8 ,,f#J 29 !J :; ' " 
FOURTEENTH CONGRESS OF THE REPrJBLIC) 
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OF THE PHILIPPINES 
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First Regular Session 
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Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
Every technological breakthrough changes the procedure in transacting business. 
The payment of bills, whether it be for utilities, groceries, gasoline, medicine, or any 
other item, can now be made through a credit card, automated teller machine card, or by 
telephone. 
The use of electronic systems to transfer funds has provided substantial benefits to 
consumers. However, due to the characteristics of such systems, the application of 
existing consumer protection legislation is unclear. The rights and liabilities o f 
consumers, financial institutions, and intermediaries in electronic fund transfers are 
undefined. 
This bill seeks to establish the rights, liabilities, and responsibilities of 
participants in electronic fund transfer systems. 


FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
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,iAN 29 r’ ? 
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First Regular Session 
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Introduced by Senator Miriam Defensor Santiago 
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AN ACT 
DEFINING THE RIGHTS AND LIABILITIES OF PARTIES IN 
ELECTRONIC FUND TRANSFERS 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Electronic Fund 
Transfer Act of 2008.” 
SECTION 2. Declaration of Policy. - It is the policy of the State to promote 
commercial transactions. Toward this end, the State shall enact measures to protect the 
rights and define the liabilities of parties in commercial transactions. 
SECTION 3. Definitions. -As used in this Act, the term 
(A) “accepted card or other means of access” means a card code or other means of 
access to a consumer’s account for the purpose of initiating electronic fund transfers 
when the person, to whom such card or other means of access was issued, has requested 
and received, or has signed or has used, or authorized another to use, such card or other 
means of access for the purpose of transferring money between accounts or obtaining 
money, property, labor, or services; 
(B) “account” means a demand deposit, savings deposit, or other asset account 
(other than an occasional or incidental credit balance in an open end credit plan), as 
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household purposes, but such term does not include an account held by a financial 
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institution pursuant to a bona fide trust agreement; 
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(C) “Board” means the Board of Governors of the Bangko Sentral ng Pilipinas; 
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(D) “business day” means any day on which the offices of the consumer’s 
financial institution involved in an electronic fund transfer are open to the public for 
carrying on substantially all of its business functions; 
(E) “consumer” means a natural person; 
(F) “electronic fund transfer” means any transfer of funds, other than a transaction 
originated by check, draft, or similar paper instrument, which is initiated through an 
electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, 
instruct or authorize a financial institution to debit or credit an account. Such term 
includes direct deposits or withdrawals of funds, and transfers initiated by telephone. 
Such term does not include- 
(1) any check guarantee or authorization service which does not directly 
result in a debit or credit to a consumer’s account; 
(2) any transfer of funds, other than those processed by automated 
clearinghouses, made by a financial institution on behalf of a consumer by means 
of a service that transfers funds held at either banks or other depository 
institutions and which is not designed primarily to transfer funds on behalf of a 
consumer; 
(3) any transaction the primary purpose of which is the purchase or sale of 
securities or commodities through a broker-dealer registered with or regulated by 
the Securities and Exchange Commission; 
(4) any automatic transfer from a savings account to a demand deposit 
account pursuant to an agreement between a consumer and a financial institution 
for the purpose of covering an overdraft or maintaining an agreed upon minimum 
balance in the consumer’s demand deposit account; or 
(5) any transfer of funds which is initiated by a telephone conversation 
between a consumer and an officer or employee of a financial institution which is 
not pursuant to a pre-arranged plan and under which periodic or recurring 
transfers are not contemplated; 
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(G) “electronic terminal” means an electronic device, other than a telephone 
operated by a consumer, through which a consumer may initiate an electronic fund 
3 ’ transfer. Such term includes, but is not limited to, point-of-sale terminals, automated 
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teller machines, and cash dispensing machines; 
(H) “financial institution” means a bank, a savings and loan association, a mutual 
savings bank, a credit union, or any other person who, directly or indirectly, holds an 
account belonging to a consumer; 
(I) “pre-authorized electronic fund transfer” means an electronic fund transfer 
authorized in advance to recur at substantially regular intervals; 
(J) “unauthorized electronic f b d  transfer” means an electronic fund transfer from 
a consumer’s account initiated by a person other than the consumer without actual 
authority to initiate such transfer and from which the consumer receives no benefit, but 
the term does not include any electronic fund transfer 
(1) initiated by a person other than the consumer who was furnished with 
the card, code, or other means of access to such consumer’s account by such 
consumer, unless the consumer has notified the financial institution involved that 
transfers by such other person ax no longer authorize; 
(2) initiated with fraudulent intent by the consumer or any person acting in 
conceit with the consumer; or 
(3) which constitutes an error committed by a financial institution. 
