Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon Ci

15™ CONGRESS
First Regular Session

“3015

HOUSE BILL NO.

Introduced by REP. SALVADOR H. ESCUDERO IIL

EXPLANATORY NOTE

The credit card is a very useful tool. It frees us from the need to bring cash, thus
bringing convenience and security to its users.

First time credit card holders are prone to the dangers of overspending. Once they
receive their first bill, they become shocked and realize that they have been 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. Thus, the State has to come’'in to regulate 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.

‘ 7a
SALVADOR H. ESCODERO II
Representative
1" District, Sorsogon



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

15" CONGRESS
First Regular Session

House BiLNo._ 3015

Introduced by REP. SALVADOR H. ESCUDERO IIL

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
Congress assembled:

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 modemize 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


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(D)

(E)

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G)

(H)

(a)

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(K)

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

“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:

(ay

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

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


“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. -

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(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 traffies 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, traffies 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, traffies in,
has control or custody of, or possesses:

a.) A scani

ing 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, 10
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 o1
agent, knowingly and with intent to defraud causes or arranges for
another person {o 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:

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


(Cy)

(D)

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 amount 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 all 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. -

(A)

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;



(B.) Surcharges or penalties shall likewise be limited to a ceiling of 1% per
month, without compoundin;

(C.) 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;

(D.) The pertinent provisions of the Truth in Lending Act shall apply
suppletorily insofar as relevant and complimentary to the provisions of
this Act. 7

SEC. 7. Student Credit Card Protection. -

(A) 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.

(B.) 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.

(C.))__ 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, 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:

jable 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
(P 100,000.00), 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.)) _ In case 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 liability 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 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,