ABSTRACT OF “TRUTH IN LENDING ACT” (Republic Act No. 3765)

SECTION 1. This Act shall be known as the “Truth in Lending Act.” SECTION 2. Declaration of Policy. – It is hereby declared to be the policy of the State to protect its

citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy.

X X X X X X X X X SECTION 3. As used in this Act, the term – X X X X X X X X X

(3) “Finance charge” includes interest, fees, service charges discounts, and such other charges incident to the extension of credit as the Board may by regulation prescribe.

X X X X X X X X X SECTION 4. Any creditor shall furnish to each person to whom credit is extended, prior to the

consummation of the transaction, a clear statement in writing setting forth, to the extent applicable and in accordance with rules and regulations prescribed by the Board, the following information: (1) the cash price or delivered price of the property or service to be acquired; (2) the amounts, if any, to be credited as down payment and/or trade-in; (3) the difference between the amounts set forth under clauses (1) and (2); (4) the charges, individually itemized, which are paid or to be paid by such person in

connection with the transaction but which are not incident to the extension of credit;

(5) the total amount to be financed; (6) the finance charge expressed in terms of pesos and centavos; and (7) the percentage that the finance charge bears to the total amount to be financed

expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

X X X X X X X X X SECTION 6. (a) Any creditor who in connection with any credit transaction fails to disclose to any

person any information in violation of this Act or any regulation issued thereunder shall be liable to such person in the amount of P100 or in an amount equal to twice the finance charge required by such creditor in connection with such transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction. x x x

X X X X X X X X X (c) Any person who willfully violates any provision of this Act or any regulation issued

thereunder shall be fined by not less than P1,000 nor more than P5,000 or imprisonment for not less than 6 months, nor more than one year or both.

X X X X X X X X X (e) Any final judgment hereafter rendered in any criminal proceeding under this Act to the

effect that a defendant has willfully violated this Act shall be prima facie evidence against such defendant in an action or proceeding brought by any other party against such defendant under this Act as to all matters respecting which said judgment would be an estoppel as between the parties thereto.

SECTION 7. This Act shall become effective upon approval. Approved, June 22, 1963.

SAVINGS ACCOUNT INTEREST COMPUTATION TO OUR VALUED CLIENTS: In compliance with Sec. 1248 of the CB Manual of Regulations for Banks and Other Financial Intermediaries, we wish to inform you that your savings deposit with us earns interest based on the following terms:

I. Interest Rates

Minimum Daily Balance Interest Rates A. Regular Peso SA P5,000.00 0.5% p.a B. Regular Dollar SA $ 500.00 0.5% p.a.

II. Base year – 365 days III. Interest is accrued daily and paid monthly. IV. Interest is paid to the account at the end of the interest period.

Illustration: Daily Interest = Available balance x rate x 1 day Actual # of days in the year (technical term is: ACTUAL-DAY YEAR) Monthly Interest Payment = Accumulated Interest for the Month Withholding Tax = Accumulated Daily Interest for the Month x 0.20

V. Illustration

Daily Interest = P30,580.32 x 0.005 x 5 days = P2.094542 (October 1-5) 365

Monthly Interest Payment = P13.001206 (sum of Daily Interest Accrued) Withholding Tax = P23,493.22 x 0.20 = P2.60 (October 31) Assume a Regular Peso SA with entries shown below. The period covered is October of 2007

Date Withdrawal Deposit Available Balance Transaction September 30 30,580.32 Balance October 6 2,000.00 28,580.32 WD October 13 4,899.90 33,480.22 CD October 28 10,000.00 23,480.22 WD October 31 13.18 23,493.18 IE October 31 2.64 23,490.77 WT

The interest earned by this sample account for the month of October 2007 is P13.001206:

Date No. of Days Available Balance Daily Interest Accrued October 1 – 5 5 30,580.32 2.094542 October 6 – 12 7 28,580.32 2.740579 October 13 – 27 15 33,480.22 6.879497 October 28 – 31 4 23,480.22 1.286587

Accumulated Daily Interest for the Month: 13.001206

This is only a sample computation. Rates are subject to change without prior notice. Please refer to Terms and Conditions for more details.

INTEREST AND LOAN CHARGES COMPUTATION TO OUR VALUED CLIENTS: In compliance with Sec. X307.4 of the Central Bank Manual of Regulations for Banks and Other Financial Intermediaries, this is to inform you of the interest and loan charges which are based on the following terms: Sample: Mortgage Loan Computation

I. Sample Interest Rate

Home Loan Rate 5 year fixed 9.50%

II. Manner of interest payment is collected via principal plus interest depending on the loan term. To

illustrate:

PRINCIPAL 1,000,000.00 INTEREST RATE 9.50% TERM IN YEARS 5 NO. OF PAYMENTS 60 MODE OF PAYMENT MONTHLY AMORTIZATION 21,001.86

NO. DATE AMORTIZATION INTEREST PRINCIPAL BALANCE August 1, 2007 1,000,000.00 1 September 1, 2007 21,001.86 7,916.67 13,085.19 986,914.81 2 October 1, 2007 21,001.86 7,813.08 13,188.78 973,726.03 3 November 1, 2007 21,001.86 7,708.66 13,293.20 960,432.83 4 December 1, 2007 21,001.86 7,603.43 13,398.43 947,034.40 5 January 1, 2008 21,001.86 7,497.36 13,504.50 933,529.90 6 February 1, 2008 21,001.86 7,390.45 13,611.41 919,918.49 7 March 1, 2008 21,001.86 7,282.69 13,719.17 906,199.32 8 April 1, 2008 21,001.86 7,174.08 13,827.78 892,371.54 9 May 1, 2008 21,001.86 7,064.61 13,937.25 878,434.29 10 June 1, 2008 21,001.86 6,954.27 14,047.59 864,386.70 11 July 1, 2008 21,001.86 6,843.06 14,158.80 850,227.90 12 August 1, 2008 21,001.86 6,730.97 14,270.89 835,957.01

III. Other fees and charges enforced by the bank in connection with the loan:

Post-Approval Fees/Charges:

Processing Fee : P3,000 Credit Life Insurance Premium (1st year) : P4,800 Registration Expenses : P13,853 Fire Insurance Coverage : Actual Sub Total : P21,653 –To be paid

This is only a sample for a P-1 Million loan computation. Rates are subject to change without prior notice. Please refer to the Terms and Conditions

for more details.