THIRTEENTH CONGRESS OF THE REPUBLIC ) 
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OF THE PHILIPPINES 
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First Regular Session 
1 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
The Constitution, Article 2, Section 5 provides: 
The maintenance of peace and order, the protection of life, liberty and 
property, and the promotion of the general welfare are essential for the enjoyment 
by all the people of the blessings of democracy. 
There is a significant number of consumers engaged in rental-purchase transactions. 
Unfortunately in many instances, these transactions have taken place, without adequate 
disclosures and other protections to consumers. 
Hence, this bill seeks to protect consumers by requiring meaningful disclosure of the 
terms of rental-purchase agreements and providing certain substantive rights to consumers who 
enter into rental-purchase agreements. 


THIRTEENTH CONGRESS OF THE REPUBLIC ) 
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OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
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S. B. No. 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
TO ASSURE MEANINGFUL DISCLOSURES OF THE TERMS OF RENTAL PURCHASE 
AGREEMENTS, INCLUDING DISCLOSURES OF ALL COSTS TO CONSUMERS UNDER 
SUCH AGREEMENTS AND TO PROVIDE CERTAIN SUBSTANTIVE RIGHTS TO 
CONSUMERS UNDER SUCH AGREEMENTS 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assem bled: 
SECTION 1. Short Title. - This Act shall be known as the “Consumer Disclosure and 
Rental Purchase Agreement Act”. 
SECTION 2. Purpose. - The purposes of this Act are - 
(I) to assure meaningful disclosure of the terms of rental-purchase agreements, including 
disclosures of all costs to consumers under such agreements, and 
(2) to provide certain substantive rights to consumers who enter into rent-purchase 
agreements. 
SECTION 3. De$nition -For purposes of this Act: 
(I) The term “advertisement” means a commercial message in any medium that 
promotes, directly or indirectly, a rental-purchase agreement but does not include price tags, 
window signs, or other in-store merchandising aids, 
(2) The term “agricultural purpose” includes: 
(a) the production, harvest, exhibition, marketing, transformation, processing, or 
manufacture of agricultural products by a natural person who cultivates plants or 
propagates or nurtures agricultural products; and 


(b) the acquisition of farmlands, real property with a farm residence, or personal 
property and services used primarily in farming. 
(3) The term “consumer” means a natural person who is offered or enters into a rental- 
purchase agreement. 
(4) The term “date of consummation” means the date on which a consumer becomes 
contractually obligated under a rental-purchase agreement. 
(5) The term “merchant” means a person who provides the use of property through a 
rental-purchase agreement in the ordinary course of business and to whom a consumer’s initial 
obligation under the agreement is payable. 
(6) The term “rental-purchase agreement” means a contract between a consumer and a 
merchant- 
(a) under which the merchant agrees to provide the consumer the use of the 
personal property for an initial period of four (4) months or less; 
(b) that is automatically renewable with each payment by the consumer; and 
(c) that permits but does not obligate the consumer to become the owner of the 
property. 
SECTION 4. Exempted Transactions. - This Act does not apply to rental-purchase 
agreements primarily for business, commercial, or agricultural purposes, or those made with 
Government agencies or instrumentalities. 
SECTION 5. General Disclosure Requirements- 
(1) IN GENERAL - The merchant under a rental-purchase agreement shall disclose to the 
consumer under the agreement the information required by Sections 6, 7, and 8. In an agreement 
involving more than 1 merchant, only I merchant is required to make the disclosures. 
(2) DISCLOSURE - The disclosures required under sections 6 and 7 and the agreement 
provisions required to be included under 8 shall be made or included- 
(a) at or before the date of consummation of the rental-purchase agreement; 


