Republic of the Philippines (b) Collateral

CONGRESS OF THE PHILIPPINES charges refer to the fees

Metro Manila paid’ to the Land
Transportation Office
Sixteenth Congress (LTO) for the registration
First Regular Session of a brand new motor
vehicle and other
Begun and held in Metro Manila, on incidental expenses such
Monday, the twenty-second day of July, as, but not limited to, the
two thousand thirteen. cost of insurance
pertaining to the vehicle,
REPUBLIC ACT NO. 10642 chattel mortgage fees and
interest expenses if
AN ACT STRENGTHENING applicable;
CONSUMER PROTECTION IN THE
PURCHASE OF BRAND NEW MOTOR (c) Comparable motor
VEHICLES vehicle refers to a motor
vehicle that is identical or
Be it enacted by the Senate and House reasonably equivalent to
of Representatives of the Philippines in the motor vehicle to be
Congress assembled: replaced, in terms of
specifications and values,
subject to availability, as
Section 1. Short Title. – This Act shall be
the motor vehicle existed
known as the "Philippine Lemon Law".
at the time of
purchase: Provided, That
Section 2. Declaration of Policy. – It is there shall be an offsetting
hereby declared the policy of the State to from this value for
promote full protection to the rights of reasonable allowance for
consumers in the sale of motor vehicles its use;
against business and trade practices
which are deceptive, unfair or otherwise
(d) Consumer refers to
inimical to consumers and the public
any person, natural or
interest.
juridical, who purchases a
brand new motor vehicle
The State recognizes that a motor either by cash or credit
vehicle is a major consumer purchase or from an authorized
investment. Hence, the rights of distributor, dealer or
consumers should be clearly defined, retailer in the Philippines;
including the means for redress for
violations thereof.
(e) Dealer or retailer refer
s to any person, natural or
Section 3. Definition of Terms. – As juridical, authorized by the
used in this Act: manufacturer or
distributor to sell brand
(a) Brand new motor new motor vehicles
vehicle refers to a vehicle directly to the retail buyers
constructed entirely from and the public;
new parts and covered by
a manufacturer’s express (f) Distributor refers to
warranty at the time of any person, natural or
purchase that it has never juridical, authorized by the
been sold or registered manufacturer to sell brand
with the Department of new motor vehicles to
Transportation and duly authorized dealers or
Communications (DOTC) retailers;
or an appropriate agency
or authority, and has
(g) Implementing
never been operated on
agency refers to the
any highway of the
Department of Trade and
Philippines, or in any
Industry (DTI),
foreign state or country;
reorganized under Title X,
Book IV of Executive only on rails or tracks, and
Order No. 292, series of tractors, trailers and
1987, otherwise known as traction engines of all
the "Administrative Code kinds used exclusively for
of 1987"; agricultural purposes.
Trailers having any
(h) Lemon Law rights number of wheels, when
period refers to the period propelled or intended by
ending twelve (12) attachment to a motor
months after the date of vehicle, shall be classified
the original delivery of a as separate motor vehicle
brand new motor vehicle with no power rating;
to a consumer or the first
twenty thousand (20,000) (k) Nonconformity refers
kilometers of operation to any defect or condition
after such delivery, that substantially impairs
whichever comes first. the use, value or safety of
This shall be the period a brand new motor vehicle
during which the which prevents it from
consumer can report any conforming to the
nonconformity, as defined manufacturer’s or
in paragraph (k) herein, to distributor’s standards or
the standards and specifications, which
specifications of the cannot be repaired, but
manufacturer, authorized excluding conditions
distributor, authorized resulting from
dealer or retailer, and noncompliance by the
pursue any right as consumer of his or her
provided for under this obligations under the
Act; warranty, modifications
not authorized by the
(i) Manufacturer refers to manufacturer or
any person, natural or distributor, abuse or
juridical, engaged in the neglect, and damage due
business of to accident or force
manufacturing or majeure;
assembling motor
vehicles; (l) Purchase price refers
to the invoice price or the
(j) Motor vehicle refers to amount of money which
any self-propelled, four the dealer or retailer
(4) wheeled road vehicle actually received for the
designed to carry brand new motor vehicle,
passengers including, but in consideration of the
not limited to, sedans, sale of such brand new
coupes, station wagons, motor vehicle;
convertibles, pick-ups,
vans, sports utility (m) Warranty refers to the
vehicles (SUVs) and written assurance, so
Asian Utility Vehicles labeled, of the
(AUVs) but excluding manufacturer of a brand
motorcycles, delivery new motor vehicle
trucks, dump trucks, including any term or
buses, road rollers, trolley condition precedent to the
cars, street sweepers, enforcement of
sprinklers, lawn mowers obligations under the
and heavy equipment warranty; and
such as, but not limited to,
bulldozers, payloaders, (n) Warranty rights
graders, forklifts, period refers to the period
amphibian trucks, cranes, provided for under the
and vehicles which run contract of sale when the
 manufacturer would
guarantee the materials
used, the workmanship
and the roadworthiness of
a brand new motor vehicle
for ordinary use or
reasonable intended
purposes.
