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THE PHILIPPINE LEMON LAW

Q: What is Republic Act No. 10642?


A: Republic Act (RA) No. 10642, or the Philippine Lemon Law, is the act that
strengthens consumer protection in relation to the purchase of brand new motor
vehicles.

Q : What is the basic policy of the Philippine Lemon Law?


A : The basic policy of the Philippine Lemon Law is to promote the full protection of
the rights and welfare of consumers in the sale of motor vehicles against business and
trade practices which are deceptive, unfair or unfavorable to consumers and their
interests.

Q : What is the coverage of the Philippine Lemon Law?


A : The Philippine Lemon Law covers brand new motor vehicles purchased in the
Philippines that are reported by a consumer to be in nonconformity with the standards
or specifications of the vehicles manufacturer or distributor within twelve (12) months
from the date of original delivery to the consumer, or up to twenty thousand (20,000)
kilometers of operation after such delivery, whichever comes first.

Q : Which government agency is responsi ble for the implementation of the


Philippine Lemon Law?
A : The Department of Trade and Industry (DTI) is the sole implementing agency of the
Philippine Lemon Law.

Q : What is a brand new motor vehicle?


A : A motor vehicle is brand new if:
The vehicle is constructed entirely from new parts;
Covered by a manufacturers express warranty at the time of purchase;
It has never been sold nor registered with the Department of Tra nsportation and
Communications (DOTC) or any appropriate agency; and
It has never been operated on any highway of the Philippines, or in any foreign
state or country.

Q : What does nonconformity refer to?


A : Nonconformity refers to any defect or conditi on that substantially impairs the use,
value or safety of a brand new vehicle which prevents it from meeting the standards or
specifications of the manufacturer or distributor.

Q : What causes of nonconformity exempt manufacturers, distributors,


authorized dealers or retailers from being held responsible for defective motor
vehicles?
A :
Noncompliance by the consumer of the obligations stipulated under the
warranty;
Modifications not authorized by the manufacturer, distributor, authorized dealer
or retailer;
Abuse or neglect of the brand new motor vehicle; and
Damage to the vehicle due to accident or force majeure (an event caused by the
elements of nature such as national disasters).
Q : When can a consumer avail of his/her rights under the Phili ppine Lemon Law?
A : A consumer may avail of his/her rights under the Philippine Lemon Law at any time
within the Lemon law rights period and if after at least four (4) separate repair
attempts by the concerned manufacturer, distributor, authorized dealer or retailer, the
defect remains unresolved.

Q : How can a consumer avail of his/her rights under the Philippine Lemon Law?
A : A consumer shall issue a Notice of Availment of Lemon Law Rights to the
concerned manufacturer, distributor, authorized dealer o r retailer stating that s/he will
avail of his/her rights provided for under the Philippine Lemon Law.

Q : What are the rights of consumers under the Philippine Lemon Law?
A :
When nonconformity is found on a brand new motor vehicle within twelve (12)
months from its date of original delivery, a consumer may bring it before the
concerned manufacturer, distributor, aut horized dealer or retailer for repair.
During repair and the period of availment of the Lemon Law rights, the
consumer, as agreed with the concerned manufacturer, distributor, authorized
dealer or retailer, shall be provided with any of the following:
o Daily Transport Allowance which covers the transportation expenses of
the consumer to and from his/her house and regular workplace or
destination; or
o Service vehicle.
If after at least four separate (4) repair attempts the defect or nonconformity
remains unresolved then, a consumer may issue a Notice of Availment of Lemon
Law Rights to the concerned manufacturer, distributor, authorized dealer or
retailer.
Following to filing the said notice, the consumer shall bring the defective or
nonconforming motor vehicle to the concerned manufacturer, distributor,
authorized dealer or retailer for a final attempt to address the complaint
according to his/her satisfaction.
In case the final attempt to address the defect or nonconformity fails, the
consumer may bring his/her complaint before the DTI.

Q : How will Lemon Law related consumer complaints be resolved?


