Republic of the Philippines:
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL No, 8524

Introduced by HON. LUIS RAYMUND “LRAY” F, VILLAFUERTE, JR.

AN ACT
REQUIRING ALL CREDITORS OR LENDERS OF FUNDS TO PROVIDE EQUAL
CREDIT OPPORTUNITIES TO ALL CREDIT-WORTHY PERSONS APPLYING FOR
THE SAME

The activities of the country's lending institutions are regulated by the General Banking
Law, the Central Banking Act, pertinent provisions of the New Civil Code, and such
special laws as the Truth in Lending Act. In all thes , Nowhere is it provided that
financial institutions and other firms engaged in the extension of credit must make credit
available with fairness, impartiality, and without discrimination on the basis of sex, marital
status, race creed, religion, or age.

This bill seeks to fill the gap in existing laws by requiring the country’s financial
institutions and other firms engaged in the extension of credit to make equally available
to all credit worthy customers without regard to sex, marital status, national origin,
religion, or age. Aregime of equality credit extension will enhance economic stability.
It will also foster friendly competition among the various financial institutions and other
firms engaged in the extension of credit.

Nyprhr

LUIS RAYMUND “LI F. VILLAFUERTE, JR.

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Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City
EIGHTEENTH CONGRESS
Second Regular Session

House BILL No. 8524

Introduced by HON. LUIS RAY

IND “LRAY” F. VILLAFUERTE, JR.

AN ACT
REQUIRING ALL CREDITORS OR LENDERS OF FUNDS TO PROVIDE EQUAL
CREDIT OPPORTUNITIES TO ALL CREDIT-WORTHY PERSONS APPLYING FOR
THE SAME

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 “Equal Credit Opportunity Act.”

SECTION 2. Declaration of Policy. — It is hereby declared a state policy to enhance
economic stability and foster competition among the country’s financial institutions by
requiring these and other firms engaged in the extension of credit to make credit equally
available to all credit-worthy customers with fairness, impartiality, and without
discrimination.

SECTION 3. Definition of Terms. — As used in this Act —

(A) “Adverse Action” means a denial or revocation of credit, a change in the terms of an
existing credit arrangement, or a refusal to grant credit in substantially the amount or on
substantially the terms requested. Such term does not include a refusal to extend
additional credit under an existing credit arrangement where the applicant is delinquent
or otherwise in default, or where such additional credit would exceed a previously
established credit limit;

(8) “Applicant” means any person who applies to a creditor directly for an extension,
renewal or continuation of credit, or applies for a credit indirectly by use of an existing
credit plan for an amount exceeding a previously established credit limit;

(C) “Board” refers to the Central Monetary Board;


(D) “Credit” means the right granted by a creditor to a debtor to defer payment of debt or
to incur debt and defer its payment or to purchase property or services and defer
payment therefore;

(E) “Creditor” means any person who regularly extends, renews, or continues credit, any
person regularly arrang: he extension, renewal, or continuation of credit; or
any assignee of an original creditor who participates in the decision to extend, renew, or
continue credit; and

(F) “Person” means a natural person, a corporation, a government or governmental
subdivision or agency, trust, estate partnership, cooperative or association.

SECTION 4. Activities Constituting Discrimination. — It shall be unlawful for any creditor
to discriminate against any applicant, with respect to any aspect of a credit transaction —

(A) On the basis of race, color, religion, national origin, sex or marital status, or age,
provided that the applicant has the capacity to contract;

(B) Because alll or part of the applicant's income derives from dole-outs or any public
assistance program; or

2

(C) Becatise the 0d faith exercised any right under this Act.

