FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 1964 
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. 
. 'UL 
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. l 
I This bill was originally filed during the Fourteenth Congress, First Regular session. 
1 


FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.No. 1964 
Introduced by Senator Miriam Defensor Santiago 
1 
AN ACT 
2 
TO ASSURE MEANINGFUL DISCLOSURES OF THE TERMS OF RENTAL 
3 
PURCHASE AGREEMENTS, INCLUDING DISCLOSURES OF ALL COSTS TO 
4 
CONSUMERS UNDER SUCH AGREEMENTS AND TO PROVIDE CERTAIN 
5 
SUBSTANTIVE RIGHTS TO CONSUMERS UNDER SUCH AGREEMENTS 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
6 
SECTION 1. Short Title. - This Act shall be known as the "Consumer Disclosure and 
7 
Rental Purchase Agreement Act". 
8 
9 
SECTION 2. Purpose. - The purposes ofthis Act are -
10 
(A) to assure meaningful disclosure of the terms of rental-purchase agreements, 
II 
including disclosures of all costs to consumers under such agreements, and 
12 
B) to provide certain sUbstantive rights to consumers who enter into rent purchase 
13 
agreements. 
14 
15 
SECTION 3. Definition - For purposes of this Act 
16 
(A) The term "advertisement" means a commercial message in any medium that 
17 
promotes, directly or indirectly, a rental-purchase agreement but does not include price tags, 
18 
window signs, or other in-store merchandising aids, 
19 
(B) The term "agricultural purpose" includes: 
20 
(l) the production, harvest, exhibition, marketing, transformation, processing, 
21 
or manufacture of agricultural products by a natural person who cultivates plants or 
22 
propagates or nurtures agricultural products; and 
1 


I 
(2) the acquisition of fannlands, real property with a farm residence, or 
2 
personal property and services used primarily in farming. 
3 
(C) The tenn "consumer" means a natural person who is offered or enters into a 
4 
r~ntal purchase agreement. 
5 
D) The tenn "date of consummation" means the date on which a consumer becomes 
6 
contractually obligated under a rental-purchase agreement. 
7 
(E) The term "merchant" means a person who provides the use of property through a 
8 
rental-purchase agreement in the ordinary course of business and to whom a consumer's 
9 
initial obligation under the agreement is payable. 
10 
(F) The tenn "rental-purchase agreement" means a contract between a consumer and 
II 
a merchant-
12 
(I) under which the merchant agrees to provide the consumer the use of the 
13 
personal property for an initial period offour (4) months or less; 
14 
(2) that is automatically renewable with each payment by the consumer; and 
15 
(3) that pennits but does not obligate the consumer to become the owner of 
16 
the property. 
17 
18 
SECTION 4. Exempted Transactions. - This Act does not apply to rental-purchase 
19 
agreements primarily for business, commercial, or agricultural purposes, or those made with 
20 
Government agencies or instrumentalities. 
21 
22 
SECTION 5. General Disclosure Requirements-
23 
(A) IN GENERAL - The merchant under a renlal-purchase agreement shall disclose 
24 
to the consumer under the agreement the infonnation required by Sections 6, 7, and 8. In an 
25 
agreement involving more than 1 merchant, only 1 merchant is required to make the 
26 
disclosures. 
27 
(B) DISCLOSURE - The disclosures required under sections 6 and 7 and the 
28 
agreement provisions required to be included under 8 shall be made or included-
29 
(1) at or before the date of consummation of the rental-purchase agreement; 
2 