A : The DTI shall settle Lemon Law-related consumer complaints in accordance to the
following dispute resolution mechanisms:
Mediation. A conference/negotiation for both parties to settle their dispute
amicably. Mediation proceedings shall not exceed ten (10) working days.
Arbitration. In the event that mediation fails, the complainant and respondent
may voluntarily undertake arbitration proceedin gs wherein a third party who is
chosen by both parties, will decide on the case.
Adjudication. Should both parties choose not to undertake arbitration, at least
one of them may commence adjudication proceedings wherein a DTI
Adjudication/Hearing Officer will decide on the case. Adjudication proceedings
shall not exceed twenty (20) working days.

Q : If during adjudication proceedings it is proven that there is nonconformity in


the motor vehicle, what are the possible remedies for consumers?
A : In case a finding of nonconformity is arrived at during adjudication proceedings,
the DTI will direct the concerned manufacturer, distributor, authorized dealer or
retailer to grant any of the following remedies to the consumer:
Replace the motor vehicle with a sim ilar or comparable motor vehicle in terms
of specifications and value; or
Accept the return of the motor vehicle and refund the purchase price, and pay
collateral charges.

Q : Can a consumer choose to replace the defective motor vehicle with another
vehicle that is of higher value and specifications?
A : Yes, provided that, the consumer will pay the difference in cost.

Q : How is the value of a nonconforming motor vehicle determined?


A : The value of a nonconforming motor vehicle is determined by deduct ing the
reasonable allowance for use from the purchase price.

Q : What is reasonable allowance for use?


A : Reasonable allowance for use shall mean twenty percent (20%) per annum
deduction from the purchase price, or the product of the distance travelle d in
kilometers and the purchase price divided by one hundred thousand (100,000)
kilometers, whichever is lower.

Q : What if the DTI found no defect or nonconformity on the motor vehicle?


A : The DTI shall rule in favor of the manufacturer, distributor, authorized dealer or
retailer and direct the consumer to reimburse the costs incurred by the latter in
validating the consumers complaints.

Q : Can a decided case be appealed?


A : Yes, an appeal may be filed before the DTI Secretary within fifteen (15) days upon
receipt of the decision based on the following grounds:
Grave abuse of discretion;
The decision/order is in excess of jurisdiction or authority of the Adjudication
Officer; and
The decision/order is not supported by the evidence, or there is serious error in
the findings of facts.

Q : How long does it take for an appeal to be decided upon?


A : The DTI Secretary shall decide within thirty (30) days upon receipt of the
Memorandum of Appeal.

Q : Can a returned motor vehicle be resold to consumers?


A : Yes, provided that, the manufacturer, distributor, authorized dealer or retailer
disclosed the following information to consumers:
The motor vehicle was returned;
The nature of the defect or nonconformity which caused the return; and
The condition of the motor vehicle at the time of return.

Q : Can a manufacturer, distributor, authorized dealer or retailer be held


responsible for the resold motor vehicle?
A : No. The responsibility of the manufacturer, distributor, authorized dealer or retailer
ends upon the sale of the resold motor vehicle to its first purchaser.

Q : Can a manufacturer, distributor, authorized dealer or retailer be penalized for


non-disclosure of information on the resale of returned motor vehicles?
A : Yes. If found to have violated the provisions on disclosure on resale, the
manufacturer, distributor, authorized dealer or retailer shall be liable to pay One
hundred thousand pesos (P100,000) as damages to the aggrieved party without
prejudice to any civil or criminal liability that may be incurred under existing laws.

Q : When will the Philippine Lemon Law take effect?


A : The Philippine Lemon Law shall take effect on 07 August 2014 or fifteen (15) days
after its publication in a newspaper of general circulation (Manila Bulletin, 23 July
2014).

Q : When will the Implementing Rules and Regulations (IRR) of the Philippine
Lemon Law be released?
A : The IRR of the Philippine Lemon Law will be issued within ninety (90) days from its
date of effectivity.

Q : Can a consumer invoke the Lemon Law Act prior its date of effectivity?
A : No, the Lemon Law Act has no retroactive effect.

Q : After its effectivity, can the Lemon Law Act be implemented prior the
issuance of its IRR?
A : Yes. The IRR is only needed for those provisions that are not clearly stated.