Nine Things Before the Customer Signs
A sale on instalments is two transactions wearing one receipt: you sell a thing, and you sell the time. The Philippine Consumer Act is unusually specific about the second one. Before a consumer credit sale is consummated, nine items must be disclosed clearly and conspicuously in writing — and two of the nine are different interest rates, both required, computed differently. Our invoice can hold a balance and a due date. It cannot hold a schedule, and it has never heard of a finance charge.
Who this reaches, and who it does not
Article 145 exempts credit extended for business or commercial purposes, credit to the Government and its agencies, and credit to juridical entities or organizations — as well as transactions where the debtor is the one specifying the credit terms. So this chapter is about selling to a person on instalments. If your receivables are trade credit to companies, none of what follows is your obligation, and the ordinary invoice-and-terms machinery is the right shape. The reason to read on anyway is that the disclosure list is a good specification for any instalment arrangement, and the product gap it exposes is the same either way.
Nine disclosures, and two of them are rates
Article 140 applies to a consumer credit sale that is not under an open-end plan — the ordinary case of buying something and paying for it over months. The creditor must disclose, in a statement, to the extent applicable:
Article 140, item by item
What must be disclosed What it actually requires you to compute
Cash price What it would have cost outright
The cash price or delivered price of the property or service. The price without the credit, which means you have to have one.
Down payment and trade-in What was credited up front
The amounts, if any, credited as a down payment and as a trade-in — as separate figures, and a trade-in is a valuation rather than a payment.
Amount financed The principal
The total amount to be financed, or the difference between the first two items. Derived, and it is the denominator for one of the two rates.
Other charges, itemised Costs that are not credit costs
Charges paid in connection with the transaction but not incident to the extension of credit — individually itemised. Delivery and installation live here, and keeping them out of the finance charge is the point of the itemisation.
The finance charge The price of the time, in money
Expressed in pesos and centavos. Article 132 defines it as the sum of all charges imposed as an incident to the credit — interest or time price differential, point systems, collection and finder's fees, credit investigation fees, notarial fees, and premiums for insurance protecting the creditor against default.
The simple annual rate The first rate
The percentage the finance charge bears to the total amount financed, expressed as a simple annual rate on the outstanding balance. The method is set by the implementing agency's rules.
The effective interest rate The second rate
Required separately, in the same statement. Two rates, both disclosed, and a system that stores one number called "interest" cannot produce them.
The schedule When, how many, how much
The number, amount and due dates or periods of the payments scheduled to repay the indebtedness. Not a due date — a list.
Default charges What happens if it is late
The default, delinquency or similar charges payable in the event of late payments — which Article 134 permits on any instalment not paid in full on or before the tenth day after its due date.
Article 143 fixes the timing: all of it, clearly and conspicuously, in writing, before the transaction is consummated. Not on the statement afterwards. And Article 144 requires the periodic statement to carry both rates again, along with the date by which payment avoids further finance charges and the method of determining the balance the charge is imposed on.
The right to prepay, and the rebate that follows
Article 137 gives the consumer a right to prepay in full or in part, at any time, without penalty. Article 138 then says what has to come back: on prepayment in full of a <em>precomputed</em> transaction, at least the unearned portion of the finance charge must be rebated — and the Act sets out the method itself, in terms of the sums of the instalment balances scheduled to be outstanding, with a fifteen-day rule for deciding which instalment date the prepayment counts against. It even names the method, which statutes rarely do: the rule of 78, or the sum of the digits.
A rebate on prepayment is not a discount you choose to give. It is a computation over a schedule — and if you never stored the schedule, there is nothing to compute it from.
One instrument, two signatures, three warnings
Article 146 is the document requirement, and it is worth reading closely because it describes an artefact rather than a record. The obligation must be evidenced by a <em>single instrument</em> which includes the required disclosures, the signature of the seller <em>and</em> of the person to whom credit is extended, the date it was signed, a description of the property sold, and a description of any property transferred as a trade-in. It must also carry a clear and conspicuous typewritten notice telling the buyer three things: that he should not sign the instrument if it contains any blank space; that he is entitled to a reasonable return of the precomputed finance charge if the balance is prepaid; and that he is entitled to an exact, true copy of the agreement.
And if the instrument is later sold at a discount to a bank or financing company, that transferee takes it subject to all the claims and defences the debtor could have asserted against the seller. The paper travels; the defences travel with it.
