FAILURE TO COMPLY WITH THE PROVISIONS OF THE TRUTH IN LENDING ACT

Read also: TRUTH IN LENDING ACT

• Any creditor who fails to disclose to any person any information in violation of the Truth in Lending Act shall be liable to such person in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction.

• Any person who willfully violates any provision of Truth in Lending Act shall be fined by not less than P1,000 or more than P5,000 or imprisonment for not less than 6 months, nor more than one year or both.

• The contract or transactions entered by parties remains valid or enforceable.

Under the Truth in Lending Act, the creditor must furnish the borrower, prior to the consummation of the transaction, a clear statement in writing setting forth the following:

1. the cash price or delivered price of the property or service to be acquired;
2. the amounts, if any, to be credited as down payment and/or trade-in;
3. the difference between the cash price or delivered price and down payment and/or trade-in
4. 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;
5. the total amount to be financed;
6. the finance charge expressed in terms of pesos and centavos; and
7. the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

What happens if the creditor fails for disclose the above information to the borrower?

The law says:

Any creditor who in connection with any credit transaction fails to disclose to any person any information in violation of the Truth in Lending Act or any regulation issued thereunder shall be liable to such person in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction.

Action to recover such penalty may be brought by such person within one year from the date of the occurrence of the violation, in any court of competent jurisdiction. And the creditor shall be liable for reasonable attorney’s fees and court costs as determined by the court.

A criminal case may also be filed against the creditor.

Any person who willfully violates any provision of Truth in Lending Act shall be fined by not less than P1,000 or more than P5,000 or imprisonment for not less than 6 months, nor more than one year or both.

However, noncompliance with Truth in Lending Act shall not affect the validity or enforceability of any contract or transactions.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

All rights reserved.

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