Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
First Regular Session
HoUSEBILLNo.         6340
Introduced by: REPRESENTATIVE ARNULF BRYAN "ARNIE" a. FUENTEBELLA
EXPLANATORY NOTE
WHEREAS,   See.   5   of   Art.    11   of   the   1987   Constitution   provides   "The
maintenance  of  peace  and  order,  the  protection  of  life,  liberty,  and  property,  and
promotion of the general welfare are essential for the enjoyment by all the people of
the blessings of democracy";
WHEREAS,  Art.  2  of  Ftepublic  Act  No.  7894  or  The  Consumer Act  of the
Philippines  provides  "lt  is  the  policy  of  the  State  to  protect  the  interests  of  the
consumer,  promote  his  general  welfare  and  to  establish  standards  of conduct for
business  and  industry.  Towards  this  end,  the  State  shall  implement  measures  to
achieve the following objectives:
a)   Protection against hazards to health and safety;
b)  5##ct::r  against deceptive,  unfair and  unconscionable  sales  acts  and
c)   Provision of information and education to facilitate sound choice and the
proper exercise of rights by the consumer;
d)   Provision of adequate rights and means of redress; and
e)   Involvement   of  consumer   representatives   in   the   formulation   of   social   and
economic policies" (emphasis ours);
WHEREAS, Sec. 2 of Republic Act No, 8556 or The Financing Company Act
of 1988 provides "lt is hereby declared to be the policy of the State to regulate and
promote the activities of financing and leasing companies to place their operations on
a  sound,  competitive,  stable  and  efficient  basis  as  other  financial  institutions,  to
recognize and strengthen their critical role in providing medium and long-term
credit for investments in capifa] goods and equipment especially by small and
medium enterprises particularly in the countryside and to curtail and prevent
acts or practices prejudicial to the public interest so that they may be in a better
position to extend efficient service in a fair manner to the general public and to
industry, commerce and agriculture and thereby more fully contribute to the
sound development of the national economy (emphasis ours);"
WHEREAS,  See.  2  of  Republic  Act  No.  9474  or  The  Lending  Company
Regulation Act provides that "lt is hereby declared the policy of the State to regulate
the  establishment  of lending  companies  and  to  place their operation  on  a  sound,
efficient  and  stable  condition  to  derive  the  optimum  advantages from  them  as  an
additional source of credit; to prevent and mitigate, as far as practicable, practices
prejudicial  to  public  interest;  and  to  lay  down  the  minimum  requirements  and
standards under which they may be established and do business (emphasis ours)";
WHEREAS,  despite over 88°/a of Filipinos having  shown the ability to speak
Englisht,  there  remains  a  minority  who  have  yet  to  be  proficient  or  have  a  full
understanding of the language;
1 Temelhova, Kris;rdr\a, Languages of the Philippines: Everything You Need to Know, 20 AprH 20Z2
(httDs://www.nilestoneloc.com/lanauaaes-of-the-DhiliDoineso Accessed 01  August 2022


WHEREAS,  vulnerable  sectors  -  particularly  farmers  and   MSMEs  -  will
benefit from better access to credit2;
WHEREAS,  online  lending  platforms  (OLPs)  and  contracts/agreements  for
loans   and   financing   usually   utilize  the   English   language  to   contract  with   their
borrowers, which hinders a full understanding of the terms and conditions contained
in such agreements and online lending platforms;
WHEREAS, in view of the public interest involved in the lending and financing
industry, the State's policy to protect against deceptive,  unfair,  and  unconscionable
sales  acts  and  practices,  as well  as the  provision  of information  and  education  to
facilitate the sound choice and the proper exercise of the rights of the consumer, this
representation  seeks  to  require  banks,  lending  and  financing  corporations,  quasi-
banks, cooperatives offering loans, and microfinance non-government organizations
to  use  loan  contracts  in  the  Filipino  language or in  a  language  used  in  the  locality
where the said corporation operates;
ln light of the foregoing, the passage of this bill is earnestly sought.
2 Galang, lvory ftyka, Land Tenure, Access to Credit, and Agricultural Performance Of Agrarian Reform Beneficiaries , Phihiippine
Institute for Development Studies Research paper Series No. 2021 -07 (2021 )


