Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILLNO. 1517

Introduced by HONORABLE MARCELINO “MARCY” R. TEODORO

EXPLANATORY NOTE

There are a number of consume ged in rantal-purc

th sactions have taken plat

{ransaclions. Unfortunately in many insta

without adequate disclosures and other protections to consumers who most of the time

ius oul to become victims of unprincipled businessmen.

euves of the ferns of rental

This measure seeks to assure meanir

rinckides di

under an ag

purchase agreement, whi

well as provid enumeration of substantive rights available to sonsu

The proposed bili is tn ke: tiation,

Artic

2, Section 5 which declares:

ly, and

In view of the foregoing, immediate passage of this bill is hereby sought

Val “MARCY” R. TEODORO.

Representative, 1 District
City of Marikina


Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1517

Introduced by HONORABLE MARCELINO “MARCY” R. TEODORO

in Congres

and Rental Purchase Ag

purchase agi

promotes, dir
window signs, or other in.

AN ACT
TO ASSURE MEANINGFUL DISCLOSURES OF THE TERMS OF RENTAL
PURCHASE AGREEMENT, INCLUDING DISCLOSURES OF ALL COSTS TO.
CONSUMERS UNDER SUCH AGREEMENT AND TO PROVIDE CERTAIN |,
SUBSTANTIVE RIGHTS TO CONSUMERS UNDER SUCH AGREEMENTS,

Be it enacted by the Senate and House and Representatives of the Philippines
embled:

a

SECTION 1. Short Title. - This Act shall be known as the “Consumer Disclosure
gement Act.”

(8) To provide certain substantive
ments.

of this Act.

SECTION 3. Definition. ~ For purpo:

lverlisement* means a
purch
jore merche

| message in any medium that
not include price tags,

(A) The te

(B) The term “agricultural purpose" includes:

1. the production, harvest, exhibition, marketing, transformation, processing, or
manufacture of agricultural products by a natural person who cultiv tants ¢
propagates or nurtures agricullural products; and

2. the acquisition of farmlands, real properly with a form residence, or personal
property and service used primarily In faring,

consumer” meat who is offered or enters into a

(C) The term ns 4 natural pe

rental purchase agreement

(D) The term “date of consummation* means the date on which a consumer

becomes contractually obligated under a rental-purchase agreement.

through a rental
consumer's initial obligation under the agreement in payable

(E) Tho term “merchant" means a person who provides the use of property,
purchase agreement in the ordinary course of business and to whom a



(F) The term
and a merchant

ental-purchase agreement’ means a contract between consumer

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 ‘Transaction, ~ This Act does not apply to rental
purchase agroament primarily for business, commercial , or agricultural purpose, oF
whose made with Government agenclas or instrumantalilies.

SECTION 5. General Disclosure Requiraments -

(A) IN GENERAL ~ The merchant under a rental -purchase agreement shail
disclose lo consumer under the agreement the information by Section 6,7, and 8. In an
agreement involving more than 1 merchant, only 1 merchant is required to make the
disclosures

(B) DISCLOSURE — The disclosure required 6 and 7 and thi
ion required to be inclucled under saction 8 shall ne macie or included

preeinent

provi

1. ator before the date of consummation of the rental -purchase agreement;

2. dlearly and conspicuously in writing and in a form that the consumer may kea
andl

in case af d ures required under &
data, or information provided to ti

jregated from all other te

(C) INACCURACY ~ If a disclosure requirad to be made by a merchant to a
consumer under section € becomes inaccurate as the 1 of any mutual ua
agreement between the merchant and such consumer occurring alter delivery of the
required disclosure ta such consumer under this tite , the resulting inaccuracy is not
violation of this Tille

Fon,

ies. - For each rental -

consumer, to the oxtdnt

SECTION 6.
purchase
appli

1A) The amount of the first payment and the total amount of fees.
or other charges whi
the agreement;

(8) The amount and timing of rei

taxes

may be required ator before the dale of consummation, of

ment;

(C) The total number and tota
acquire ownership of the property ;

Amount «

frental payment — nece:

y to

(D) -
consumer has pa

\ statement that the consumer will not own the property until the
1 the total amount necessary to acquired ownership;

(E) A disclosure, to th extent applicable, that the total dollar amount of
payment does not Include other fees or chargas, such as a delivery fee, an initial
processing fee, laxos, or other fees or charges which may be payable | under the
agreement. Such fees and charges shall he separately isentified ja the
agreement;

(F) A statement that the consimer me

\sible for the fair market


value of the property if itis lost, stolen, damage, or destroyed;

(G) A statement indicating whether the property is now new or —_ used
except a statement indicating that new properly is not a violation of this Title;