SECTION 4. Regulations. - 
(A) The Board shall prescribe regulations to carry out the purposes of this Act. In 
prescribing such regulations, the Board shall: 
(1) consult with the other affected agencies and take into account and 
allow for, the continuing evolution of electronic banking services and the 
technology utilized in such services. 
(2) prepare an analysis of economic impact which considers the costs and 
benefits to financial institutions, consumers, and other users of electronic fund 
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transfers, including the extent to which additional documentation, reports, 
records, or other paper work would be required, and the effects upon competition 
in the provision of electronic banking services among large and small financial 
institutions and the availability of such services to different classes of consumers, 
particularly low income consumers, 
(3) to the extent practicable, the Board shall demonstrate that the 
consumer protections of the proposed regulations outweigh the compliance costs 
imposed upon consumers and financial institutions; and 
(a) any proposed regulations and accompanying analyses shall be 
sent promptly to Congress by the Board. 
(b) The Board shall issue model clauses for optional use by 
financial institutions to facilitate compliance with the disclosure 
requirements of the following section and to aid consumers in 
understanding the rights and responsibilities of participants in electronic 
fund transfers by utilizing readily understandable language. With respect 
to the disclosures required by Section 5, the Board shall lake account of 
variations in the services and charges under different electronic fund 
transfer systems and, as appropriate, shall issue alternative model clauses 
for disclosure of these differing account terms. 
(c) Regulations prescribed hereunder may 
contain such 
classifications, differentiations, or other provisions, and may provide for 
such adjustments and exceptions for any class of electronic fund transfers, 
as, in the judgment of the Board, are necessary or proper to effectuate the 
purposes of this Act, to prevent circumvention or evasion thereof, or to 
facilitate compliance therewith. This Board shall by regulation modify the 
requirements imposed by this Act on small financial institutions if the 
Board determines that such modifications are necessary to alleviate any 
undue compliance burden on small financial institutions and such 
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modifications are consistent with the purpose and objective of this 
subchapter. 
(d) In the event that electronic fund transfer services are made 
available to consumers by a person other than a financial institution 
holding a consumer’s account, the Board shall by regulation assure that 
the disclosures, protections, responsibilities, and remedies created by this 
Act are made applicable to such persons and services. 
SECTION 5. Terms and Conditions of Transfers. - 
(A) The terms and conditions or electronic fund transfers involving a consumer’s 
account shall be disclosed at the time the consumer contracts for an electronic fund 
transfer service, in accordance with regulations of the Board. Such disclosures shall be in 
readily understandable language and shall include, to the extent applicable - 
(1) the consumer’s liability for unauthorized electronic fund transfers and, 
at the financial institution’s option, notice of the advisability of prompt reporting 
of any loss, theft, or unauthorized use of a card, code, or other means of access; 
(2) the telephone number and address of the person or office to he notified 
in the event the consumer believes that an unauthorized electronic fund transfer 
has been or may be effected; 
(3) the type and nature of electronic fimd transfers which the consumer 
may initiate, including any limitations on the frequency or dollar amount of such 
transfers, except that the details of such limitations need not be disclosed if their 
confidentiality is necessary to maintain the security of an electronic fund transfer 
system, as determined by the Board; 
(4) any charges for electronic €und transfers or for the right to make such 
transfers; 
(5) the consumer’s right to stop payment of a preauthorized electronic 
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fund transfer and the procedure to initiate such a stop payment order; 
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(6) the consumer’s right to receive documentation of electronic fund 
transfers under Section 6; 
(7) a summary, in a form prescribed by regulations of the Board, of the 
error resolution provisions of section 8 and the consumer’s rights thereunder. The 
financial institution shall thereafter transmit such summary at least once per 
calendar year; 
(8) the financial institution’s liability to the consumer under Section 10; 
and 
(9) under what circumstances the financial institution will, in the ordinary 
course of business, disclose information concerning the consumer’s account to 
third person. 
