Republic of the Philippines ; pat
HOUSE OF REPRESENTATIVES

Quezon City

16" CONGRESS
First Regular Session

2043

HOUSE BILL NO.

Introduced by REP. EVELINA G. ESCUDERO

EXPLANATORY NOTE

Undeniably for some, a credit card is a very useful tool as it frees us from the
need to bring cash, thus bringing convenience and security.

However, many, especially first time credit card holders, are prone to the
dangers of overspending. Over a short period of time, many are already buried under
the avalanche of tremendous interest and surcharges.

The repeal of the usury law is not a license for persons to charge prohibitive
interest rates. This bill regulates the interest rates charged by credit card companies so
that a healthier economic environment will prevail for the benefit of the credit card
holder and the credit card company.

(teeter)

EVELINA G. ESCUDERO.


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

16" CONGRESS
First Regular Session

2043

HOUSE BILL NO,

Introduced by REP. EVELINA G. ESCUDERO.

AN ACT
GOVERNING CREDIT CARD AND OTHER ACCESS DEVICE TRANSACTIONS
AND PROVIDING PENALTIES THEREFOR.

Be it enacted by the Senate and the House of Representatives of the Philippines in

SECTION 1. Title. - This Act shall be known as the “Credit Card and Other
Access Device Act”.

SEC.2. The State shall simplify, clarify and modernize the laws governing
credit transactions and encourage the development of fair and economically sound
consumer credit practices. The State shall promote the general welfare of the people by
protecting the privacy of consumers in commercial transactions involving the use of
credit cards. The State shall assure the full disclosure of the true cost of credit to protect
the consumer from lack of awareness of the true cost of credit to the user. The State shall
protect the economic interest of the people by assuring that only reasonable interest
rates and surcharges will be imposed on credit card transactions, as well as prohibit
hidden charges on credit card transactions.

SEC. 3. Definition of Terms. - As used in this Act, the term:

(A) “Credit Card” means any instrument or device, whether known as
a credit card, credit plate, coupon book or other card device issued
with or without fee by an issuer, existing for the purpose of
obtaining money, property, labor, services, or anything of value on
credit. It shall not include a check guarantee card.

(B.)  “Open-End-Credit Plan’ means a consumer credit extended to an
account pursuant to a plan under which:

(1) The creditor may permit the cardholder to make purchases
or obtain loans, from time to time, directly from the creditor
or indirectly by the use of credit card;

(2) The person has the privilege of paying the balance; and

(3) A finance charge may be computed by the creditor from
time to time on an outstanding unpaid balance.


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(C)

(D)

(E)

(F)

(G)

(H.)

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(M)

“Access Device” means any card, plate, code, account number,
electronic serial number, personal identification number, or other
telecommunications service, equipment, or _instrumental
identifier, or other means of account access that can be used alone
or in conjunction with another access device, to obtain money,
goods, services, or any other thing of value, or that can be used to
initiate a transfer of fund (other than a transfer originated solely by
paper instrument);

“Counterfeit Access Device” means any access device that is
counterfeit, fictitious, altered, or forged, or an identifiable
component of an access device or a counterfeit access device;

“Unauthorized Access Device” means any device that is lost,
stolen, expired, revoked, cancelled, or obtained with intent to
defraud;

“Produce” includes design, alter, authenticate, duplicate, or
assemble;

“Traffic means transfer, or otherwise dispose of, to another, or to
obtain control of with intent to transfer or dispose of;

“Device-making equipment” means any equipment, mechanism, or
impression designed or primarily used for making an access device
or a counterfeit access device;

“Credit Card System Member” means a financial institution or
other entity that is a member of a credit card system, including an
entity, whether affiliated with or identical to the credit card issuer,
that is the sole member of a credit card system;

“Scanning Receiver” means a device or apparatus that can be used
to intercept a wire or electronic communication;

“College Student Credit Card Account” means a credit card
account under an open-end consumer credit plan established or
maintained for or on behalf of any college student;

“College Student” means an individual:

(1.) Who isa full-time student attending an institution of higher
education; and

(2.) Who has not yet attained the age of 21.

“Institution of Higher Education” means institutions offering
tertiary degree programs and post secondary programs;


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“Tertiary Degree Programs” refer to courses of study leading to
master’s, doctor's or similar degrees. It also includes courses of
study which by themselves may be only for one, two, or three-year
courses of study leading to less than a bachelor’s degree program,
but which can subsequently be credited in full bachelor’s degrees.