(b) clearly and conspicuously in writing and in a form that the consumer may 
keep; and 
(c) in a case o f d isclosures required under Section 6, segregated from all other 
terms, data, or information provided to the consumer. 
(3) INACCURACY- If a disclosure required to be made by a merchant to a consumer 
under section 6 becomes inaccurate as the result of any mutual written agreement between the 
merchant and such consumer occurring after delivery o f  the required disclosure to such 
consumer under this title, the resulting inaccuracy is not a violation o f  this Title. 
SECTION 6. Rental-Purchase Agreement Disclosures. - For each rental-purchase 
agreement, the merchant shall disclose to the consumer, to the extent applicable, under the 
agreement the following: 
(1) The amount of the first payment and the total amount of fees, taxes, or other charges 
which may be required at or before the date of consummation of the agreement; 
(2) The amount and timing of rental payments; 
(3) The total number and total amount of rental payments necessary to acquire ownership 
of the property; 
(4) A statement that the consumer will not own the property until the consumer has paid 
the total amount necessary to acquire ownership; 
(5) A disclosure, to the extent applicable, that the total dollar amount of payments does 
not include other fees or charges, such as a delivery fee, an initial processing fee, taxes, or other 
fees or charges which may be payable under the agreement. Such fees and charges shall be 
separately identified in the agreement; 
(6) A statement that the consumer may be responsible for the fair market value of the 
property if it is lost, stolen, damaged, or destroyed; 
(7) A statement indicating whether the property is new or used, except a statement 
indicating that new property is not a violation o f  this Title; 
(8) A statement of- 
(a) the manufacturer's suggested retail price, where applicable; or 


d 
(b) the price for which the property is available from the merchant in a cash sale. 
(9) A clear statement of the terms of the consumer’s option to acquire ownership; 
(1 0) A statement- 
(a) identifying the party responsible for maintaining or servicing the property 
while it is being rented; 
(b) describing the responsibility for maintenance or service; and 
(c) disclosing that if any part of a manufacturer’s express warranty covers the 
property at the time the consumer acquires ownership of the property, the warranty will be 
transfemd to the consumer if allowed by the terms of the warranty. 
(11) The date of consummation of the transaction and the identities of the merchant and 
consumer; 
(12) Late fees for past due rental charges. 
SECTION 7. Point-ofRental Disclosures. - (1) IN GENERAL - Except as provided in 
subsection (2), each item of property or each s et o f i tems, i f o ffered as a set o r d isplayed or 
offered in connection with a rentaI-purchase agreement, shall have displayed on or next to it a 
card, tag, or label that clearly and conspicuously discloses only the following: 
(a) A brief description of the property; 
(b) Whether the property is new or used; 
(c) The cash price of the property; 
(d) The amount of each rental payment; 
(e) The total number of rental payments necessary to acquire ownership of the 
property; 
(f) The total amount of rental payments necessary to acquire ownership of the 
property; 
(2) EXCEPTION - A merchant may make the disclosure required by subsection (a) in the 
form of a list or catalog which is readily availabIe to the customer if t he merchandise is not 
displayed in the merchant’s showroom or if displaying a tag would be impractical due to the size 
of the merchandise. 


SECTION 8. Agreement Provisions. - (1) IN GENERAL - Each rental-purchase 
agreement shall- 
(a) provide a statement of any obligation of the consumer and the merchant under 
the agreement to repair any defect or malfunction of the property covered by the 
agreement, and any limitation of those obligations; 
(b) provided that the consumer may terminate the agreement without penalty by 
voluntarily surrendering or returning the property covered by the agreement upon 
expiration of any term; and 
(c) contain a provision for reinstatement of the agreement, which at a minimum- 
(i) permits a consumer who fails to make a timely rental renewal payment to 
reinstate the agreement, without losing any rights or options which exist under 
the agreement, by the payment of all past due rental charges and any late fee and 
a payment for the next rental term within 7 business days after the renewal date 
if the consumer pays monthly, or within 3 business days after the renewal date if 
the consumer pays more frequently than monthly; 
(ii) i f  the consumer returns or voluntarily surrenders the property covered by 
the agreement, other than through judicial process, during the applicable 
reinstatement period set forth in subparagraph (A), permits the consumer to 
reinstate the agreement during a period of at least 30 days after the date of the 
return or surrender of the property by the payment of all past due rental charges, 
and any applicable redelivery, repair, or late fees and a payment for the next rental 
term; and 
(iii) if the consumer has paid 60 percent or more of the total amount of 
payments necessary to acquire ownership of the property, other than due to 
judicial process, during the applicable reinstatement period set forth in paragraph 
(a), permits the consumer to reinstate the agreement during a period of at least 9 
days after the date of the return of the property by the payment of all past due 