(B) A financial institution shall notify a consumer in writing at least twenty-one 
(21) days prior to the effective date of any change in any term or condition of the 
consumer’s account required to be disclosed under subsection (1) of this section if such 
change would result in greater cost or liability for such consumer or decreased access to 
the consumer’s account. A financial institution may, however, implement a change in the 
terms or conditions of an account without prior notice when such change is immediately 
necessary to maintain or restore the security of an electronic fund transfer system or a 
consumer’s account. Subject to subsection (A) (3) of this section, the Board shall require 
subsequent notification if such a change is made permanent. 
(C) For any account of a consumer made accessible to electronic fund transfers 
prior to the dfective date of this Act, the information required to be disclosed to the 
consumer under subsection (A) of this section shall be disclosed not later than the earlier 
of - 
(1) the first periodic statement required by section 6 after the effective date 
of this Act; or 
(2) thirty (30) days after the effective date of this Act. 
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SECTION 6. Documentation of Transfers. - 
(A) For each electronic fund transfer initiated by a consumer from an electronic 
terminal, the financial institution holding such consumer’s account shall, directly or 
indirectly, at the time the transfer is initiated, make available to the consumer written 
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documentation of such transfer. The documentation.shal1 clearly set forth to the extent 
applicable - 
(1) the amount involved and the date the transfer is initiated; 
(2) the type of transfer; 
(3) the identity of the consumer’s account with the financial institution 
from which, or to which, funds are transferred; 
(4) the identity of any third party to whom or from whom the funds are 
transferred; and 
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(5) the location or identification of the electronic terminal involved. 
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(B) For a consumer’s account which is scheduled to be credited by a pre- 
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authorized electronic fund transfer from the same payor at least once in each successive 
16. sixty-day period, except where the payor provides positive notice of the transfer to the 
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consumer, the financial institution shall elect to provide promptly either positive notice to 
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the consumer when the credit is made as scheduled, or negative notice to the consumer 
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when the credit is not made as scheduled, in accordance with regulations of the Board. 
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The means of notice elected shall be disclosed to the consumer in accordance with 
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section 5 of this Act. 
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(C) A financial institution shall provide each consumer with a periodic statement 
for each account of such consumer that may be accessed by means of an electronic fund 
transfer. Except as provided in subsection (D) and (E) of this section, such statement shall 
be provided at least monthly for each monthly or shorter cycle in which an electronic 
fund transfer affecting the account has occurred, or every thee (3) months, whichever is 
more frequent. The statement, which may include information regarding transactions 
other than electronic fund transfers, shall clearly set forth - 
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(1) with regard to each electronic fund transfer during the period, the 
information described in subsection (A) of this Section, which may be provided 
on an accompanying document: 
(2) the amount of any fee or charge assessed by the financial institution 
during the period for electronic fund transfers or for account maintenance; 
(3) the balances in the consumer’s account at the beginning of the period 
and at the close of the period; and 
(4) the address and telephone number to be used by the financial 
institution for the purpose of receiving any statement inquiry or notice of account 
error from the consumer. Such address and telephone number shall be preceded 
by the caption “Direct Inquiries to:” or other similar language indicating that the 
address and number are to be used for such inquiries or notices. 
(D) In the case of a consumer’s passbook account which may not be accessed by 
electronic fund transfers other than pre-authorized electronic fund transfers crediting the 
account, a financial institution may, in lieu of complying with the requirements of 
subsection (C) of this section, upon presentation of the passbook, provide the consumer 
in writing with the amount and date of each such transfer involving the account since the 
passbook was last presented. 
(E) In the case of consumer’s account, other than a passbook account, which may 
not be accessed by electronic fund transfers other than pre-authorized electronic fund 
transfers crediting the account, the financial institution may provide a periodic statement 
on a quarterly basis which otherwise complies with the requirements of subsection (C) of 
this Section. 
(F) In any action involving a consumer, any documentation required by this 
section to be given to the consumer which indicates that an electronic fund transfer was 
made to another person shall he admissible as evidence of such transfer and shall 
constitute prima facie proof that such transfer was made. 