We capture one signature and this document needs two
A till sale in this product can carry a signature — a stored mark, the name of the person who signed, and the moment they signed it. It is the customer's, and it exists to say the customer agreed to something. Article 146 asks for the seller's signature as well, on the same instrument, because the document is a contract rather than an acknowledgement. That is a one-word difference in a requirement and a structural difference in a schema: a record with one signature field cannot hold a counter-signed agreement, and a customer invoice in this product carries no signature field at all.
What our sales records can and cannot say
The nine disclosures against the invoice schema
| The disclosure | Held as a value | Computable | On the document |
|---|---|---|---|
| Cash price of the goods | Yes | Yes | Yes |
| Down payment received | Yes | Yes | Yes |
| Amount financed | Partly — configurable by you | Partly — configurable by you | No |
| Other charges, individually itemised | Yes | Yes | Yes |
| The finance charge, in money | No | No | No |
| The simple annual rate | No | No | No |
| The effective interest rate | No | No | No |
| The payment schedule — number, amounts, dates | No | No | No |
| Delinquency charges | No | No | No |
Built and maintained Configurable by you, not maintained by us Not built
The invoice knows the total, what has been paid, what is outstanding, one due date and a currency, and it has a free-text terms field where a diligent person could type all nine disclosures as prose. That is precisely the wrong shape: a paragraph cannot be recomputed when somebody prepays in month four, and Article 138 makes that recomputation an entitlement rather than a courtesy.
The gap is a single structural one. A payment record in this product is a payment <em>received</em> — a number, a date, a method from a fixed list, a reference. There is nothing anywhere that represents a payment <em>scheduled</em>; a search across the models and the migrations for the word instalment, spelled either way, returns nothing at all. So the eighth disclosure — the number, amounts and due dates of the payments — has no home, and the fifth, sixth and seventh are all derived from a schedule that does not exist.
An invoice with a balance
A total, what has been paid, what is outstanding, a due date, a currency and a status that includes overdue.
Many payments against one invoice
Each with its own number, date, amount, method from a fixed list, reference and notes.
Itemised charges on a document
Invoice lines carry their own quantities and amounts, so delivery and installation can be shown separately from the goods.
A signature captured at the counter
A till sale can carry a stored mark, the signer's name and the moment of signing.
A schedule of payments to come
A payment record here describes money that arrived; the number, amounts and dates of payments still to be made would be a new kind of row.
A finance charge as a figure on the document
The sum of the charges imposed as an incident to the credit, held as money beside the goods rather than inside a total.
Two rates, computed and stored
A simple annual rate on the outstanding balance and an effective interest rate, as separate values with the method recorded.
A counter-signed instrument
One document carrying both the seller's and the buyer's signature, dated, with the property and any trade-in described on it.
Four questions for a system that will sell on instalments
Show me a payment schedule.
What you will probably hear
Here is the invoice with a due date and a balance.
How to read it
That is one payment, late or not late. Ask to see six dated rows before any money has moved, because that is what a schedule is, and everything from the rate disclosures to a prepayment rebate is computed over it.
Where is the finance charge?
What you will probably hear
It is built into the price.
How to read it
Then the cash price and the credit price are the same number and the first disclosure cannot be made. Ask for the cash price and the finance charge as two separate stored figures, because the law asks for both and a single total cannot be decomposed afterwards.
What happens if the customer pays early?
What you will probably hear
The balance clears.
How to read it
Under this Act at least the unearned portion of a precomputed finance charge has to come back, on a method the statute names. Ask whether the system can compute a rebate, and against what — if the answer is a spreadsheet, the entitlement is being honoured by hand or not at all.
Can one document carry two signatures?
What you will probably hear
We capture the customer's signature.
How to read it
A contract needs both parties. Ask specifically whether the seller signs the same instrument, whether the date of signing is separate from the date of the invoice, and whether the customer can be given an exact copy — three requirements that sound administrative and are all in the same article.
What AWRA OpsHub does today
- An invoice with a total, a balance and a status, including an overdue state, a due date and the currency it was raised in.
- Many payments against one invoice, each with its own reference, date, amount and method from a fixed list.
- Itemised lines on a document, so charges that are not part of the goods can be shown separately and totalled separately.
- A signature captured at the point of sale, with the signer's name and the moment of signing stored beside the mark.
- A credit hold on a customer account, so an outstanding balance can gate further sales.
- Money at each currency's own precision, and totals across currencies disclosed rather than converted into one figure.
- Custom fields on invoices and invoice lines, so any of these disclosures can be recorded as a value today and reported on.