rental charges and any applicable redelivery, repair, or late fees and a payment for 
the next rental term. 
(2) CONSTRUCTION - Subsection (1) shall not be construed to prevent a merchant 
from attempting to repossess property during the reinstatement period pursuant to subsection 
(l)(c)(i), but such a repossession does not affect the consumer’s right to reinstate. Upon 
reinstatement, the merchant shall provide the consumer with the same property, if available; if it 
is not available the merchant shall substitute property of comparable quality and condition. 
SECTION 9. Prohibited Inclusion. - A rental-purchase agreement may not contain- 
(1) a confession ofjudgement; 
(2) a negotiable instrument; 
(3) a security interest or any other claim of a property interest in any goods, except those 
goods the use of which is provided by the merchant pursuant to the agreement; 
(4) a wage assignment; or 
(5) a waiver by the consumer of a claim or defense. 
SECTION 10. Statement of Accounts. - A merchant shall be required upon request by the 
consumer to provide a quarterly statement. 
SECTION 11. Renegotiations and Extensions. - A renegotiation of a rental-purchase 
agreement is deemed to be a new agreement for purposes of this Act, requiring new disclosures 
under Section 6. A renegotiation shall be considered to occur when an existing rental purchase 
agreement is satisfied and replaced by a new agreement undertaken by the same merchant. 
Events such as the following shall not be treated as renegotiations: 
(1) The addition or retnrn of property in a multiple-item agreement or the substitution of 
property, if in either case the average payment allocable to a payment period is not changed by 
more than twenty-five percent (25%). 
(2) A deferral or extension of one or more periodic payments, or portions of a periodic 
payment. 


(3) A reduction in charges in the agreement. 
(3) An agreement involving a court proceeding. 
(4) Any other event described in regulations prescribed by the Board. 
SECTION 12. Rental-Purchase Advertising. - 
(1) ADVERTISEMENTS - If an advertisement refers to or states the amount of any 
payment and the right to acquire ownership for any specific item, the merchant that makes the 
advertisement shall also clearly and conspicuously state in the advertisement the following items: 
(a) The transaction advertised is a rental-purchase agreement. 
(b) The total number and total amount o f r ental payments n ecessav t o acquire 
ownership under the agreement. 
(c) The consumer acquires no owner ship rights in the property if the total amount 
of rental payments necessary to acquire owner ship is not paid. 
(2) LLABILITY - The owner or personnel of any medium in which an advertisement 
appears or through which it is disseminated shall not be liable for a violation of subsection (1). 
(3) CONSTRUCTION - Subsection (1) does not apply to an advertisement which- 
(a) is published in the yellow pages of a telephone directory or in any similar 
directory of businesses, or 
(b) is displayed in the merchant’s place of business. 
SECTION 13. Civil Liability. - 
(1) LIABILITY AMOUNT - Except as otherwise provided in this Act, a merchant who 
willfully violates this Act with respect to the consumer is liable to the consumer in an amount 
equal to the following: 
(a) In an action by an individual consumer, the sum of- 
(i) actual damages sustained by the consumer as a result of the violation; 
and 
(ii) not less than Five thousand Pesos (P5,OOO.OO). 
(2) STATUTE OF LIMITATIONS - 