Section 4. Coverage. – This Act shall
cover brand new motor vehicles
purchased in the Philippines reported by
a consumer to be in nonconformity with
the vehicle’s manufacturer or distributor’s
standards or specifications 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. The following causes of
nonconformity shall be excluded:
(a) Noncompliance by the
consumer of the
obligations under the
warranty;
(b) Modifications not
authorized by the
manufacturer, distributor,
authorized dealer or
retailer;
(c) Abuse or neglect of the
brand new motor vehicle;
and
(d) Damage to the vehicle
due to accident or force
majeure.
Section 5. Repair Attempts. – At any
time within the Lemon Law rights period,
and after at least four (4) separate repair
attempts by the same manufacturer,
distributor, authorized dealer or retailer
for the same complaint, and the
nonconformity issue remains unresolved,
the consumer may invoke his or her
rights under this Act.
The repair may include replacement of
parts components, or assemblies.
Section 6. Notice of Availment of Lemon
Law Rights. – Before availing of any
remedy under this Act and subject to
compliance with the provisions of Section
5 hereof, the consumer shall, in writing,
notify the manufacturer, distributor,
authorized dealer or retailer of the
unresolved complaint, and the
consumer’s intention to invoke his or her
rights under this Act within the Lemon
Law rights period.
The warranty booklet issued by the
manufacturer, distributor, authorized
dealer or retailer shall clearly state the
manner and form of such notice to
constitute a valid and legal notice to the
manufacturer, distributor, authorized
dealer or retailer. It shall also clearly state
the responsibility of the consumer under
this section.
Section 7. Availment of Lemon Law
Rights. – Subsequent to filing the notice
of availment referred to in the preceding
section, the consumer shall bring the
vehicle to the manufacturer, distributor,
authorized dealer or retailer from where
the vehicle was purchased for a final
attempt to address the complaint of the
consumer to his or her satisfaction.
It shall be the duty of the manufacturer,
distributor, authorized dealer or retailer,
upon receipt of the motor vehicle and the
notice of nonconformity required under
Section 6 hereof, to attend to the
complaints of the consumer including, as
may be necessary, making the repairs
and undertaking such actions to make
the vehicle conform to the standards or
specifications of the manufacturer,
distributor, authorized dealer or retailer
for such vehicle.
In case the nonconformity issue remains
unresolved despite the manufacturer,
distributor, authorized dealer or retailer’s
efforts to repair the vehicle, pursuant to
the consumer’s availment of his or her
Lemon Law rights, the consumer may file
a complaint before the DTI as provided
for under this Act: Provided,
however, That if the vehicle is not
returned for repair, based on the same
complaint, within thirty (30) calendar
days from the date of notice of release of
the motor vehicle to the consumer
following this repair attempt within the
Lemon Law rights period, the repair is
deemedsuccessful: Provided,
finally, That, in the event that the
nonconformity issue still exists or persists
after the thirty (30)-day period but still
within the Lemon Law rights period, the
consumer may be allowed to avail of the
same remedies under Sections 5 and 6
hereof.