(H) A statement of -.
(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,

() A clear statement of the terms of the consume
acquire ownership;

option to

(J) A statements-

1. Identilying the party responsible for maintaining or servi
while it is being rented;

2. Desoribing the responsibility for.maintenance or service; and

3. Disclosing that if any part of a manufacturer's express warranty covers the

property at the lime the consumer acquires ownership of the properly, the

warranty will be transferred to the consumor if allowed by the terms of the

warranty

the property

(iX) The date of consummation of the transaction and the identities of the
merchant and consumer;

(1) Late fe

for pasl due rental charges
SECTION 7. Point of Rental Disclosures.~

(A) INGE
or each set of ite
renta-purchase agr
thal clearly and cons

2 cept as provided in subsection (B) , each item of property

ii offered as a sel or displayed or offered in connection with a
nents, shalt have displayed on or next to it a card, fag or label
ly discloses only of 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 paymer sary to acquire ownership of thé
property;

(6) The total amount of rental payments necessary to acquire ownership of the
property;

(B) EXCEPTION erchant may make the disclosure require by subsection
(1) In the form of a list or catalogue which is readily available to the customer if the
merchandise yed in the merchant's showroom ar if displaying a tag would

be impractical due to the size of the merchandise.

SECTION 8. Agiooment Provisions.

(A) IN GENERAL + Each rental-purchase agreements shall -

(1) Provide a statement of any obligation of the consumer and the merchant,undet
the agreement to repalr any dafect or malfunotion of the property covered by the
ae nents, any limitation of those obligations;


(2) Provide that the consumer may terminate the agreements without penaily 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) permils a consumer who fails to make a timely rental renewal payment to
reinstate the agreement, without losing any rights or option which exist under the
agreement, by Ihe payment of all past due charges and any late fee and payment
for the next rental term within seven (7) business days after the renewal dale if
the consumers pays monthly , or within three (3) business days afler the renewal
date if the consumer pays more frequently than monthly;
(b) if the consumer returns or voluntarily surrenders the properly covered by the
agreement, other than through judicial process, during the applicable
reinstatement period set forth in subparagraph (1), permits he consumer to
reinstate the agreement during a period of at least thirly (30) days afler the cate
of the return or surrender of the property by the payment of all past dus rental
charges, and any applicable redelivery, repair , or late fees and a payments for
the next rental; and
(6) if the consumer has paid sixty percent (60%) or more of the tolal amount of
payments necessary to acquire ovmership of the property, olher than due to
judicial process, during the applicable reinstatement period set forth in parageaph
(1), permits the consumer to reinslale the agreement during a period of at least
nine (8) days afler the date of the roturn of the property by the payments of il
due rental charges and any applicable redelivery, repair, or late feos and
payment! for the next rental term.

(B) CONSTRUCTION ~ Subsection (A) shall not be construed to prave:
Merchant from attempting to repossess property during the reinstalement pe
pursuant to subsection (A)(2\a), but such @ repossession does not affec
consumer's right fo reinstate. Ujon the merchant shall provide the
consumer with the same property, if avail >{ available the merchant shall
substitute property of comparable quality and condition,

the

SECTION 5. Prohibited inclusion. - A rental-purchase agreement may not
contain-(A) a confession of judgment;

(A) A confession of judgment

(8) A negotiable instrument,
(C) A seourity interest or any other claim of property interest in any goods, exe
those goods the use of which is provided by the merchant pursuant to the ai

(D) A wage assignment; or
(E) A waiver by Ihe consumer of a claim or defense.

SECTION 10. Statements of Accounts. » A merchant shall be required upon
request by the consumer to provide @ quarterly statement

SECTION 11. Renegoliations and Extensions. - A ri
purchase agreement is deemed to he a new agreements for purposes of this
‘. uiring new disclosures under Section 6. A renegotiation shall ba considered to occu
when an existing rental purchase agreement is satisfled and replaced by a new
agreement undertaken by the same merchant, Events such as the following shall not be
treated as renegotiations:

negotiations of the rental-

i

(A) The addition or return of property in a muttiple-item agreement or the


substitution of properly, 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 oxtension of one or more periodic payments, or portions of a
periodic payments.

(C.) A reduction in changes in the agreement
(D) An agreement involving a court proceeding,
(E) Any other event described in regulations prescrited by the Board,
SECTION 12. Rental- Purchase Advertising.-

(A) ADVERTISEMENTS ~ If an advertisement refers to of 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: i

(1) The transaction advertised is a rental-purchase agreement;

(2) The Total number and total amount: of rontal payments necessary to acquire
ownership under the agreement; and

(3) The consumer acquires no ownership is not paid

(B) LIABILITY ~ The owner or personnel of any medium in which an
advertisement appears or through which il is disseminated shall not be liable for
violation of stibsaction (A

(C) CONSTRUGTION = Subsection (A) does not apply to an advertisement

1. is published in the yellow pages of a telephone directory or in any similar
directory of busir
2. is displayed in the

s placa of business.

