TRUTH IN LENDING ACT services on a time, credit, or installment basis,

either as principal or as agent) who requires as

Republic Act No. 3765 an incident to the extension of credit, the
___________________________________________ payment of a finance charge.
Credit Grabbers: ​Leizl Mae Balagot; Bobbie ▪ Person ​- means any individual, corporation,
Labastilla, Catherine Labastilla, Beverly Ann partnership, association, or other organized
Nombrado, Nikka Peligro group of persons, or the legal successor or
___________________________________________ representative of the foregoing, and includes
the Philippine Government or any agency
thereof, or any other government, or of any of
Policy of the Law: its political subdivisions, or any agency of the
To PROTECT the citizens from LACK OF foregoing.
AWARENESS of the true cost of credit to the user by
assuring a FULL DISCLOSURE of such COST with Prior to the consummation of the transaction, the
a view of PREVENTING the UNINFORMED USE creditor shall furnish to each person to whom
of credit to the detriment of the national economy. credit is extended the following:
Monetary Board of the Central Bank of the A clear statement in writing setting forth, to the
Philippines​: extent applicable and in accordance with rules and
Entity in charge of implementing the TILA. regulations prescribed by the Monetary Board of the
Central Bank of the Philippines, the following
Definitions: information:
▪ Board - means the Monetary Board of the
Central Bank of the Philippines. (1) the cash price or delivered price of the
▪ Credit - means any loan, mortgage, deed of property or service to be acquired;
trust, advance, or discount; any conditional (2) the amounts, if any, to be credited as down
sales contract; any contract to sell, or sale or payment and/or trade-in;
contract of sale of property or services, either (3) the difference between the amounts set
for present or future delivery, under which forth under clauses (1) and (2);
part or all of the price is payable subsequent (4) the charges, individually itemized, which
to the making of such sale or contract; any are paid or to be paid by such person in
rental-purchase contract; any contract or connection with the transaction but which are
arrangement for the hire, bailment, or leasing not incident to the extension of credit;
of property; any option, demand, lien, pledge, (5) the total amount to be financed;(6) the
or other claim against, or for the delivery of,
finance charge expressed in terms of pesos
property or money; any purchase, or other
and centavos; and
acquisition of, or any credit upon the security
(7) the percentage that the finance bears to the
of, any obligation of claim arising out of any
of the foregoing; and any transaction or series total amount to be financed expressed as a
of transactions having a similar purpose or simple annual rate on the outstanding unpaid
effect. balance of the obligation.
▪ Finance Charge - includes interest, fees,
service charges, discounts, and such other
charges incident to the extension of credit as Liability of the creditor who fails to disclose to any
the Board may prescribe. person any information in violation of this Act or
▪ Creditor ​- means any person engaged in the any regulation issued thereunder:
business of extending credit (including any
person who as a regular business practice Any creditor who in connection with any credit
make loans or sells or rents property or transaction fails to disclose to any person any
information in violation of this Act or any regulation conversion of his loan account with the bank into a
issued thereunder shall be liable to such person in the regular housing loan account.
amount of P100 or in an amount equal to twice the
finance charged required by such creditor in Issue: Whether or not petitioner DBP complied with
connection with such transaction, whichever is the the Disclosure requirement.
greater, except that such liability shall not exceed
P2,000 on any credit transaction. Ruling:
Yes, DBP complied with the disclosure
Prescription: requirement. Section 1 of R.A. No. 3765 provides
that prior to the consummation of a loan transaction,
Action to recover such penalty may be brought by the creditor is obliged to furnish a client with a
such person within one year from the date of the disclosure statement. In this case, DBP might have
occurrence of the violation, in any court of competent failed to disclose the required information in the
jurisdiction. disclosure statement form, but it did so in the loan
transaction documents between it and Arcilla. The
Penalty for any person who willfully violates any appellee had been sufficiently informed of the terms
provision of this Act or any regulation issued and the required charges included in the subject loan.
thereunder: It was readily available in the three (3) promissory
