency may promulgate and adopt rules and regulations with respect to other precomputed consumer credit transactions.
139. General Requirements on Credit Cost Disclosure. - Each creditor shall disclose,
in accordance with the regulations of the implementing agency, to each person to whom consumer credit is extended, the disclosures
required by this Act.
If there is more than one obligor, a creditor need not furnish a statement of information required
under this Act to more than one of them.
Art. 140. Credit Sale, Required Disclosures. - Any creditor
extending a consumer credit sale other than one pursuant to an open-end credit plan shall disclose in a statement to the extent
applicable, the following information:
the cash price or delivered price of the property or service to be acquired;
(b) the amounts, if any, to be credited as downpayment and/or
(c) the total amount to be financed or the difference between the amounts set forth under paragraphs
(1) and (2);
(d) the charges, individually itemized, which are paid or to be paid by such person in connection with
the transaction but which are not incident to the extension of credit;
(e) the finance charge expressed in terms of pesos and centavos;
(f) the percentage
that the finance charge bears to the total amount to be financed expressed as a simple annual rate on the outstanding balance
of the obligation;
(g) the effective interest rate;
(h) the number, amount and due dates or periods of payments
scheduled to repay the indebtedness; and
(i) the default, delinquency or similar charges payable in the event of
Art. 141. Required Disclosure on Open-end Credit Plan. - Before opening any account under an open-end
consumer credit plan, the creditor shall disclose, to the extent applicable, the following information:
the conditions under which a finance charge may be imposed, including the time period, if any, within which any credit extended
may be repaid without incurring a finance charge;
(b) the method of determining the balance upon which a finance
charge may be imposed;
(c) the method of determining the amount of the finance charges, including any minimum or fixed amount
imposed as a finance charge;
(d) where one or more periodic rates may be used to compute a finance charge, each such rate, the range
of balances to which it is applicable, and the corresponding simple annual rate;
(e) the conditions under which the creditor may impose a
security lien and a description of the goods to which such lien may attach.
implementing agency shall prescribe regulations consistent with commonly accepted accounting standards to carry out the requirements
of this Article.
Art. 142. Required Disclosures on Consumer Loans
Not Under Open-End Credit Plan. - Any creditor extending a consumer loan or in a transaction which is neither a
consumer credit sale nor under an open-end consumer credit plan shall disclose, to the extent applicable, the following information:
the amount of credit of which the debtor will have the actual use, or which is or will be paid to him or for his account or
to another person on his behalf;
(b) all charges, individually itemized, which are included in the amount of credit extended but which
are not part of the finance charge;
(c) the total amount to be financed or the sum of the amounts referred
to in paragraphs (a) and (b);
(d) the finance charge expressed in terms or pesos and centavos;
(e) the effective
(f) 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;
(g) the default, delinquency or similar charges payable in
the event of late payments;
(h) a description of any security interest held or to be held or to be retained or acquired by the
creditor in connection with the extension of credit and a clear identification of the property to which the security interest
Art. 143. Form and Timing of Disclosure. - All disclosures required
under this Act shall be made clearly and conspicuously in writing before the transaction is consummated.
144. Periodic Statement of Charges. - The periodic statement transmitted by the creditor
in connection with any extension of consumer credit other than under an open-end consumer credit plan, shall set forth the
the simple annual rate;
(b) the effective interest rate;
(c) the date by which, or the period (if any) within which
payment must be made in order to avoid additional finance charges;
(d) method of determining the balance upon which the finance
charge may be imposed.
Art. 145. Exempted Transaction. - The foregoing requirements on consumer
credit transactions shall not apply to the following credit transactions:
those involving extension of credits for business or commercial purposes, or to the Government and governmental agencies and
instrumentalities, juridical entities or to organizations;
(b) those in which the debtor is the one specifying the definite
set of credit terms such as bank deposits, insurance contracts, sale of bonds or analogous transactions.
Art. 146. Sale of Consumer Products On Installment Payment. - In a consumer credit sale other than one pursuant to an open-end credit plan, the obligation of the consumer to
whom credit is being extended shall be evidenced by a single instrument which shall include, in addition to the disclosures
required by this act, the signature of the seller and the person to whom credit is extended, the date it was signed, a description
of the property sold and a description of any property transferred as a trade-in. The instrument evidencing the credit shall
contain a clear and conspicuous typewritten notice to the person to whom credit is being extended that:
he should not sign the instrument if it contains any blank space;
(b) he is entitled to a reasonable return of the precomputed
finance charge if the balance is prepaid; and
(c) he is entitled to an exact, true copy of the agreement.
cases where the instrument will be sold at a discount to a bank, financing company or other lender, the said transferee shall
be subject to all claims and defenses which the debtor could assert against the seller of consumer products obtained hereto
or with the proceeds thereof.
Art. 147. Penalties. - Any creditor who
in connection with any credit transaction fails to disclose to any person any information in violation of this Chapter or
the Implementing rules and regulations issued thereunder shall be liable to such person in the amount of One thousand pesos
(P1,000.00) or in amount equal to twice the finance charge required by such creditor in connection with such transaction,
whichever is greater, except that such liability shall not exceed Three thousand pesos (P3,000.00) for any credit transaction
and actual damages with the non-disclosure of the required information. Action to recover such penalty may be brought by such
person within one (1) year from the date of the occurrence of the violation in any court of competent jurisdiction.