SECTION 13. Civil Liability.

wise provided in this Act, a merchant
xér is liable to the consumer in

(A) LIABILITY AMOUNT ~ Except as othe
who willfully violates this Act with respeol to the consun
an amount equal to the following:

(1) In an action by an individual consurner, the sum of

{a) actual damages sustained by the consumer as 4 res
and
(b) not less than Five thousand Pasos (5,100.00).

ult of the violation;

(8) STATUTE OF LIMITATIONS

1, ACTIONS - An action may be brought in a court of competent jurisdiction at any
time but not laler than one year of the date of the occurrence of the violation.

CONSTRUCTION -- This stibsectian does not bar a consumers from assarting a
violation of this tile in-an action to collect a debt brought more than one year
after the date of tho occurrence of the violation as a matter of defense by
recoupment or set off, except otherwise provided by law.

np

(C ) OFFSET


1. LIMITATION — A consumer fay not take any action to offset any arhount 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 judgment of a court of competent jurisdiction in action which the
merchant was a party.

2. CONSTRUCTION ~ This subsection does nol bar a consumer who Is In default
on the obligation from asserting a violation of this Act as an original action, or as
defense of counterclaim to an action brought by the merchant to collect amounts
owed by the consumer.

SECTION 14, Defonses, - 4 merchant is not liable ~

(A) Under Section 13 for a violation of the requirements of Section 6 if within
fifleen (15) days after first having knowledge of the violation, and before an action under
Seotion 13 is filed or written notice of the violation and makes whatever adjustments |
in the account are nacessary that the consumer will not he required to pay an amount in
excess of the amounts actually disclosed;

¢ @ violation if the merchant establishes, and al the lime of
reasonably calculated to provided the

(B) Under this Act
the violation is implementing, pro
violation

SECTION 15. Liability of As

igne

(A) ASSIGN For purposes of Section 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 §
apparent on the face of the renlal-purchase agreements to which it relates. 4 v
apparent in Ihe face of a rental- purchase agreement inchides a disclosure that can b:

determined to be incomplets or inaccurate from the face of the agreement. An assignee
has no liability in a ca which the assignment is involuntary.

(B) CONSUMER ACKNOWLED - in any action by or against an

ignee, the consumer's written acknowledgment of receipt of a disclosure shall be

conclusive proof that the disclasure was made, if the assignee had no knowledge’ t
ihe disclosure had not been made when the assignee acquired the rental-purchase

agreements to which it reiate Hl
‘

SECTION 16. Regulation and Enforcement.-

(A) IN GENERAL The Secretary of Trade and Industry shall ue regulations
to carry out the purposes of this Acl, lo prevent its circumvention, and to facilitate
compliance with its requirements, The regulations may contain classification and
dilferentiations and may provide for adjustments and exceptions for any clas:
Wwansaction,

(8) MODELS ~ The department shall publish model disclosure forms and clauses
to facilitate compliance with the disclosure requirements of this Act and to ald
consumers in understanding transaction under rantal-purchase agreements. — in
designing forms, the department shall consider the use by merchants of date
processing of similar automated equipment, Uses of the models shall be option, A
merchant who property uses the modal disclosure forms shall be deemed to be In
compliance with the disclostire requirements

(C) EFFECTIVE DATE OF REGULATIONS = Any regulations issued, or any


amendment or interpretation thereof, shall not be effective before the October 1 that
follows the date af promulgation by a least six (6) months. The Secretary may at it
discretion lengthen that period of time to permit merchants to adjust their forms to
accommodation new requiremenis. The Secretary may also shorten than period of
time, notwithstanding the first sentence, if it makes a specific finding that such aclicn 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
requirements prior to ils effective date.

(D) ENFORCEMENT = The Department shall enforcement the requirem
this Act, The authority of Section 10 shalt apply with respect to the enforce ent of
requirements

ant oF

SECTION 17. Effect on Government Agencies. - No civil liability or criminal
psnally under this Act may be imposed on the government or any of its department or
agencies, or political subclivisian. ay

SECTION 18. Separability Clause. - If any provision or part hereof, ‘so’ hield
invalid oF unconstitutional, the remainder of the law or the provision not otherwise
affected shall remain valid and subsisting,

SECTION 19. Repealing Clause. laws, rules and regulations inconsistent
ith this Act are hereby repealed or modified accordingly.

ty Clause, » Thi
alter its 7 in at loast two (2) newspapers

Acl shall take effect fifleen (15) days
of general circulation.

Approved,