SEC. 4. Privacy and Fraud. -

(A)

(B.)

No person, firm, partnership, corporation, or other business entity
that accepts a credit card for a business transaction shall write,
cause to be written, or require that a credit card holder write
personal identification, not required by the credit card issuer, on
the credit card transaction form. Personal identification
information shall include, but shall not be limited to a credit card
holder's address or telephone number.

Acts of fraud and related activity in connection with access devices
are hereby prohibited, such as those who shall:

1) Knowingly and with intent to defraud uses or traffics in one or
more counterfeit access devices;

2) Knowingly and with intent to defraud uses or traffics in or uses
any unauthorized device, and by such conduct obtains anything
of value;

3) Knowingly and with intent to defraud, produces any counterfeit
access device or any unauthorized access device;

4) Knowingly and with intent to defraud, produces, traffics in, has
control or custody of, or possesses device-making equipment;

5) Knowingly and with intent to defraud, uses, produces, traffics
in, has control or custody of, or possesses a telecommunications
device;

6) Knowingly and with intent to defraud, uses, produces, traffics
in, has control or custody of, or possesses:

a.) A scanning receiver; or

b,) Hardware or software used for altering or modifying
telecommunications instruments to obtain unauthorized
access to telecommunications devices

7) Knowingly and with intent to defraud effects transaction, with
one or more access devices issued to another person or persons,
to receive payment or any other thing of value;


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8) Without authorization of the issuer of the access device,
knowingly and with intent to defraud, solicits for the purpose
of:

i) Offering an access device; or

ii) Selling information regarding an application to obtain
an access device; or

9) Without the authorization of the credit card system member or
its agent, knowingly and with intent to defraud causes or
arranges for another person to present to the member or its
agent, for payment, one or more evidence or records of
transactions made by an access device;

The provisions of this section shall apply to all credit card
transactions;

provided, however, that the provisions of this section shall not be
construed to prevent a person, firm, partnerships, corporation, or
other business entity from requesting information that is necessary
for shipping, delivery, or installation or purchased merchandise or
services or for a warranty when such information is provided
voluntarily by a credit holder. In addition, the provisions of this
section shall not be construed to prohibit a person, firm,
partnership, corporation or other business entity from requesting
one or more additional identification cards to confirm the identity
of the credit card user.

SEC. 5. Notice and Minimum Payments. -

(A)

(B)

In the case of any credit card under an open-end-credit plan, no
increase in any annual percentage rate of interest shall be allowed
except an increase due solely to a change in another rate of interest
to which such rate is indexed or an increase due to the expiration of
any introductory percentage rate of interest applicable to any
outstanding balance of credit under such plan; and no change in
the index used to determine any such annual percentage rate of
interest shall likewise take effect before the end of the ninety (90)
day period beginning on the date of notice of such increase or
change in index is first provided to the consumer.

If, after receiving a notice with respect to any credit card account
under an open-end-credit plan, a consumer cancels the credit card
account before the end of the ninety (90) day period, the following
shall be observed:

1) An annual percentage rate of interest applicable after the
cancellation with respect to the outstanding balance on such
account as of the date of cancellation may not exceed any
annual percentage rate or interest applicable with respect to


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such balance under the terms and conditions in effect before the
cancellation; and

2) The . repayment of such outstanding balance after the
cancellations shall be subject to all other terms and conditions
applicable with respect to such account before the cancellation.

The notice referred to with respect to an increase in any annual
percentage rate of interest or any change in an index shall be made
in a clear and conspicuous manner and shall contain a brief
statement of the rights of the consumer:

1.) To cancel the account before the effective date of the increase or
change in index; and

2.) After such cancellation, to pay any balance outstanding on such
account at the time of the cancellation in accordance with the
terms and conditions in effect before the cancellation.

Additional information regarding repayment of the outstanding
balance of the consumer under the account, appearing in
conspicuous type on the front of the first page of each such billing
statement, and accompanied by an appropriate explanation, shall
contain:

1.) The words “Minimum Payment Warning: Making only the
minimum payment will increase the amount of interest that you
pay and the time it will take to repay your outstanding
balance”;

2.) The number of years and months (rounded to the nearest
month) that it would take for the consumer to pay the entire
amotint of that balance, if the consumer pays only the required
minimum monthly payments;

3.) The total cost to the consumer, shown as the sum of alll principal
and interest payments, and the breakdown of the total costs in
interest and principal, of paying that balance in full if the
consumer pays only the required minimum monthly payments,
and if no further advances are made;

4.) The monthly payment amount that would be required for the
consumer to eliminate the outstanding balance in 36 months if
no further advances are made; and

5) A toll-free number at which the consumer may receive
information about accessing credit counseling and debt
management services.