1 
(2) clearly and conspicuously in writing aud in a fonn that the consumer may 
2 
keep; and 
3 
(3) in a case 0 f disclosures required under Section 6, segregated from all· 
4 
other terms, data, or information provided to the consumer. 
5 
(C) INACCURACY- If a disclosure required to be made by a merchant to a 
6 
consumer under section 6 becomes inaccurate as the result of auy mutual written agreement 
7 
between the merchant and such consumer occurring after delivery of the required disclosure 
8 
to such consumer under this title, the resulting inaccuracy is not a violation of this title. 
9 
10 
SECTION 6. Rental-Purchase Agreement Disclosures. - For each rental-purchase 
11 
agreement, the merchant shall disclose to the consumer, to the extent applicable, under the 
12 
agreement the following: 
13 
(A) The amount of the first payment and the total amount of fees, taxes, or other 
14 
charges which may be required at or before the date of consummation of the agreement; 
15 
(B) The amount and timing of rental payments; 
16 
(C) The total nnmber and total amount of rental payments necessary to acqUIre 
17 
ownership of the property; 
18 
(D) A statement that the COllSUlller will not own the property until the consumer has 
19 
paid the total amount necessary to acquire ownership; 
20 
(E) A disclosure, to the extent applicable, that the total dollar amount of payments 
21 
does not include other fees or charges, such as a delivery fee, an initial processing fee, taxes, 
22 
or other fees or charges which may be payable under the agreement. Such fees and charges 
23 
shall be separately identified in the agreement; 
24 
(F) A statement that the consumer may be responsible for the fair market value of the 
25 
property if it is lost, stolen, damaged, or destroyed; 
26 
(G) A statement indicating whether the property is new or used, except a statement 
27 
indicating that new property is not a ; 
28 
(H) A statement of-
29 
(1) the mauufacturer's suggested retail price, where applicable; or 
3 


I 
(2) the price for which the property is available from the merchant in a cash 
2 
sale. 
3 
(I) A clear statement ofthe terms of the consumer's option to acquire ownership; 
4 
(J) A statement-
5 
(l) identifying the party responsible for maintaining or servicing the property 
6 
while it is being rented; 
7 
(2) describing the responsibility for maintenance or service; and 
8 
(3) disclosing that if any part of a manufacturer's express warranty covers the 
9 
property at the time the consumer acquires owuership of the property, the warranty 
10 
will be transferred to the consumer if allowed by the terms of the warranty. 
11 
(K) The date of consummation of the transaction and the identities of the merchant 
12 
and consumer; 
13 
(L) Late fees for past due rental charges. 
14 
15 
SECTION 7. Point-of Rental Disclosures. -
16 
(A) IN GENERAL - Except as provided in subsection (B), each item of property or 
17 
each set of items, if offered as a set or displayed or offered in connection with a rental-
18 
purchase agreement, shall have displayed on or next to it a card, tag, or label that clearly and 
19 
conspicuously discloses only the following: 
20 
(I) A brief description of the property; 
21 
(2) Whether the property is new or used; 
22 
(3) The cash price of the property; 
23 
(4) The amount of each rental payment; 
24 
(5) The total number of rental payments necessary to acquire ownership of 
25 
the property; 
• 
26 
(6) The total amount of rental payments necessary to acquire ownership of 
27 
the property; 
28 
(B) EXCEPTION - A merchant may make the disclosure required by subsection 
4 


1 
(1) in the fonn of a list or catalogue which is readily available to the customer 
2 
if the merchandise is not displayed in the merchant's showroom or if displaying a tag 
3 
would be impractical due to the size ofthe merchandise. 
4 
5 
SECTION 8. Agreement Provisions. -
6 
(A) IN GENERAL - Each rental-purchase agreement shall-
7 
(1) provide a statement of any obligation of the consumer and the merchant 
8 
under the agreement to repair any defect or malfunction of the property covered by 
9 
the agreement, and any limitation of those obligations; 
10 
(2) provided that the consumer may tenninate the agreement without penalty 
11 
by voluntarily surrendering or returning the property covered by the agreement upon 
12 
expiration of any tenn; and 
13 
(3) contain a provision for reinstatement of the agreement, which at a 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
mlmmum-
(a) pennits 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 tenn 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; 
(b) if the consumer retums or voluntarily surrenders the property 
covered by the agreement, other than through judicial process, during the 
applicable reinstatement period set forth in subparagraph (I), pennits 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 tenn; and (c) if the consumer has paid 60 percent 
or more of the total amount of payments necessary to acquire ownership of 
5 