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SECTION 7. Pre-authorized Transfers. - 
(A) A preauthorized electronic fund transfer from a consumer’s account may be 
authorized by the consumer only in writing, and a copy of such authorization shall be 
provided to the consumer when made. A consumer may stop payment of pre-authorized 
electronic fund transfer by notifying the financial institution orally or in writing at any 
time up to three (3) business days preceding the scheduled date of such transfer. The 
financial institution may require written confirmation to be provided to it within fourteen 
(14) days of an oral notification if, when the oral notification is made, the consumer 
advised of such requirement and the address to which such confirmation should be sent. 
(B) In the case of pre-authorized transfers from a consumer’s account to the same 
person which may vary in amount, the financial institution or designated payee shall, 
prior to each transfer provide reasonable advance notice to the consumer, in accordance 
with regulations of the Board, of the amount to be transferred and the scheduled date of 
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the transfer. 
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SECTION 8. Error Resolution. - 
(A) If a financial institution, within sixty (60) days after having transmitted to a 
consumer documentation pursuant to this Act, receives oral or written notice in which the 
consumer 
(1) sets forth or otherwise enables the financial institution to identify the 
name and account number of the consumer; 
(2) indicates the consumer’s belief that the documentation, or, in the case 
of notification pursuant to Section 6, the consumer’s account, contains an error 
and the amount of such error; and 
(3) sets forth the reasons for the consumer’s belief (where applicable) that 
an error has occurred, the financial institution shall investigate the alleged error, 
determine whether an error has occurred, and report or mail the results of such 
investigation and determination to the consumer within ten (10) business days. 
The financial institution may require written confirmation to be provided to it 
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within ten (10) business days of an oral notification of error if, when the oral 
notification is made, the consumer is advised of such requirement and the address 
to which such confirmation should he sent. A financial institution which requires 
written confirmation in accordance with the previous sentence need not 
provisionally re-credit a consumer’s account in accordance with subsection (C) of 
this section, nor shall the financial institution be liable under subsection (E) of this 
section if the written confirmation is not received within the ten-day period 
referred to in the previous sentence. 
(B) If the financial institution determines that an error did occur, it shall promptly, 
but in no event more than one (1) business day after such determination, correct the error, 
object to Section 9, including the crediting of interest where applicable. 
(C) If a financial institution receives notice of an error in the manner and within 
the time period specified in subsection (A) of this Section, it may, in lieu of the 
requirements of subsections (A) and (B) of this Section, within ten (10) business days 
after receiving such notice provisionally re-credit the consumer’s account for the amount 
alleged to be in error, subject to Section 9, including interest where applicable, pending 
the conclusion of its investigation and its determination of whether an error has occurred. 
Such investigation shall be concluded not later than forty-five (45) days after receipt of 
notice of the error. During the pendency of the investigation, the consumer shall have full 
use of the funds provisionally re-credited. 
(D) If the financial institution determines after its investigation pursuant to 
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0 subsection (A) or (C) of this section that an error did not occur, it shall deliver or mail to 
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the consumer an explanation of its findings within three (3) business days after the 
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conclusion of its investigation, and upon the request of the consumer promptly deliver or 
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mail to the consumer reproductions of all documents which the financial institution relied 
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on to conclude that such error did not occur. The financial institution shall include notice 
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of the right to request reproductions with the explanation of its findings. 
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(E) If any action under this Act, the court finds that - 
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(1) the financial institution did not provisionally re-credit a consumer’s account 
within the ten-day period specified in subsection (C) of this section, and the financial 
institution (a) did not make a good faith investigation of the alleged error; or (b) did not 
have a reasonable basis for believing that the consumer’s account was not in error; or 
(2) the financial institution knowingly and willhlly concluded that the 
consumer’s account w as not in error when such conclusion could not reasonably have 
been drawn from the evidence available to the financial institution at the time of its 
investigation, then the consumer shall be entitled to treble damages. 