SECTION 5. Activities Not Constituting Discrimination. — It shall not constitute
discrimination for purposes of this Act for a creditor —

(A) To make an inquiry as to marital status if such inquiry is for the purpose of creating a
valid lien, passing clear title, waiving inchoate rights to property; or assigning earnings;

(B) To request the signature of both parties to a marriage for the purpose of creating a
valid lien, passing clear title, waiving inchoate rights to property; or assigning earings.
Provided, however, that this subsection shall not be construed to permit a creditor to take
sex or marital status into account in connection with the evaluation of credit-worthiness of
any applicant;

(C) To make an inquiry of the applicant's age or of whether the applicant's income
derives from dole-outs or any public assistance program if such inquiry is for the purpose
of determining the amount and probable continuance of income levels, credit history, or
other pertinent element of credit-worthiness as provided in regulations of the Board;

(D) To use any empirically derived credit system which considers age if such a system is
demonstrably and statistically sound in accordance with regulations of the Board, except
that in the operation of such system the age of an elderly applicant may not be assigned
a negative factor or value; or


(E) To make an inquiry or to consider the age of an elderly applicant when the age of
such applicant is to be used by the creditor in the extension of credit in favor of such
applicant.

SECTION 6. Additional Activities Not Constituting Discrimination. — It is not a violation of
this Act for a creditor to refuse to extend credit offered pursuant to —

(A) Any credit assistance program expressly authorized by law for an economically
disadvantaged class of persons;

(B) Any credit assistance program administered by a profit organization for its members
or an economically disadvantaged class of persons; or

(C) Any special purpose credit program offered by profit-making organization to meet
special social needs which meets standard prescribed in regulations by the Board if such
refusal is required by or made pursuant to such program.

SECTION 7. Reason for Adverse Action; Procedure Applicable.

(A) Within thirty (30) days, or such longer reasonable time as specified in regulations of
the Board for any class of credit transaction, after receipt of a completed application for
credit, a creditor shall notify the applicant of its action on the application.

(B) Each applicant against whom adverse action is taken shall be entitled to a statement
of reasons for such action from the creditor. A creditor satisfies this obligation by —
(1) Providing statements of reasons in writing as a matter of course to applicants
against whom adverse action is taken; or
(2) Giving written notification of adverse action which discloses —
(a)The applicant's rights to a statement of reasons within thirty (30) days after
receipt by the creditor of a request made within sixty (60) days after such
notification, and
(b)The identity of the person or office from which such statement may be
obtained. Such statement may be given orally if the written notification advises
‘the applicant of his right to have the statement of reasons confirmed in writing
on written request.

(C) Astatement of reasons meets the requirements of this Section only if it contains the
specific reasons for the adverse action taken.

(D) Where a creditor has been requested by a third party to make specific extension of
credit directly to an applicant, the notification and statement of reasons required by this
subsection may be made directly by such creditor, or indirectly through the third party,
provided in either case that the identity of the creditor is disclosed.

(E) The requirements of paragraph (B), (C) or (D) may be satisfied by verbal stater
or notifications in the case of any creditor who did not act on more than one hundred and


fifty (150) applications during the calendar year preceding the calendar year in which the
adverse action is taken, as determined under regulations of the Board.

SECTION 8. Promulgation of Regulations by Board; Establishment of Consumer
Advisory Council by Board; Duties and Membership of Council. —

(A) The Board shall prescribe regulations to carry out the purposes of this Act, These
regulations may contain but are not limited to such classifications, differentiation, or other
provision, and may provide for such adjustments and exceptions for any class of
transactions, 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 or
substantiate compliance there particular, such regulations may exempt from one
or more of the provisions of this Act any class of transactions not primarily for personal,
family, or household purposes, if the Board makes an express finding that the application
of such provision or provisions would not contribute substantially to carrying out the
purposes of this Act.

(B) The Board shall establish a Consumer Advisory Council to advise and consult with it
in the exercise of its functions and to advise and consult with it concerning other
consumer related matters it may place before the Council. In appointing the members
of the Council, the Council shall meet from time to time at the call of the Board.
Members of the Council who are not regular full-time employees of government, national,
or |, OF any government-owned or controlled corporation, shall, while attending
meetings of such Council, be entitled to receive compensation at a rate fixed by the
Board, but no exceeding Three Hundred Pesos (P300.00) per day, including travel time.
Such members may be allowed travel expenses, including transportation and
subsistence, while away from their homes or regular place of business.

SECTION 9. Administrative Enforcement. — Compliance with the requirements imposed
under this Act shall be enforced by:

(A) The Board, with respect to banks, including government banking institutions, savings
and loan associations, and other financial institutions or firms engaged in the extension

(B) The Land Bank of the Philippines, with respect to agricultural credit union
cooperatives;

(C) The Securities and Exchange Commission, with respect to brokers and dealers.
The Board shall, however, exercise overall authority in the enforcement of the
requirements imposed under this Act.