1 
the property, other than due to judicial process, during the applicable 
2 
reinstatement period set forth in paragraph (1), permits the consumer to 
3 
reinstate the agreement during a period of at least 9 days after the date of the 
4 
return of the property by the payment of all past due rental charges and any 
5 
applicable redelivery, repair, or late fees and a payment for the next rental 
6 
term. 
7 
(B) CONSTRUCTION - Subsection (A) shall not be construed to prevent a merchant 
8 
from attempting to repossess property during the reinstatement period pursuant to subsection 
9 
(A)(3)(a), but such a repossession does not affect tho: consumer's right to reinstate. Upon 
10 
reinstatement, the merchant shall provide the consumer with the same property, if available; 
11 
if it is not available the merchant shall substitute property of comparable quality and 
12 
condition. 
l3 
14 
SECTION 9. Prohibited Inclusion. - A rental-purchase agreement may not contain-
15 
(A) a confession of judgment; 
16 
(B) a negotiable instrument; 
17 
(C) a security interest or any other claim of a property interest in any goods, except 
18 
those goods the use of which is provided by the merchant pursuant to the agreement; 
19 
(D) a wage assignment; or 
20 
(E) a waiver by the consumer of a claim or defense. 
21 
22 
SECTION 10. Statement of Accounts. - A merchant shall be required upon request by 
23 
the consumer to provide a quarterly statement. 
24 
25 
SECTION 11. Renegotiations and Extensions. - A renegotiation of a rental-purchase 
26 
agreement is deemed to be a new agreement for purposes of this Act, requiring new 
27 
disclosures under Section 6. A renegotiation shall be considered to occur when an existing 
28 
rental purchase agreement is satisfied and replaced by a new agreement undertaken by the 
29 
same merchant. Events such as the following shall not be treated as renegotiations: 
6 


1 
(A) The addition or return of property in a' multiple-item agreement or the 
2 
substitution of property, if in either case the average payment allocable to a payment period 
3 
is not changed by more than twenty-five percent (25%). 
4 
(B) A deferral or extension of one or more periodic payments, or portions of a 
5 
periodic payment. 
6 
(C) A reduction in charges in the agreement. 
7 
(D) An agreement involving a court proceeding. 
8 
(E) Any other event described in regulations prescribed by the Board. 
9 
10 
SECTION 12. Rental-Purchase Advertising. -
11 
(A) ADVERTISEMENTS - If an advertisement refers to or states the amount of any 
12 
payment and the right to acquire ownership for any specific item, the merchant that makes 
13 
the advertisement shall also clearly and conspicuously state in the advertisement the 
14 
following items: 
15 
(1) The transaction advertised is a rental-purchase agreement. 
16 
(2) The total number and total amount of rental payments necessary to 
17 
acquire ownership under the agreement. 
18 
(3) The consumer acquires no owner ship rights in the property if the total 
19 
amount of rental payments necessary to acquire owner ship is not paid. 
20 
(B) LIABILITY - The owner or personnel of allY medium in which an advertisement 
21 
appears or through which it is disseminated shall not be liable for a violation of subsection 
22 
A). 
23 
(C) CONSTRUCTION - Subsection (A) does not apply to an advertisement which-
24 
(1) is published in the yellow pages of a telephone directory or in any similar 
25 
directory of businesses, or (2) is displayed in the merchant's place of business. 
26 
27 
SECTION 13. Civil Liability. - (A) LIABILITY AMOUNT - Except as otherwise 
28 
provided in this Act, a merchant who willfully violates this Act with respect to the consumer 
29 
is liable to the consumer in an amount equal to the following: 
7 


I 
(I) In an action by an individual consumer, the sum of-
2 
(a) actual damages sustained by the consumer as a result of the violation; and 
3 
(b) not less than Five thousand Pesos (P5,000.00). 
4 
(B) STATUTE OF LIMITATIONS-
5 
(I) ACTIONS - an action may be brought in a court of competent jurisdiction 
6 
at any time but not later than one year of the date of the occurrence of the violation. 
7 
(2) CONSTRUCTION - This subsection does not bar a consumer from 
8 
asserting a in an action to collect a debt brought more than one year after the date of 
9 
the occurrence of the violation as a matter of defense by recoupment or set off, 
10 
except otherwise provided by law. 
II 
(C) OFFSET -
12 
(I) LIMITATION - A consumer may not take any action to offset any 
13 
amount for which a merchant is potentially liable under subsection (I) against any 
14 
amount owed by the consumer, unless the amount of the merchant's liability has been 
15 
determined by judgment of a court of competent jurisdiction in an action which the 
16 
merchant was a party. 
17 
(2) CONSTRUCTION - This subsection does not bar a consumer who is in 
18 
default on the obligation from asserting a violation of this Act as an original action, 
19 
or as a defense of counterclaim to an action brought by the merchant to collect 
20 
amounts owed by the consumer. 
21 
22 
SECTION 14. Defenses. -A merchant is not liable-
23 
(A) under Section 13 for a violation of the requirements of Section 6 if within fifteen 
24 
(15) days after first having knowledge of the violation, and before an action under Section 
25 
13 is filed or written notice of the violation and makes whatever adjustments in the account 
26 
are necessary to assure that the consumer will not be required to pay an amount in excess of 
27 
the amounts actually disclosed; 
28 
(B) under this Act for a violation if the merchant establishes, and at the time of the 
29 
violation is implementing, procedures reasonably calculated to prevent the violation. 
8 


