Rules Implementing the Truth in Lending Act ( CDA Memorandum Circular No. 005-12 )

March 14, 2012

March 14, 2012


TO : All Registered Cooperatives
SUBJECT : Rules Implementing the Truth in Lending Act 


SECTION 1. Legal Basis.

BOA Res. No. 074, series of 2012 dated March 14, 2012 and RA 3765 (Truth in Lending Act).

SECTION 2. Scope.

All credit and multi-purpose cooperatives with savings and loan services registered with the Cooperative Development Authority under RA9520.

SECTION 3. Purposes.

The purposes of issuing these rules are:

1) To enhance loan protection transparency;

2) To ensure a level playing field among credit providers;

3) To protect the member-borrower from the effect of misrepresentation and concealment;

4) To permit the member-borrower fully appreciate and evaluate the real cost of their borrowings; and SEIDAC

5) To avoid circumvention of usury laws.

SECTION 4. Methods of Computing Interest on Loans Receivables. —

1) The amount of interest shall be charged only based on the outstanding balance of a loan at the beginning of an interest period.

2) For a loan where principal is payable in installments, interest per installment period shall be calculated based on the outstanding balance of the loan at the beginning of each installment period.

3) All loan related documents shall show repayment schedules in a manner consistent with this provision.

SECTION 5. Definition of Terms.

Finance Charges — includes interest, fees, service fees, discounts and such other charges incidental to the extension of credits.

Loans and Receivables — as defined under the Standard Chart of Accounts (SCA) MC-2009-4 Series of 2009, these refer to financial assets with fixed or determinable payments that are not quoted in an active market other that Available for Sale, Held to Maturity and Investment at Fair Value through Profit and Loss.

SECTION 6. Information to be Disclosed.

As a general rule, loan terms shall be disclosed to all types of borrowers. For micro and small cooperatives with lending operations, the following are the minimum information to be disclosed:

a. The total amount of loans;

b. The finance charges;

c. The net proceeds of the loans; and

d. The percentage that the finance charge bears to the total amount of the loans. CITaSA

All credit cooperatives and multi-purpose cooperatives with savings and lending operations shall be enjoined to adopt the above stated rules.

SECTION 7. Effectivity. — This circular shall become effective upon approval of the Board of Administrators and fifteen (15) days upon submission of a copy to the Office of the National Administrative Register (ONAR).

Approved this 14th day of March 2012.

(SGD.) EMMANUEL M. SANTIAGUEL, Ph.D.ChairmanCooperative Development Authority



  Hon. Emmanuel M. Santiaguel, Ph.D. - Chairman/Presiding Officer
  Hon. Felicitas S. Acosido, Ph.D. - Administrator
  Hon. Nelon B. Alindogan - Administrator
  Hon. Manuel C. Lapeña - Administrator
  Hon. Paisalin P.D. Tago - Administrator
  Dir. Orlando R. Ravanera - Acting Executive Director


RESOLUTION NO. 074, s-2012

Upon motion of Adm. Felicitas S. Acosido duly seconded by Adm. Nelon B. Alindogan, be it RESOLVED as it is hereby RESOLVED to approve the Memorandum Circular on Rules Implementing the Truth in Lending Act.


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Thus is to certify that the foregoing is true and correct from the minutes of the CDA Board of Administrators' Regular Meeting.

(SGD.) MARY GRACE I. CINCOActing Board Secretary IV