It has been said that one of the greatest disservice you written disclosure.
sure. Thus, if you are acquiring a vehicle
can do a man is to lend him money that he can’t pay
back.
Republic Act No. 3765, aptly entitled “Truth in Lending
Act”, aims to protect the public from lack of awareness of
the true cost of credit by requiring from the creditor the
disclosure of full information incident to a credit
transaction.
A creditor is required to supply to the borrower prior to
each credit transaction a clear statement in writing of the
following information: the amount of the loan or credit
service extended; any down payment or trade-in made;
individually itemized charges, fees and other related
costs; the total amount to be financed or amount of loan
extended; the interest or finance charge to be paid,
expressed in terms of pesos and centavos; and  the
percentage that the interest or finance charge bears to
the total amount to be financed. The interest must be
expressed as a simple annual rate.
It is not just banks and other financial institutions that
must follow these requirements. Any person in the
business of extending loans, or selling or renting property
or services on a time, credit, or installment basis, either
as principal or as agent, is required to make the same
under a financing scheme, or purchasing a mobile phone
on installment basis, the seller is required to provide you
the information enumerated above.
The creditor’s failure to comply with these requirements
does not mean that the debt is forgiven, or that the goods
purchased on credit or installment basis are deemed fully
paid. The transactions remain valid and enforceable. The
lender, however, will have no right to collect such charge
or increases thereof, even if stipulated in the promissory
note (Development Bank of the Philippines vs Arcilla,
462  SCRA 599).
In one case decided by the Supreme Court, although the
creditor failed to state the penalty charges in the
disclosure statement, the penalty charges were upheld
because the borrower signed a promissory note detailing
the penalty charges. Since the promissory note was
signed on the same date as the disclosure statement,
and the promissory note is an acknowledgment of a debt
and commitment to repay it on the date and under the
conditions that the parties agreed on, the same is a valid
contract.
In another case, the Supreme Court held that a
promissory note which grants the creditor the power to
unilaterally fix the interest rate means that the promissory
note does not contain a clear statement in writing of the
finance charge. Such provision is illegal not only because
it violates the principle of mutuality of contracts but it also
contravenes the Truth in Lending law (UCPB vs Veloso,
530 SCRA 567).

In case there is a violation, the borrower may file a civil

case for recovery of damages in the amount of Php 100
or of twice the finance charged required by the creditor,
whichever is greater, but not to exceed P2,000. A
criminal case may also be filed against the creditor. The
action to recover the penalty should be brought within
one year from the date of the occurrence of the violation
and may be instituted by the aggrieved private person
separately and independently from the criminal offense.

With the disclosure required by law, it is expected that

borrowers are able to weigh the pros and cons of
borrowing. Such information allows them to evaluate their
options in arriving at business decisions. Thus, even in
matters of credit, knowing the truth sets us free.