1 
2 
SECTION 15. Liability of Assignees. -
3 
(A) ASSIGNEES - For purposes of Sections 13 and 14 and this Section, the term 
4 
'.'J1;lerchant" includes an assignee of a merchant. However, an action under Section 13 for a 
5 
violation of this Act may be brought against an assignee only if the violation is apparent on 
6 
the face of the rental-purchase agreement to which it relates. A violation apparent in the face 
7 
of a rental-purchase agreement includes a disclosure that can be determined to be incomplete 
8 
or inaccurate from the face of the agreement. An assignee has no liability in a case in which 
9 
the assignment is involuntary. 
10 
(B) CONSUMER ACKNOWLEDGEMENT - III any action by or against an 
11 
assignee, the consumer's written acknowledgment of receipt of a disclosure shall be 
12 
conclusive proof that the disclosure was made, if the assignee had no knowledge that the 
13 
disclosure had no! been made when the assignee acquired the rental-purchase agreement to 
14 
which it relates. 
15 
16 
SECTION 16. Regulation and Enforcement. -
17 
(A) IN GENERAL - The Secretary of Trade and Industry shall issue regulations to 
18 
carry out the purposes of this Act, to prevent its circumvention, and to facilitate compliance 
19 
with its requirements. The regulations may contain classification and differentiations and 
20 
may provide for adjustments and exceptions for any class of transaction. 
21 
(B) MODELS - The department shall publish model disclosure forms and clauses to 
22 
facilitate compliance with the disclosure requirements of this Act and to aid consumers in 
23 
understanding transactions under rental-purchase atreements. In designing forms, the 
24 
department shall consider the use by merchants of data processing of similar automated 
25 
equipment. Use of the models shall be optional. A merchant who properly uses the model 
26 
disclosure forms shall be deemed to be in compliance with the disclosure requirements. 
27 
(C) EFFECTIVE DATE OF REGULATIONS - Any regulation issued, or any 
28 
amendment or interpretation thereof, shall not be effective before the October 1 that follows 
29 
the date of promUlgation by at least six (6) months. The Secretary may at its discretion 
9 


1 
lengthen that period of time to permit merchants to adjust their forms to accommodate new 
2 
requirements. The Secretary may also shorten that period of time, notwithstanding the first 
3 
sentence, if it makes a specific finding that such action is necessary to comply with the 
4 
,,~ndings of a court or'to prevent unfair or deceptive practices. In any case, merchants may 
5 
comply with any newly promulgated disclosure requirement prior to its effective date. 
6 
(D) ENFORCEMENT - The Department shall enforcement the requirement of this 
7 
Act. The authority of Section 10 shall apply with respect to the enforcement of such 
8 
requirements. 
9 
10 
SECTION 17. Effect on Government Agencies. - No civil liability or criminal penalty 
11 
under this Act may be imposed on the government or any of its departments or agencies, or 
12 
political subdivision. 
13 
14 
SECTION 18. Separability Clause. - If any provision or part hereof, is held invalid 
; 
15 
or unconstitutional, the remainder of the law or the provision not otherwise affected shall 
16 
remain valid and subsisting. 
17 
18 
SECTION 19. Repealing Clause. - All laws, rules and regulations inconsistent with 
19 
this Act are hereby repealed or modified accordingly. 
20 
21 
SECTION 20. Effectivity Clause., - This Act shall take effect fifteen (15) days after 
22 
its publication in at least two (2) newspapers of general circulation. 
Approved. 
10