(F) For the purpose of this section, an error consists of - 
(1) an unauthorized electronic fund transfer; 
(2) an incorrect electronic fund transfer from or to the consumer’s 
account; 
(3) the omission from a periodic statement of an electronic fund transfer 
affecting the consumer’s account which should have been included; 
(4) a computational error by the financial institution; 
(5) the consumer’s receipt for an incorrect amount of money from an 
electronic terminal; 
(6) a consumer’s request for additional information or clarification 
concerning an electronic fund transfer or any documentation required by this Act; 
or 
(7) any other error described in regulations of the Board. 
SECTION 9. Consumer Liability.- 
(A) A consumer shall he liable for any unauthorized electronic fund transfer 
involving the account of such consumer only if the card or other means of access utilized 
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for such transfer was an accepted card or other means of access and if the issuer of such 
card, code, or other means of access has provided a means whereby the user of such card, 
code, or other means of access can be identified as the person authorized to use it, such as 
by signature, photograph or fingerprint, or by electronic or mechanical confirmation. In 
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lesser of- 
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(1) One Thousand Pesos (P1,OOO.OO); or 
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(2) The amount of money or value of property or services obtained in such 
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unauthorized electronic fund transfer prior to the time the financial institution is 
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notified of or otherwise becomes aware of, circumstances which lead to the 
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reasonable belief that an unauthorized electronic fund transfer involving the 
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consumer’s account has been or may be effected. Notice under this paragraph is 
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sufficient when such steps have been taken as may be reasonably required in the 
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ordinary course of business to provide the financial institution with the pertinent 
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information, whether or not any particular officer, employee, or agent of the 
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financial institution does in fact receive such information. Notwithstanding the 
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foregoing, reimbursement need not be made to the consumer for losses the 
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financial institution establishes would not have occurred but for the failure of the 
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consumer to report within sixty (60) days of transmittal of the statement (or in 
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extenuating circumstances such as extended travel or hospitalization, within a 
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reasonable time under the circumstances) any unauthorized electronic fund 
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transfer or account error which appears on the periodic statement provided to the 
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consumer for losses which the financial institution establishes would not have 
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occurred but for the failure of the consumer to report any loss or theft of a card or 
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other means of access within two (2) business days after the consumer learns of 
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the loss or theft (or in extenuating circumstances such as extended travel or 
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hospitalization, within a longer period which is reasonable under the 
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circumstances), but the consumer’s liability under this subsection in any such case 
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may not exceed a total of Ten Thousand Pesos (PlO,OOO.OO) or the amount of 
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unauthorized electronic fund transfers which occur following the close of two (2) 
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business days (or such longer period) after the consumer learns of the loss or theft 
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but prior to notice to the financial institution under this subsection, whichever is 
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less. 
no event, however, shall a consumer’s liability for an unauthorized transfer exceed the 
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(B) In any action which involves a consumer’s liability for an unauthorized 
electronic fund transfer, the burden of proof is upon the financial institution to show that 
the electronic fund transfer was unauthorized, then the burden of proof is upon the 
financial institution to establish that the conditions of liability set forth in subsection (B) 
of this Section have been met, and, if the transfer was initiated after the effective date of 
this Act, that the disclosures required to be made to the consumer under Section 5 were in 
fact made in accordance with such section. 
(C) In the event of a transaction which involves both an unauthorized electronic 
fund transfer and an extension of credit to an agreement between the consumer and the 
financial institution to extend such credit to the consumer in the event the consumer’s 
account is overdrawn, the limitation on the consumer’s liability for such transaction shall 
be determined solely in accordance with this section. 
(D) Nothing in this section imposes liability upon a consumer for an authorized 
electronic fund transfer in excess of his liability for such a transfer under other applicable 
law or under any agreement with the consumer’s financial institution. 
(E) Except as provided in this Section, a consumer incurs no liability from an 
unauthorized electronic fund transfer. 
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restricting such transfer; 
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SECTION 10. Liability of Financial Institutions - 
(A) Subject to subsections (B) and (C) of this Section, a financial institution shall 
be liable to a consumer for all damages proximately caused by - 
(1) the financial institution’s failure to make an electronic fund transfer, in 
accordance with the terms and conditions of an account, in the correct amount or 
in a timely manner when properly instructed to do so by the consumer, except 
(a) the consumer’s account has insufficient funds; 
(b) the funds are subject to legal process or other encumbrance 
(c) such transfer would exceed an established credit limit; 
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(d) an electronic terminal has insufficient cash to complete the 
transaction; or 
(e) as otherwise provided in regulations of the Board. 