SEC. 6. Imposable Interest Rates and Charges. -


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(A)

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Interest rates imposed on any credit card on purchases and cash
advances made through such facility shall in no case be higher than
1% per month or 12% per annum, without compounding;

Surcharges or penalties shall likewise be limited to a ceiling of 1%
per month, without compounding;

No other costs shall be imposed other than the foregoing except for
reasonable attorney’s fees and expenses of collection completely
disclosed to, sufficiently understood by and voluntarily agreed
with by an applicant for a credit card;

The pertinent provisions of the Truth in Lending Act shall apply
suppletorily insofar as relevant and complimentary to the
provisions of this Act.

SEC. 7. Student Credit Card Protection. -

(A)

(B.)

Unless a parent, legal guardian, or spouse of a college student
assumes joint liability for debts incurred by the student in
connection with a college student credit card account:

1.) No credit card issuer shall grant a college student card account
where the credit limit for that account exceeds, during a full
calendar year:

(a.)Twenty percent (20%) of the annual gross income of the
student, if any; or

(b.) Fifteen Thousand Pesos (P15,000.00), whichever is greater;
and

2.) No credit card issuer shall grant a student a credit card account,
if the credit limit for that credit card account, combined with the
credit limits of any other credit card accounts held by the
student, would exceed thirty percent (30%) of the annual gross
income of the student, if any, in the most recently completed
calendar year

No increase shall be made in the amount of credit authorized to be
extended under a college student credit card account for which a
parent, legal guardian, or spouse of the consumer has assumed
joint liability, unless such parent, guardian, or spouse, as the case
may be, approves in writing, and assumes joint liability for, such
increase.

For purposes of this Act, a credit card issuer shall require adequate
proof of income, income history, and credit history, subject to the
rules of the Monetary Board of the Bangko Sentral ng Pilipinas,


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before any college student credit card account may be opened by or
on behalf of a student.

(D.) No credit card issuer may open a credit card account for, or issue
any credit card to, any college student who:

1) Has no verifiable annual gross income; and

2) Already maintains a credit card under an open-end-consumer
credit plan with that credit card issuer; or any affiliate thereof,

(E) The Monetary Board of the Bangko Sentral ng Pilipinas may, by
rule, provide for exemptions to the provisions of this subsections,
as deemed necessary or appropriate and consistent with the
purpose of this Act.

SEC. 8. Penalties, -

(A) Any violation of the provisions of this Act shall be punishable by a
Penalty of imprisonment of arresto mayor or a fine ranging from
Fifty Thousand Pesos (P50,000.00) to One Hundred Thousand
Pesos (P100,000.00), or both, depending upon the gravity of the act
committed and the circumstances attendant thereto as may be
determined by the court.

(B.) _ If the entity responsible for the prohibited act is a corporation, trust
or firm, partnership, association, or any other entity, the penalty or
imprisonment shall be imposed on the entity's responsible officers,
including, but not limited to, the president, vice-president, chief
executive officer, general manager, managing director, or partner
directly responsible therefor.

(C) _ Incase the violation is committed by, or in the interest of a foreign
juridical person duly licensed to engage in business in the
Philippines, such license to engage in business in the Philippines
shall immediately be revoked

SEC.9. ‘The National Bureau of Investigation (NBI) shall, in addition
to any other agency having such authority, have the authority to investigate
offenses under this Act.

SEC. 10. Any person who engages in the conduct of any trade or
commerce and who suffer any loss or money or property, real or personal, as a
result of the use or employment by another person who engages in any act
proscribed in this Act may bring in court, without prejudice to the criminal
Hability provided for in this Act, whether by way of original complaint,
counterclaim, cross-claim or third-party action for damages and such equitable
relief, including an injunction, as the court deems to be necessary and proper.
Such person, if he has not suffered any loss of money or property, may obtain
such an injunction if it can be shown that the aforementioned unfair method of



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competition, act or practice may have the effect of causing such loss of money or
property,

For purposes of this section, the injured party has one (1) year from the
date of the cause of action arises to file the appropriate complaint.

SEC. 11. 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.

SEC. 12. 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.

SEC. 13, This Act shall take effect fifteen (15) days after its publication in
at least two (2) newspaper of general circulation or the Official Gazette.

Approved,