notes that Arcilla executed. Hence, DBP did not
Shall be fined by not less than P1,00 or more than remiss of its disclosure obligation.
P5,000 or imprisonment for not less than 6 months,
nor more than one year or both. SPOUSES SILOS V PNB
G.R. No. 181045 July 2, 2014
DBP VS ARCILLA
GR No. 161397 June 30 2005 Facts:
To increase their credit line from PNB,
Facts: Spouses Silos constituted a Credit agreement with
Atty. Arcilla, Jr. was employed by the Real Estate Mortgage as a security. They issued
Development Bank of the Philippines. He obtained Promissory Notes and signed a Credit Agreement
from the said bank a housing loan for the purchase of containing a stipulation on interest and provisions
the lot and the construction of a residential building that allowed the PNB to increase or decrease the
thereon. He obliged himself to pay the loan in 25 interest unilaterally.
years, with a monthly amortization and a 9% interest The 1st promissory note was agreed at a
per annum, which is to be deducted from his monthly 19.5% rate and the interest rate in the succeeding PN
salary. A Deed of Conditional Sale was issued with a were left blank for PNB to unilaterally fill without
stipulation that in case he will retire, his loan will be the consent or agreement of the spouses. Initially,
converted into a regular housing loan. petitioners religiously paid the interests without
When he resigned, the bank indeed converted objection or fail. But after faltering despite repeated
his loan to a regular housing loan. When Arcilla demands, the mortgage was foreclosed and later on
failed to pay his loan account, it led DBP to rescind sold in an auction. Petitioners seek annulment of the
the Deed of Conditional Sale by notarial act. He was foreclosure and argued that the succeeding PN is null
given time to purchase the said property but Arcilla and void because it did not comply with the
failed to respond. Thus, the property was advertised disclosure requirement under the TILA.
for bidding. PNB denied and argued that petitioners
Arcilla therefore filed a complaint against agreed that without prior notice PNB may modify
DBP alleging that the bank failed to furnish him with interest rates depending on future policy adopted by it
the disclosure statement required by TILA prior to and that the imposition of penalties was agreed upon
the execution of the deed of conditional sale and the in the Credit Agreement.
Issue: Whether or not the unilateral determination of Issue: Whether or not the bank violated TILA
interest rate of PNB is a violation of TILA. because it imposed handling charges not otherwise
included in the promissory note.
Held:
Yes, the unilateral determination of interest Ruling:
rate is a violation of TILA. Contract changes must be Yes, the bank violated TILA. All banks and
made with the consent of the contracting parties. Any non-bank financial intermediaries authorized to
change must be mutually agreed upon, otherwise, it is engage in quasi-banking functions are required to
bereft of any binding effect. Section 4 of the TILA strictly adhere to the provisions of TILA. The
provides that a disclosure statement must be promissory notes signed by private respondents do
furnished prior to the consummation of the not contain any stipulation on the payment of
transaction. By requiring the petitioners to sign the handling charges. Petitioner bank cannot, therefore,
credit documents and the promissory notes in blank, charge private respondents such handling charges.
and then unilaterally filling them up later on,
respondent violated the law, and was remiss in its
disclosure obligations.

CONSOLIDATED BANK VS CA
GR No. 91494 July 14 1995

Facts:
Respondent George King Tim Pua had two
sets of accounts with the petitioner bank, his personal
account and his account for George and George
Trade, Inc. For his personal account, he obtained six
separate loans with different due dates while under
the account of George and George Trade, Inc, he
obtained three loans. In lieu of this, he executed
promissory notes to which he agreed to pay attorney's
fees only "in addition to expenses and costs of suit”.
In order to secure the payment, he assigned
unto the bank the proceeds of a fire insurance policy
issued by the Kerr Insurance Company. According to
petitioner bank, after it deducted from the proceeds
all of the unpaid loans of the respondent in both
accounts, there was still a balance that the respondent
needed to settle.
Petitioner instituted an action against the bank
for recovery of the unpaid balance. He claimed that it
was in fact the bank which owed him by reason of its
failure to return to the latter the balance of said
insurance and for imposing additional sum for
attorney's fees. He further argued that the bank
violated the TILA because the Promissory Note
signed by him did not contain any stipulation on the
payment of handling charges.