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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No._5274

Introduced by: REPRESENTATIVE ERIC L. OLIVAREZ

EXPLANATORY NOTE

In this day and age where everything is fast-paced,
technologically advanced, and leaning towards a system that is
paperless, consumers are starting to explore more convenient ways
to carry out and accomplish their day-to-day activities. Filipinos,
especially professionals are starting to see the value of credit cards
to facilitate their purchases and other important transactions.

According to Visa’s Consumer Payment Attitudes Survey, an
annual study conducted online across six markets in Southeast
Asia, Over half of Filipinos who have tried electronic payment
methods prefer it to using cash, as of 2016. Forty nine percent of
Filipinos have more cards in their wallets compared to five years
ago, while 29 percent carry less cash. Filipinos were most interested
in contactless payments, and used them typically to pay for
groceries, bills and fines, and food and beverages.

Indeed, while the Philippines has lagged behind other
Southeast Asian countries in terms of actual credit card usage
throughout the years, Filipinos nonetheless showed a huge appetite
for new technology that bring convenience and security. This is why
the banking industry is investing heavily in contactless payments
and is convincing more retailers to install technology that would
allow "tap and go" payment schemes.


As more and more Filipinos avail of the credit card service, the
State has to be more vigilant in protecting their rights as consumers
and ensuring that they do not fall on the traps of careless spending
and, worse, incurring unnecessary and completely avoidable
penalties from credit card companies. Perhaps by doing so, the
State can also encourage more Filipinos to use and explore the
realm of cashless transactions and the benefits it could offer, free
from the fear of being unable to manage their own finances properly
and of ending up paying hefty amounts of charges to the credit card
company.

Filipinos only need security and assurance that the credit card
industry is not out there only to get their hard-earned money in the
form of inadequately disclosed fines, surcharges, and penalties. By
enacting this proposed Act, the State is intensifying its regulatory
functions that would strike a good balance between the interest of
this booming credit card industry and the interest of the people who
work hard for the money.

Therefore, this legislative measure is hereby earnestly being
proposed for the approval of this august body.

Que ce.
ERIC L. OLIVAREZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 5274

Introduced by: REPRESENTATIVE ERIC L. OLIVAREZ

AN ACT REQUIRING THE CREATION OF A SYSTEM OR
APPLICATION THAT WOULD DETERMINE POTENTIAL CREDIT
LIMIT BREACH AND GIVE THE CREDIT CARD HOLDER
REAL-TIME FINANCIAL NOTIFICATION

Section 1. Short Title. This Act shall be known as the “Real
Time Credit Limit Notification Act”.

Sec. 2. Declaration of Policy. It is hereby declared as a
policy of the State to balance the interest of the credit card industry
which has been recognized as an indispensable tool in in the
economy’s development, with the right of the public particularly the
credit cardholders to fair, sound and transparent consumer credit
practices aligned with international best practices. To this end, the
State shall institute appropriate mechanisms to protect credit
cardholders from unexpected penalty and other charges in crucial
cases such as a credit limit breach.

Sec. 3. Scope and Coverage. The Act shall govern all credit
card issuers, acquirers and all credit card transactions in the
Philippines.

Sec. 4. Definition of Terms. The following terms, as used in
this Act, shall mean:


Credit card - refers to any card or other credit
device intended for the purpose of obtaining money,
property or services on credit.

Credit card limit - refers to the maximum total
amount for purchases, cash advances, balance transfers,
and finance charges, service fees, penalties, and other
charges which can be charged to the credit card.

Credit card limit breach - refers to the situation
when a credit cardholder’s account balance is more than
the maximum amount of money the credit card issuer
would loan to the former.

Application - refers to a computer program or
software application designed to run on devices such as
computers, laptops and mobile devices like phones or
tablets.

Credit card issuer - refers to a bank or a
corporation that offers the use of its credit card.

Sec. 5. Creation of A Credit Limit Notification System —
Every credit card issuer shall create or commission the creation of a
credit limit notification system or application for its credit
cardholders that would provide updated or real-time information on
their outstanding credit card expenditure vis-a-vis the amount of
their credit limit. The said application shall prompt an alert to the
credit cardholder of a potential breach of his/her credit limit by a
new transaction as well as of the remaining balance that the credit
cardholder may use to avoid being charged penalties for any over-
the-limit transaction. Provided further, that the application must
clearly and prominently indicate the corresponding penalties, fees
and/or other related charges for the breach of the credit limit to
guide the credit card holder in case he/she decides to proceed with
the over-the-limit transaction.


Sec. 6. Period of Creation. All credit card issuers must have
a fully operational credit limit notification system/application
bearing all the features or specifications required by this law and its
Implementing Rules and Regulation, within one year from the
effecOtivity of this Act.

Sec. 7. Disclosure Requirement. All credit card issuers are
required to inform all its present credit cardholders of the existence
of such credit limit notification system or application and provide
basic guide or instructions on how to install and use such
application in their devices. Provided further, that credit card
applicants must be informed by the credit card issuer about such
system by its attending agent or manager at the point of
application, even pending its approval.

Sec. 8. Violation of this Act. A person or entity which failed
to comply with the provisions of this Act and any related rules and
regulations issued by the Monetary Board shall be subject to
applicable criminal and administrative sanctions as well as any
applicable penalties and fines, as provided in R.A. 7653 or the New
Central Bank Act, and/or R.A. 10870 otherwise known as the
Philippine Credit Card Industry Regulation Law. Provided, that in
addition to the abovementioned sanctions that may be imposed, the
authority of the credit card issuer to issue credit cards may be
suspended of cancelled by the Bangko Sentral ng Pilipinas.

Sec. 9. Implementing Agency and Rules. The Monetary
Board of the Bangko Sentral ng Pilipinas shall issue the necessary
implementing rules and regulations to implement the provisions of
this Act within ninety (90) days after its effectivity.

Sec, 10. Separability Clause. If any provision of this Act is
declared invalid or unconstitutional, other provisions hereof which
are not affected thereby shall remain valid, and in full force and
effect.


Sec. 11. Repealing Clause. All laws, orders, decrees, rules
and regulations and other parts thereof which are inconsistent with
the provisions of this Act are hereby repealed, amended or modified.

Sec, 12. Effectivity. This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in two (2) newspapers
of general circulation.

Approved,