SECTION 10. Rules and Regulations by Enforcing Agencies. — The authority of the
Board to issue regulations does not impair the authority of the other agencies designated
in Section 9 to make rules respecting their own procedures in enforcing compliance with
the requirements imposed under this Act.


SECTION 11. Civil Liability. —

(A) Individual or Class Action for Actual Damages. — Any creditor who fails to comply with
any requirement imposed under this Act shall be liable to the aggrieved applicant for any
actual damages sustained by such applicant acting either in individual capacity or as a
member of a class.

(B) Recovery of Punitive Damages in Individual and Class Actions for Actual Damages;
Exemptions; Maximum Amount of Punitive Damages in Individual Actions; Limitation on
Total Recovery in Class Actions; Factors Determining Amount of Award. — Any creditor,
other than a government or governmental subdivision or agency, who fails to comply with
any requirement imposed under this Act shall be liable to the aggrieved applicant for
punitive damages in an amount not greater than Ten Thousand Pesos (P10, 000.00), in
addition to any actual damages provided in paragraph (A) of this Section, except that in
the case of a class action the total recovery under this subsection shall not exceed the
amount of One Hundred Thousand Pesos (P100, 000.00) or one per centum (1%) of the
net worth of the creditor. In determining the amount of such damages in any action, the
court shall consider, among other relevant factors, the amount of any actual damages
awarded, the frequency and persistence of failures of compliance by the creditor, the
resources of the creditor, the number of persons adversely affected, and the extent to
which the creditor's failure of compliance was intentional.

(C) Recovery of Costs and Attorney's Fees. — In the case of any successful action under
paragraph (A) or (B) of this Section, the costs of suit, together with a reasonable
attorney's fee as determined by the court, shall be added to any damages awarded by
the court under such subsection.

SECTION 12. Jurisdiction of Ci Maintenance of Action; Exceptions. — Any
action brought under this Act may be brought in the appropriate court using a
jurisdictional basis the amount in controversy. No such action shall be brought later
than two years from the date of the occurrence of the violations, except that —

(A) Whenever any agency having responsibility for administrative enforcement under
Section 9 commences an enforcement proceeding within two (2) years from the date of
the occurrence of the violation, or

(B) Whenever the Solicitor General commences a civil action under this section within
two (2) years from the date of the occurrence of the violation.

Any applicant who has been a victim of the discrimination which is the subject of such
proceeding or civil action may bring an action under this Section not later than one (1)
year after the commencement of that proceeding or action.

SECTION 13. aales by Responsible Enforcement Agency to Solicitor General for Civil
having responsibility for administrative enforcement under



Section 9, if unable to obtain compliance with the requirements imposed under this Act,
are authorized to refer the matter to the Solicitor General with a recommendation that an
appropriate civil action be instituted.

When a matter is referred to the Attorney General pursuant to this Section, or whenever
he has reason to believe that one or more creditors are engaged
in violation of this Act, the Solicitor General may bring a civil action in a court of
competent jurisdiction, including injunctive relief.

SECTION 14. Discovery of Creditor's Granting Standards, — Nothing in this Act shall be
construed to prohibit the discovery of a creditor's credit granting standards under
appropriate discovery procedures in the court in which an action or proceeding is
brought.

SECTION 15. Annual Reports to Congress; Contents. - Each year, the Board shall
report to the Congress concerning the administration of its functions under this Act,
including such recommendations as it may deem necessary or appropriate. In addition,
the report of the Board shall include its assessment of the extent to which compliance
with the requirements of this Act is being achieved, and a summary of the enforcement
actions taken by each of the agencies assigned administrative responsibilities under
Section 9 of this Act.

SECTION 16. Repealing Clause. — Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule or regulation contrary to or
inconsistent with, the provision of this Act is hereby repealed, modified or amended
accordingly.

SECTION 17. Separability Clause. — If any provision or part hereof is held invalid or
unconstitutional, the remainder of the law or the provision not otherwise affected shall
remain valid and subsisting.

SECTION 18. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,