TITLE IV CONSUMER CREDIT TRANSACTION

ARTICLE 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 to the user, the State shall assure the full disclosure of the true cost of credit. 

ARTICLE 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 changes, 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. 

a) interest or time price differential and any amount, payable under point or other charges; 

b) collection fees which include finder's fees or similar charges; 

c) credit investigation fees; 

d) 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.

ARTICLE 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. 

ARTICLE 134. Delinquency Charges

With respect to a consumer credit plan, the parties may agree to a delinquency charge on any installment not paid in full or before the tenth day after its scheduled or deferred due date. 

ARTICLE 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. 

ARTICLE 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. 

ARTICLE 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 credit transaction. 

ARTICLE 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 be outstanding after 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 schedule to be outstanding under the obligation. 

For the purpose of determining the installment date nearest the date or 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. 

The implementing agency may promulgate and adopt rules and regulations with respect to other precomputed consumer credit transaction. 

ARTICLE 139. General Requirement 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 obligatory, a creditor need not furnish a statement of information required under this Act to more than one of them. 

ARTICLE 140. Credit Sales, 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: 

a) the cash price or delivered price of the property or service to be acquired; 

b) the amount, if any, to be credited as down payment and/or trade in; 

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 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 of periods of payments schedule to repay the indebtedness; and 

i) the default, delinquency or similar charges payable in the event of late payments.

ARTICLE 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:

a) 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 of 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 in 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.

The implementing agency shall prescribe regulations consistent with commonly accepted accounting standards to carry out the requirements of this Article. 

ARTICLE 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: 

a) 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 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 of pesos and centavos; 

e) the effective interest rate; 

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 relates.

ARTICLE 143. Form and Timing of Disclosures

All disclosure required under this Act shall be made clearly and conspicuously in writing before the transaction is consummated. 

ARTICLE 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 following information: 

a) the simple annual rate; 

b) the effective interest rate; 

c) the date 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 charges may be imposed.

ARTICLE 145. Exempted Transaction 

The foregoing requirements on consumer credit transactions shall not apply to the following credit transactions: 

a) those involving extension of credits for business or commercial purposes, or to the Government and governmental agencies and instrumentalities, juridical entities or to organizations;

ARTICLE 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: 

a) he should not sign the instrument if it contains any blank space; 

b) he is entitled to a reasonable return of the pre-computed finance charge if the balance is prepaid; and 

c) he is entitled to an exact , true copy of the agreement.

ARTICLE 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 there under 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.