To compensate for the non-usage of the qualified
vehicle while under repair and during the independent
period of availment of the Lemon Law private entities in
rights, the consumer shall be provided a the ascertainment
reasonable daily transportation of the validity of
allowance, an amount which covers the the consumer’s
transportation of the consumer from his complaint. Any
or her residence to his or her regular cost incurred in
workplace or destination and vice versa, establishing the
equivalent to air-conditioned taxi fare, as validity of the
evidenced by official receipt, or in such consumer’s
amount to be agreed upon by the parties, complaint shall be
or a service vehicle at the option of the bornejointly by the
manufacturer, distributor, authorized consumer and the
dealer or retailer. Any disagreement on manufacturer,
this matter shall be resolved by the DTI. distributor,
authorized dealer
Nothing herein shall be construed to limit or retailer;
or impair the rights and remedies of a
consumer under any other law. (3) The complaint
shall be deemed
Section 8. Remedies for Dispute valid if it is
Resolution. – The DTI shall exercise independently
exclusive and original jurisdiction over established that
disputes arising from the provisions of the motor vehicle
this Act. All disputes arising from the does not conform
provisions of this Act shall be settled by to the standards or
the DTI in accordance with the following specifications set
dispute resolution mechanisms: by the
manufacturer,
(a) Mediation distributor,
authorized dealer
(1) The principles or retailer;
of negotiation,
conciliation and (4) Upon failure of
mediation towards the negotiation or
amicable mediation
settlement between the
between the manufacturer,
manufacturer, distributor,
distributor, authorized, dealer
authorized dealer or retailer and the
or retailer and the consumer, the
consumer shall be parties shall
strictly observed; execute a
certificate
(2) In the course of attesting to such
its dispute failure; and
resolution efforts,
the DTI shall (5) At any time
endeavor to during the dispute
independently resolution period,
establish the the manufacturer,
validity of the distributor,
consumer’s authorized dealer
outstanding or retailer and the
complaint. The consumer shall be
DTI shall likewise encouraged to
retain the services settle amicably. All
of other disputes that have
government been submitted for
agencies or mediation shall be
 settled not later (i) Replace
than ten (10) the motor
working days from vehicle
the date of filing of with a
the complaint with similar or
the DTI. comparabl
e motor
(b) Arbitration vehicle in
terms of
In the event there is a specificati
failure to settle the ons and
complaint during the values,
mediation proceedings, subject to
both parties may availability;
voluntarily decide to or
undertake arbitration
proceedings. (ii) Accept
the return
(c) Adjudication of the
motor
(1) In the event vehicle
that both parties and pay
do not undertake the
arbitration consumer
proceedings, at the
least one of the purchase
parties may price plus
commence the
adjudication collateral
proceedings, charges.
administered by
the DTI. The DTI In case the
shall rely on the consumer decides
qualified to purchase
independent another vehicle
findings as to with a higher value
conformity to and specifications
standards and from the same
specifications manufacturer,
established distributor,
herein. In no case authorized dealer
shall adjudication or retailer, the
proceedings consumer shall
exceed twenty pay the difference
(20) working days; in cost.

(2) In case a In both cases of

finding of replacement and
nonconformity is repurchase, the
arrived at, the DTI reasonable
shall rule in favor allowance for use,
of the consumer as defined in this
and direct the Act, shall be
manufacturer, deducted in
distributor, determining the
authorized dealer value of the
or retailer to grant nonconforming
either of the motor vehicle; and
following
remedies to the (3) In case a
consumer: nonconformity of
the motor vehicle
is not found by the (iii) The
DTI, it shall rule in decision/or
favor of the der is not
manufacturer, supported
distributor, by the
.authorized dealer evidence
or retailer, and or there is
direct the serious
consumer to error in the
reimburse the findings of
manufacturer, facts.
distributor,
authorized dealer The Secretary of the DTI shall decide on
or retailer the the appeal within thirty (30) days from
costs incurred by receipt thereof. A party seeking further
the latter in appeal from the decision of the Secretary
validating the of the DTI may file a case for certiorari to
consumer’s the Court of Appeals under Section 4,
complaints. Rule 65 of the Revised Rules of Court.

