Lemon Law for New Motor Vehicles

"Brand new motor vehicle": constructed from new parts, covered by express warranty, never sold or operated.
"Collateral charges": fees related to registration and incidental expenses.
"Comparable motor vehicle": similar or equivalent vehicle for replacement purposes.
"Consumer": natural or juridical person buying new motor vehicles.
"Dealer/Retailer": authorized seller to retail buyers.
"Distributor": authorized seller to dealers.
"Implementing agency": Department of Trade and Industry (DTI).
"Lemon Law rights period": 12 months or 20,000 kilometers from delivery, whichever is earlier.
"Manufacturer": engaged in motor vehicle manufacturing/assembling.
"Motor vehicle": four-wheeled passenger vehicles excluding motorcycles, trucks, heavy equipment.
"Nonconformity": defect substantially impairing use, value or safety under defined conditions.
"Purchase price": actual amount paid to dealer/retailer.
"Warranty": written assurance from manufacturer concerning vehicle condition.
"Warranty rights period": time under which manufacturer guarantees materials and workmanship.

Covers brand new motor vehicles in nonconformity reported within the Lemon Law rights period.
Excludes nonconformities due to consumer neglect, unauthorized modifications, abuse, accidents, force majeure.

Consumer must allow at least four repair attempts by the same entity for the same issue before invoking rights.
Repairs include part/component/assembly replacements.

Consumer must notify manufacturer, distributor, dealer or retailer in writing about unresolved issues and intent to invoke Lemon Law rights within rights period.
Warranty booklet must clearly state notice procedures and consumer responsibilities.

Consumer must bring vehicle for a final attempt to address complaints.
Manufacturer/distributor/dealer/retailer must attempt repairs to conform vehicle to standards.
If unresolved, consumer may file complaint with DTI.
If vehicle is not returned within 30 days of release, repair is deemed successful.
Consumer entitled to reasonable daily transportation allowance or service vehicle during repair or rights period.
Rights and remedies under other laws remain unaffected.

DTI has exclusive jurisdiction over disputes.
Dispute resolution methods include mediation, arbitration, adjudication:
- Mediation: negotiation towards amicable settlement; to be concluded within 10 working days; independent verification of complaint validity.
- Arbitration: voluntary, after failed mediation.
- Adjudication: by DTI if arbitration not undertaken; to be resolved within 20 working days.
If nonconformity found, DTI directs vehicle replacement or return with purchase price and collateral charges refund, deducting reasonable usage allowance.
If no nonconformity found, consumer must reimburse validation costs.
Appeal from decision within 15 days to DTI Secretary; further appeal to Court of Appeals on grounds of grave abuse of discretion, excess jurisdiction, or unsupported findings.

Reasonable allowance equals 20% per annum deduction from purchase price or a calculation based on kilometers traveled, whichever is lower.

Manufacturer, distributor, dealer or retailer must disclose in writing to subsequent buyer if returned vehicle is made available for resale.
Disclosure includes the return, nature of nonconformity, and vehicle condition.
Liability ceases upon sale to the first purchaser after return.

Failure to disclose resale facts leads to a minimum penalty of PHP 100,000 damages to the aggrieved party.
Civil and criminal liabilities may also apply.

The Act takes effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.