More we can add to your workspace
- A schedule of payments still to come, with a number, an amount and a due date per instalment, as rows rather than as prose in a terms field.
- A cash price and a finance charge as two figures, so the price of the goods and the price of the time are separable on the document and in the reports.
- A simple annual rate and an effective interest rate, stored as two values with the method that produced each of them recorded alongside.
- A rebate computed on prepayment, over the schedule, so an entitlement to the unearned portion of a precomputed charge is arithmetic rather than goodwill.
- A delinquency charge with its own grace period, applied to an instalment rather than to an invoice.
- A counter-signed instrument, one document with both parties' signatures, the date of signing, and a description of the property and any trade-in.
- A trade-in as a valued item on a sale, distinct from a discount and from a payment.
Where we point you to a specialist
- We will not compute a simple annual rate or an effective interest rate and present it as the disclosable figure. Article 133 leaves the method to the implementing agency, we did not read those rules, and two rates that differ by a rounding convention are the kind of thing this chapter exists to stop. We will hold the figures and the method you were advised to use, show the working, and keep both on the document.
- We will not tell you whether a particular arrangement is a consumer credit sale. Article 145 exempts business and commercial credit and credit to juridical entities, and the boundary between selling on terms and extending consumer credit is exactly where advice is worth paying for. Getting it wrong in the safe direction costs you a disclosure nobody needed; getting it wrong the other way is an offence with a one-year action window.
- We hold a position on where a disclosure belongs, and it is in fields rather than in a paragraph. A terms box will hold all nine items and satisfy nobody, because the moment a customer prepays, four of them have to be recomputed and prose cannot be recomputed. A quotation from us for this work builds the schedule first, because every other item on the list is derived from it.
The first item is the build and the rest follow from it: a schedule of instalments as rows makes the finance charge a difference, the two rates a computation, the rebate an arithmetic exercise and the delinquency charge a per-row test. That is one table and it is the smallest useful version of this. The sixth is separate and worth doing on its own merits — a counter-signed document with a date of signing is what turns a record into an agreement, and today we capture one signature and only at the till. The seventh is small and belongs with any of them.
What we can build for the Philippines on top of the standard product
Everything listed above as something we can add describes what ships in the standard product today — it is a starting point for the Philippines, not a limit on what AWRA OpsHub can do there. Kenya's eTIMS integration and its maintained payroll engine are in the product because Kenyan clients needed them and commissioned them; neither appeared by itself. The same door is open here. If a BIR EIS connection, a Philippine payroll engine, a bank or mobile money feed, a statutory return format, a rule specific to how your operation runs, or a link to a system you already have is what stands between you and a decision, tell us and we will scope it as a build — written spec, timeline and price — before you commit to anything.
BIR EIS transmission
Structured JSON transmission to the BIR Electronic Invoicing System inside the reporting window, with the retries, the failure queue and the daily report of sales that never reached the platform — which is the part that actually decides whether you are compliant, and the part vendors describe least. Withholding at source handled on the purchase side, where the certificates come from.
InstaPay, PESONet and bank feeds
InstaPay and PESONet collection matched to the invoice, e-wallet settlement reconciled rather than exported, and bank statement feeds wired into the Payments Register.
The operational work, which is what most commissions actually are
An extra approval stage in a chain that does not match the standard one, a custom field set on employees or assets that only your sector needs, an expiry that has to block an order rather than send an email, a report your board asks for in a shape nothing produces, or a scanner or weighbridge feeding the goods-in door. These are the commissions we are asked for most often and the smallest ones we quote — and unlike a revenue-authority pipeline, none of them waits on a regulator.
Payroll and statutory returns
SSS, PhilHealth, Pag-IBIG and withholding tax computed on live records, with the contribution and remittance files produced in the layout each agency expects, and thirteenth-month pay accrued through the year rather than found in December.
Systems you already run
The accounting package, CRM, online store or custom database you intend to keep — connected through our API so a fact is entered once and appears everywhere it is needed.
How it works: you describe the requirement, we return a written scope, timeline and cost, and once agreed it is built into your environment and maintained as part of the product. No roadmap slide, and no pretending in a demo that something exists when it does not.
Tell us what you need integratedTell us whether you are selling goods or selling time
If your customers pay over months, the disclosure list in this Act is a decent specification whatever your jurisdiction — and the missing piece in most systems is the same one: a payment that has not happened yet. Note that we read this Act at the Lawphil Project's reproduction rather than in the Official Gazette, and that several of its provisions delegate the method to an implementing agency whose rules we did not read; verify anything you are going to rely on.
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