An appeal may be Section 9. Determination of Reasonable

taken from a final Allowance for Use. – For purposes of this
judgment or order Act, "reasonable allowance for use" shall
of the Adjudication mean twenty percent (20%) per
Officer which annum deduction from the purchase
completely price, or the product of the distance
disposes of the traveled in kilometers and the purchase
case within fifteen price divided by one hundred thousand
(15) days from (100,000) kilometers, whichever is lower.
receipt
thereof.1âwphi1 T Section 10. Disclosure on Resale. –
he appeal shall be Should the returned motor vehicle be
taken by filing a made available for resale, the
Memorandum of manufacturer, distributor, authorized
Appeal with the dealer or retailer shall, prior to sale or
Secretary of the transfer, disclose in writing to the next
DTI, with Notice of purchaser of the same vehicle the
Appeal to the following information:
Adjudication
Officer, and with a (a) The motor vehicle was
copy duly returned to the
furnished the manufacturer, distributor,
adverse party or authorized dealer or
parties on any of retailer;
the following
grounds: (b) The nature of the
nonconformity which
(i) Grave caused the return; and
abuse of
discretion; (c) The condition of the
motor vehicle at the time
(ii) The of the transfer to the
decision/or manufacturer, distributor,
der is in authorized dealer or
excess of retailer.
jurisdiction
or The responsibility of the manufacturer,
authority of distributor, authorized dealer or retailer
the under this section shall cease upon the
Adjudicatio sale of the affected motor vehicle to the
n Officer; first purchaser.
and
Section 11. Penalty. – The
manufacturer, distributor, authorized
dealer or retailer adjudged to have
violated the provisions requiring
disclosure as mentioned in the preceding
section shall be liable to pay a minimum
amount of One hundred thousand pesos
(P100,000.00) as damages to the
aggrieved party without prejudice to any
civil or criminal liability they and/or the
responsible officer may incur under
existing laws.
Section 12. Assistance by Other
Agencies. – The DOTC and other
agencies, political subdivisions, local
government units, including government-
owned and/or controlled corporations,
shall render such assistance as required
by the DTI in order to effectively
implement the provisions of this Act.
Section 13. Implementing Rules and
Regulations. – The DTI shall promulgate
the necessary implementing rules and
regulations within, ninety (90) days from
the effectivity of this Act.
Section 14. Separability Clause. – If, for
any reason, any part or provision of this
Act is declared invalid, such declaration
shall not affect the other provisions of this
Act.
Section 15. Repealing Clause. – All
laws, decrees, executive orders,
issuances, rules and regulations or parts
thereof which are inconsistent with the
provisions of this Act are hereby deemed
repealed, amended or modified
accordingly.
Section 16. Effectivity. – This Act shall
take effect fifteen (15) days after its
publication in the Official Gazette or in
any newspaper of general circulation.
Section 8. Compliance of Retailers
Engaged in Electronic Commerce with
the Data
Protection Guidelines. Any retailer
engaged in the business of electronic
commerce
with consumers shall comply with the
requirements set forth in Section 4 on
general
principles for the protection of personal
data, Section 5 on voluntary
accreditation,
Section 6 on lawful access to personal
data in an information and
communication
system, Section 7 on obligation of
confidentiality and Section 8 on security
of data
provided for under the provisions of the
DTI Department Administrative Order
No. 8,
Series of 2006 or “Prescribing Guidelines
for the Protection of Personal Data in
Information and Communications
System in the Private Sector”.
Section 9. Addressing Consumer
Complaints.
(1) Setting Up of Internal Complaint-
Handling Mechanism. Retailers, sellers,
distributors, suppliers, or manufacturers
shall set up and make operational an
internal complaint-handling mechanism
for consumer complaints within a
maximum period of three (3) months but
the mechanism should not prejudice the
rights of the consumers to seek legal
redress.