(a) ACTIONS - an action may be brought in a court of competent jurisdiction at 
any time but not later than one year of the date of the occurrence of the violation. 
(b) CONSTRUCTION - This subsection does not bar a consumer from asserting 
a violation of this title in an action to collect a debt brought more than one year after the date of 
the occurrence of the violation as a matter of defense by recoupment or set off, except otherwise 
provided by law. 
(3) OFFSET - 
(a) LIMITATION - A consumer may not take any action to offset any amount for 
which a merchant is potentially liable under subsection (a) against any amount owed by the 
consumer, unless the amount of the merchant’s liability has been determined by judgement of a 
court of competent jurisdiction in an action which the merchant was a party. 
(b) CONSTRUCTION - This subsection does not bar a consumer who is in 
default on the obligation from asserting a violation of this Act as an original action, or as a 
defense of counterclaim to an action brought by the merchant to collect amounts owed by the 
consumer. 
SECTION 14. Defenses. - A  merchant is not liable- 
(1) under Section 13 for a violation of the requirements of Section 6 ifwithin fifteen (15) 
days after first having knowledge of the violation, and before an action under Section 13 is filed 
or written notice of the violation and makes whatever adjustments in the account are necessary to 
assure that the consumer will not be required to pay an amount in excess of the amounts actually 
disclosed; 
(2) under this Act for a violation if the merchant establishes, and at the time of the 
violation is implementing, procedures reasonably calculated to prevent the violation. 
SECTION 15. Liability of Assignees. - (1) ASSIGNEES - For purposes of Sections 13 
and 14 and this Section, the term “merchant” includes an assignee of a merchant. However, an 
action under Section 13 for a violation of this Act may be brought against an assignee only if the 
violation is apparent on the face of the rental-purchase agreement to which it relates. A violation 


apparent in the face of a rental-purchase agreement includes a disclosure that can be determined 
to be incomplete or inaccurate from the face of the agreement. An assignee has no liability in a 
case in which the assignment is involuntary. 
(2) CONSUMER ACKNOWLEDGEMENT - in any action by or against an assignee, the 
consumer’s written aclmowledgment of receipt of a disclosure shall be conclusive proof that the 
disclosure was made, if the assignee had no knowledge that the disclosure had not been made 
when the assignee acquired the rental-purchase agreement to which it relates. 
SECTION 16. Regulation and Enforcement. - (1) IN GENERAL - The Secretary of 
Trade and Industry shall issue regulations to carry out the purposes of this Act, to prevent its 
circumvention, and to facilitate compliance with its requirements. The regulations may contain 
classification and differentiations and may provide for adjustments and exceptions for any class 
of transaction. 
(2) MODELS - The department shall publish model disclosure forms and clauses to 
facilitate compliance with the disclosure requirements of this Act and to aid consumers in 
understanding transactions under rental-purchase agreements. In designing forms, the department 
shall consider the use by merchants of data processing of similar automated equipment. Use of’ 
the models shall be optional, A merchant who properly uses the model disclosure forms shall be 
deemed to be in compliance with the disclosure requirements. 
(3) EFFECTIVE DATE OF REGULATIONS - Any regulation issued, or any 
amendment or interpretation thereof, shall not be effective before the October 1 that follows the 
date of promulgation by at least six (6) months. The Secretary may at its discretion lengthen that 
period of time to permit merchants to adjust their forms to accommodate new requirements. The 
Secretary may also shorten that period of time, notwithstanding the first sentence, if it makes a 
specific finding that such action is necessary to comply with the findings of a court or to prevent 
unfair or deceptive practices. In any case, merchants may comply with any newly promulgated 
disclosure requirement prior to its effective date. 
(4) ENFORCEMENT - The Department shall enforcement the requirement of this Act. 
The authority of Section 10 shall apply with respect to the enforcement of such requirements. 


SECTION 17. Effect on Government Agencies. - No civil liability or criminal penalty 
under this Act may be imposed on the government or any of its departments or agencies, or 
political subdivision. 
SECTION 18. Separability Clause. - 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. 
SECTION 19. Repealing Clause. - All laws, rules and regulations inconsistent with this 
Act are hereby repealed or modified accordingly. 
SECTION 20. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation. 
Approved. 
I1915 PTMT