QuestionsQuestions (Republic Act No. 10642)
RA No. 10642 is known as the “Philippine Lemon Law.”
The State promotes full protection of consumer rights in the purchase of brand new motor vehicles against deceptive, unfair, or otherwise inimical business and trade practices, recognizing that a motor vehicle is a major consumer purchase/investment and must have clear rights and redress.
A vehicle constructed entirely from new parts, covered by the manufacturer’s express warranty at time of purchase, never sold or registered with the DOTC (or appropriate agency), and never operated on any highway in the Philippines or in a foreign state/country.
Nonconformity is any defect or condition that substantially impairs the use, value, or safety of a brand new motor vehicle and prevents conformity to manufacturer/distributor standards/specifications, and cannot be repaired. Excluded are issues resulting from consumer noncompliance with warranty obligations, unauthorized modifications, abuse/neglect, and damage due to accident or force majeure.
It ends at the earlier of: (a) twelve (12) months from the original delivery of the brand new motor vehicle to the consumer, or (b) the first twenty thousand (20,000) kilometers of operation after such delivery.
RA 10642 covers brand new motor vehicles purchased in the Philippines when the consumer reports the vehicle’s nonconformity to the manufacturer/distributor within twelve (12) months from original delivery or up to 20,000 km of operation, whichever comes first.
At least four (4) separate repair attempts by the same manufacturer/distributor/authorized dealer/retailer for the same complaint, within the Lemon Law rights period, and the issue remains unresolved.
The consumer must, in writing, notify the manufacturer/distributor/authorized dealer/retailer of the unresolved complaint and the intention to invoke Lemon Law rights within the Lemon Law rights period. The warranty booklet must clearly state the manner/form of valid notice and the consumer’s responsibility.
The consumer must bring the vehicle to the manufacturer/distributor/authorized dealer/retailer from where it was purchased for a final attempt to address the complaint to the consumer’s satisfaction.
The repair is deemed successful, based on the same complaint, if the vehicle is not returned for repair within thirty (30) calendar days from the date of notice of release to the consumer.
If DTI finds nonconformity, it directs the manufacturer/distributor/authorized dealer/retailer to either (i) replace the vehicle with a similar/comparable motor vehicle (subject to availability) or (ii) accept the return and pay the purchase price plus collateral charges. A reasonable allowance for use is deducted in both cases.
It is the lower of: (a) 20% per annum deduction from the purchase price, or (b) (distance traveled in km × purchase price) / 100,000 km.
DTI has exclusive and original jurisdiction over disputes arising from RA 10642. It uses dispute resolution mechanisms: mediation (strictly observed), voluntary arbitration, and/or adjudication administered by DTI.
Disputes submitted for mediation must be settled not later than ten (10) working days from the date of filing of the complaint with DTI.
An appeal may be taken from a final judgment/order within fifteen (15) days from receipt by filing a Memorandum of Appeal with the DTI Secretary, with Notice of Appeal to the Adjudication Officer, and with copies furnished the adverse party, on grounds of grave abuse of discretion, excess of jurisdiction/authority, or decision not supported by evidence/serious error in findings of facts. The Secretary decides within thirty (30) days. Further appeal may be via certiorari to the Court of Appeals under Rule 65.
Before sale/transfer, the manufacturer/distributor/authorized dealer/retailer must disclose in writing to the next purchaser: (a) that the vehicle was returned to them; (b) the nature of the nonconformity causing the return; and (c) the condition at the time of transfer to them. Responsibility ceases upon sale to the first purchaser.
If adjudged to have violated the disclosure requirement, the manufacturer/distributor/authorized dealer/retailer must pay at least PHP 100,000.00 as damages to the aggrieved party, without prejudice to civil or criminal liability under existing laws.
Fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.