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
First Regular Session
HoUSEBILLNo.      6340
Introduced by: REPRESENTATIVE ARNULF BRYAN "ARNIE" a. FUENTEBELLA
AN ACT REQUIRING BANKS, LENDING CORPORATIONS, FINANCING CORPORATIONS,
QUASI-BANKS, COOPERATIVES, AND MICROFINANCE NON-GOVERNMENT
ORGANIZATIONS TO UTILIZE AGREEMENTS AND DOCUMENTS IN THE FILIPINO
LANGUAGE OR IN THE VERNACULAR LANGUAGES USED IN THEIR PLACE OF
BUSINESS, AND PRESCRIBING PENALTIES FOR VIOLATION THEREOF
Be it enacted by the Senate and House of Representatives
Of the Philippines in Congress assembled:
SECTION 1. Dec/arali.on of po/i.cy. -ln pursuance of the general welfare clause of the
Constitution,  the  recognition  of the  critical  role  of  consumer  loans  to  the  economy,  and  the
promotion of the rights of the consumer,  it is hereby declared policy of the State to protect the
right of the consumer to exercise a sound and informed choice and their right to access to credit.
SECTION 2.  Scope. -All banks, lending companies, financing companies, quasi-banks,
cooperatives offering  loans,  and  microfinance  non-government organizations shall comply with
the                                    provi sion s                                    of                                    th is                                    Act,
SECTION 3.  Loan Documents and Communications in the Filipino Language or in
the  Vemacu/ar Language or Di.a/ecf. - All  banks,  lending companies, financing companies,
quasi-banks,  cooperatives offering  loans,  and  microfinance non-government organizations are
mandated to:
a)   Have copies of their application forms, loan agreements, promissory notes, accessory
contracts, notices, and all communications related to loans between themselves and
the  consumer-borrower in  the  Filipino  language  or  in  the  language/s  and  dialect/s
being  used  in the locality in which  said  bank,  lending  company, financing  company,
cooperative, or microfinance non-government organization offers loans to the general
public;
b)   Provide  the  option  to  the  consumer-borrower  to  enter  into  and  execute  a  loan
agreement in the language of the consumer's choice;
c)   Provide the option to the consumer-borrower to access their online lending platforms
(OLPs) in the Filipino language;
d)   Incorporate a clause in the agreements indicating the lender informed the consumer-
borrower of the  availability  of the agreement  in  the vernacular and that the  lender
confirms   having   explained   the  terms   and   conditions   of  the   agreement  to  the
consumer-borrower:
e)   Fully  explain  to the  consumer the terms  and  conditions,  charges,  obligations,  and
liabilities between themselves and the consumer-borrower under the agreement;
f)    Dedicate   staff  to   assist   consumer-borrowers   to   explain   the   provisions   of  the
agreements between themselves and the consumer-borrowers; and
g)   Conduct an  annual financial  literacy  program for their consumer-borrowers without
expense on the part of the consumer-borrower.
SECTION 4.  Pena/fi.es.


a)   The Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC),
the  Ccoperative  Development  Authority  (CDA),  or  the  Microfinance  NGO  Regulatory
Council (MNRC), as applicable, after due notice and hearing, may suspend or revoke the
secondary license issued to the person or juridical entity liable for failing to comply with
any of the provisions and requirements of Section 3 of this Act;
b)   Any bank, lending company, financing company, quasi-bank, cooperative offering loans,
and  microfinance  non-government  organization  who  does  not  comply  with  any  of the
obligations in Section 4 of this Act shall be punished as follows:
Number of Violations
Penalty
1
P10,000.00
2
P50,000.00
3
P100,000.00 and suspension of the
secondary license issued to the juridical
entity liable
More than three
P200,000.00 and revocation of the
secondary license issued to the juridical
entity liable
SECTION 5. /mp/emenf7.ng R«/es and Regfi/af7-ons. - Within sixty (60) days from the
effectivity of this Act, the Department of Trade and Industry (DTI), in coordination and consultation
with  the  Department  of  Finance  (DOF),  the  CDA,  and  the  Komisyon  sa  Wikang  Filipino  shall
promulgate the implementing rules and regulations necessary to ensure the efficient and effective
implementation of this Act.
SECTION 6. Approprt-ad.ons, -The amount necessary to carry out the provisions of this
Act shall be included in the General Appropriations Act.
SECTION 7. Separabi.//.fy C/ause. - lf any portion of this Act or the application thereof
be declared valid or unconstitutional, the validity of other parts or provisions not affected thereby
shall continue to be in full force and effect.
SECTION 8. Oversi.ghf. -The DTl and the CDA, as applicable, shall submit an Annual
Progress  Report  on  the  compliance  of  lending  companies,  finance  companies,  quasi-banks,
banks,  cooperatives  offering  loans,  and  microfinance  non-government  organizations  to  the
provisions of this Act to Congress.
SECTION 9. Repea//.ng C/a«se. - All  laws,  decrees, orders,  rules and  regulations or
parts thereof inconsistent with this Act are hereby repealed or modified accordingly.
SECTION  10.  Effecfivfty.  -This Act  shall  take  effect  after fifteen  (15)  days from  its
publication in the Official Gazette or in two (2) newspapers of general circulation.
Approved,