FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
8 y.51 ;y ; 
;;, :, 6 
First Regular Session 
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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 are 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. 
DEFE 9r@-J#y
ORSANTIA 0 


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FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
13 
J!X 29 / /  -1 ’ 0 
First Regular Session 
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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 assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Consumer Disclosure 
and Rental Purchase Agreement Act of 2008”. 
SECTION 2. Purpose. - The purposes of this Act are - 
(A) to assure meaningful disclosure 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 who enter into rent- 
purchase agreements. 
SECTION 3. Dejinition - For purposes of this Act: 
(A) 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, 
(B) The term “agricultural purpose” includes: 
(1) the production, harvest, exhibition, marketing, transformation, 
processing, or manufacture of agricultural products by a natural person who 
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cultivates plants or propagates or nurtures agricultural products; and 
(2) the acquisition of farmlands, real property with a farm residence, or 
personal property and services used primarily in farming. 
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(C) The term “consumer” means a natural person who is offered or enters into a 
rental purchase agreement. 
@) The term “date of consummation” means the date on which a consumer 
becomes contractually obligated under a rental-purchase agreement. 
(E) 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. 
(F) The term “rental-purchase agreement” means a contract between a consumer 
and a merchant- 
(1) 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; 
(2) that is automatically renewable with each payment by the consumer; 
and 
(3) 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- 
(A) 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 1 merchant is required to make the disclosures. 
(B) DISCLOSURE - The disclosures required under sections 6 and 7 and the 
agreement provisions required to be included under 8 shall be made or included- 
(1) at or before the date of consummation of the rental-purchase 
agreement; 
(2) clearly and conspicuously in writing and in a form that the consumer 
may keep; and 
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violation of this Title. 
(3) in a case o f disclosures required under Section 6, segregated from all 
other terms, data, or information provided to the consumer. 
(C) 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 of the 
required disclosure to such consumer under this title, the resulting inaccuracy is not a 
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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: 
(A) 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; 
(B) The amount and timing of rental payments; 
(C) The total number and total amount of rental payments necessary to acquire 
ownership of the property; 
(D) A statement that the consumer will not own the property until the consumer 
has paid the total amount necessary to acquire ownership; 
(E) 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; 
(F) A statement that the consumer may be responsible for the fair market value of 
the property if it is lost, stolen, damaged, or destroyed; 
(G) A statement indicating whether the property is new or used, except a 
statement indicating that new property is not a violation of this Title; 
(H) A statement of- 
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(1) the manufacturer's suggested retail price, where applicable; or 
(2) the price for which the property is available from the merchant in a cash sale. 
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(I) A clear statement of the terms of the consumer’s option to acquire ownership; 
(J) A statement- 
(1) identifying the party responsible for maintaining or servicing the property 
while it is being rented; 
(2) describing the responsibility for maintenance or service; and 
(3) 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 transferred to the consumer if allowed by the terms of the warranty. 
(K) The date of consummation of the transaction and the identities of the 
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(L) Late fees for past due rental charges. 
SECTION 7. Point-of Rental Disclosures. - (A) IN GENERAL - Except as 
provided in subsection (B), each item of property or each set of items, if offered as a set 
or displayed or offered in connection with a rental-purchase agreement, shall have 
displayed on or next to it a card, tag, or label that clearly and conspicuously discloses 
only the following: 
(1) A brief description of the property; 
(2) Whether the property is new or used; 
(3) The cash price of the property; 
(4) The amount of each rental payment; 
(5) The total number of rental payments necessary to acquire ownership of the 
property; 
(6) The total amount of rental payments necessary to acquire ownership of the 
property; 
(B) EXCEPTION - A merchant may make the disclosure required by subsection 
(1) in the form of a list or catalogue which is readily available to the customer if the 
merchandise is not displayed in the merchant’s showroom or if displaying a tag would be 
impractical due to the size of the merchandise. 
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agreement shall- 
SECTION 8. Agreement Provisions. - (A) IN GENERAL - Each rental-purchase 
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(1) 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; 
(2) 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 
(3) contain a provision for reinstatement of the agreement, which at a 
minimum- 
(a) 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 
hequently than monthly; 
(b) if 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 (l), 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 
(c) 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 (l), 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 
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payment of all past due rental charges and any applicable redelivery, 
repair, or late fees and a payment for the next rental term. 
(B) CONSTRUCTION - Subsection (A) shall not be construed to prevent a 
merchant from attempting to repossess property during the reinstatement period pursuant 
to subsection (A)(3)(a), 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- 
(A) a confession ofjudgement; 
(B) a negotiable instrument; 
(C) 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; 
(D) a wage assignment; or 
(E) 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: 
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(A) The addition or return 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%). 
(B) A deferral or extension of one or more periodic payments, or portions of a 
periodic payment. 
(C) A reduction in charges in the agreement. 
(D) An agreement involving a court proceeding. 
(E) Any other event described in regulations prescribed by the Board. 
SECTION 12. Rental-Purchase Advertising. - 
(A) 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: 
(1) The transaction advertised is a rental-purchase agreement. 
(2) The total number and total amount of rental payments necessary to 
acquire ownership under the agreement. 
(3) 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. 
(B) LIABILITY - 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 (A). 
(C) CONSTRUCTION - Subsection (A) does not apply to an advertisement 
which- 
(1) is published in the yellow pages of a telephone directory or in any 
similar directory of businesses, or 
(2) is displayed in the merchant’s place of business. 
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SECTION 13. Civil Liability. - (A) 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: 
(1) In an action by an individual consumer, the sum of- 
(a) actual damages sustained by the consumer as a result of the 
violation; and 
(b) not less than Five thousand Pesos (P5,OOO.OO). 
(€3) STATUTE OF LIMITATIONS - 
(1) 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. 
(2) CONSTRUCTION - This subsection does not bar a consumer fiom 
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. 
(C) OFFSET - 
(1) LIMITATION - A consumer may not take any action to offset any 
amount for which a merchant is potentially liable under subsection (1) 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. 
(2) 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- 
(A) under Section 13 for a violation of the requirements of Section 6 if within 
fifieen (1 5) days after first having knowledge of the violation, and before an action under 
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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; 
(B) 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. 
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SECTION 15. Liability ofAssignees. - 
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(A) ASSIGNEES - For purposes of Sections 13 and 14 and this Section, the term 
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“merchant” includes an assignee of a merchant. However, an action under Section 13 for 
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a violation of this Act may be brought against an assignee only if the violation is apparent 
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on the face of the rental-purchase agreement to which it relates. A violation apparent in 
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the face of a rental-purchase agreement includes a disclosure that can be determined to be 
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to which it relates. 
case in which the assignment is involuntary. 
(B) CONSUMER ACKNOWLEDGEMENT - in any action by or against an 
assignee, the consumer’s written acknowledgment 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 
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SECTION 16. Regulation and Enforcement. - 
(A) 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. 
(B) 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 
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1 .. equipment. Use of the models shall he optional, A merchant who properly uses the 
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model disclosure forms shall be deemed to be in compliance with the disclosure 
requirements. 
(C) 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. 
(D) 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. 
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Approved. 
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