(2) the financial institution’s failure to make an electronic fund transfer 
due to insufficient funds when the financial institution failed to credit, in 
accordance with the terms and conditions of an account, a deposit of funds to the 
consumer’s account which would have provided sufficient funds to make the 
transfer. 
(3) The financial institution’s failure to stop payment of a pre-authorized 
transfer from a consumer’s account when instructed to do so in accordance with 
the terms and conditions of the account. 
(B) A financial institution shall not be liable under subsection (B) (1) or (2) of this 
Section if the financial institution shows by a preponderance of the evidence that its 
action or failure to act resulted from - 
(1) an act of God or other circumstance beyond its control, that it 
exercised reasonable care to prevent such a31 occurrence, and that it exercised 
such diligence as the circumstances required; or 
(2) a technical malfunction which was known to the consumer at the time 
he attempted to initiate an electronic fund transfer or, in the case of a pro- 
authorized transfer, at the time such transfer should have occurred. 
(C) In the case of a failure described in subsection (A) of this Section which was 
not intentional and which resulted from a bona fide error, notwithstanding the 
maintenance of procedures reasonably adopted to avoid any such error, the financial 
institution shall be liable for actual damages proved. 
SECTION 11. Issuance of Curds or Other Means of Access. - 
(A) No person may issue to a consumer any card, code, or other means of access 
to such consumer’s account for the purpose of initiating an electronic fund transfer other 
than - 
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(1) in response to a request or application therefore; or 
(2) as renewal of, or in substitution for, an accepted card, code, or other 
means of access, whether issued by the initial insurer or a successor. 
(B) Notwithstanding the provisions of subsection (1) of this section, a person may 
distribute to a consumer on an unsolicited basis a card, code, or other means of access for 
use in initiating an electronic fund transfer from such consumer’s account, if - 
(1) such card, code, or other means of access is not validated; 
(2) such distribution is accompanied by a complete disclosure, in 
accordance with Section 5, of the consumer’s rights and liabilities which apply if 
such card, code, or other means of access is validated; 
(3) such distribution is accompanied by a clear explanation, in accordance 
with regulations of the Board, that such card, code, or other means of access is not 
validated and how the consumer may dispose of such code, card, or other means 
of access if validation is not desired; and 
(4) such card, code or other means of access is validated only in response 
to a request or application from the consumer, upon verification of the consumer’s 
identity. 
(C) For the purpose of subsection (B) of this Section, a card, code, or other means 
of access is validated when it may be used to initiate an electronic fund transfer. 
SECTION 12. Suspension of Obligations. - If a system malfunction prevents the 
effectuation of an electronic fund transfer initiated by a consumer to another person, and 
such other person has agreed to accept payment by such means, the consumer’s 
obligation to the other person shall be suspended until the malfunction is corrected and 
the electronic fund transfer may be completed, unless such other person has subsequently, 
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SECTION 13. Compulsory Use ofElectronic Fund Transfers. - No person may - 
(A) condition the extension of credit to a consumer on such consumer’s 
repayment by means of pre-authorized electronic fund transfers; or 
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@) require a consumer to establish an account for receipt of electronic hnd 
transfers with a particular financial institution as a condition of employment or receipt of 
a government benefit. 
SECTION 14. Waiver of Rights. - No writing or other agreement between a 
consumer and any other person may contain any provision which constitutes a waiver of 
any right conferred or cause of action created by this Act. Nothing in this section 
prohibits, however, any writing or other agreement which grants to a consumer a more 
extensive right or remedy or greater protection than contained in this subchapter or a 
waiver given in settlement of a dispute or action. 
SECTION 15. Separability Clause. - If any provision, or part hereof, is held 
invalid or unconstitutional, the remainder o€ the law or the provision not otherwise 
affected shall remain valid and subsisting. 
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accordingly. 
SECTION ,161 Repealing Clause. - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation contrary to 
or inconsistent with, the provisions of this Act is hereby repealed, modified or amended 
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Approved, 
SECTION 17. Effectivity Clause. - This Act shall take effect fifteen (15) days 
after its publication in at least two (2) newspapers of general circulation. 
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