(2) Procedure for filing a complaint with
concerned implementing agencies.
(2.1) Any person aggrieved by any
transaction arising from the purchase of
goods and services from a business
establishment for violation(s) of the
Consumer Act transacted by using
electronic data messages or electronic
documents as defined in Electronic
Commerce Act may file such complaint
before the concerned implementing
agencies by furnishing a copy of the
specific electronic data messages or
electronic document related to the
transaction.
(2.2) Upon receipt of the formal written
complaint, either through mail, personal
delivery or electronic data
messages/electronic documents, the
concerned
implementing agencies may commence
an investigation based on the said
electronic data messages or electronic
documents subject to the existing
Implementing Rules and Regulations of
the Consumer Act as well as the
Electronic Commerce Act.
(2.2.1) If after mediation/conciliation of
the complaint, there was no
amicable settlement agreed upon, the
Arbitration Officer shall
prepare and serve summons to the
respondent by personal service,
mail or publication as the case may be.
Upon receipt of the answer,
the parties shall be notified of the date,
time and place of hearing.
(2.2.2) The summons shall require
respondent to answer the complaint
(and not file a Motion to Dismiss) within
ten (10) days from service
thereof. The respondent shall answer the
complaint in writing,
together with its sworn statement and
those of his witnesses and his
documentary evidence and serve copies
thereof upon complainant.
The voluntary appearance of the
Respondent in the action is
equivalent to service of summons.
(2.2.3) If after summons, the respondent
fails to answer within the time
allowed therefrom, the implementing
agency may declare the
respondent in default and the case may
be decided upon the
evidence submitted by the complainant.
(2.3) The concerned implementing
agencies shall inform the complainant on
the action taken thereby.
(2.4) The complaint shall be decided
within fifteen (15) days from the time the
investigation was terminated.
(2.5) Any order, not interlocutory, of the
Consumer Arbitration Officer (CAO),
becomes final and executory unless
appealed to the Secretary of the
concerned implementing agency within
15 days from receipt of such
order. An appeal may be entertained only
on any of the following
grounds:
(2.5.1) grave abuse of discretion;
(2.5.2) the order is in excess of the
jurisdiction or authority of the CAO;
and
(2.5.3) the order is not supported by the
evidence or there is serious error
in the findings of facts.
(2.6) The Secretary of the concerned
implementing agency shall decide the
appeal within thirty (30) days from receipt
thereof. The decision becomes
final after fifteen (15) days from receipt
thereof unless a petition for
certiorari is filed with the proper court.
The above procedure shall be
supplemented by DTI-DOH-DA Joint
Administrative
Order (JAO) No. 1, Series of 1993 or
“Rules and Regulations Implementing
the
Provisions of Chapter III Title V of
Republic Act No. 7394 Otherwise Known
as the
Consumer Act of the Philippines” and
other existing rules. However, for
complaints
filed with the DTI under JAO 1, Series of
1997, the procedure shall be
supplemented
by the Department Administrative Order
No. 7, Series of 2006 or “Instituting the
Simplified and Uniform Rules of
Procedures for Administrative Cases
Filed with the
Department of Trade and Industry (DTI)
for Violation of the Consumer Act of the
Philippines and Other Trade and Industry
Laws” and Department Administrative
Order
No. 5, Series of 2007 or “Rules on
Mediation in the Resolution of Inquiries,
Complaints
and/or Cases Filed with the Department
and Trade and Industry (DTI) for
Violations of
the Consumer Act of the Philippines and
Other Trade and Industry Laws
Supplementing Department
Administrative Order No. 07, Series of
2006”, an
Alternative Dispute Resolution.
Any consumer located in the Philippines
aggrieved by any consumer transaction
through electronic means with a retailer
seller, distributor, supplier or
manufacturer
from another country may file his
complaint in the Philippine trade/consular
office/embassy therein or directly in the
foreign government agency or regulator
of the country.