Philippine lemon law ai

• Philippine Lemon Law (RA No. 10642)

An Act Strengthening Consumer Protection in the Purchase of Brand New Motor Vehicles.

• Policy of the State (Lemon Law)

To promote full protection to consumer rights in motor vehicle sales against deceptive, unfair, or inimical business practices, recognizing a motor vehicle as a major consumer purchase and defining means for redress.

• Motor Vehicles (Lemon Law Definition)

Any self-propelled, four (4) wheeled road vehicle designed to carry passengers, including sedans, coupes, station wagons, convertibles, pick-ups, vans, sports utility vehicles (SUVs), and Asian Utility Vehicles (AUVs).

• Excluded Vehicles (Lemon Law)

Motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley cars, street sweepers, sprinklers, lawn mowers, heavy equipment (e.g., bulldozers, forklifts), vehicles running only on rails or tracks, and tractors, trailers, and traction engines used exclusively for agricultural purposes.

• Trailers (Lemon Law Classification)

Trailers having any number of wheels, when propelled or intended by attachment to a motor vehicle, are classified as separate motor vehicles with no power rating.

Requisite to Invoke Lemon Law Rights

The motor vehicle must be brand new.

The motor vehicle must be purchased in the Philippines

The vehicle is reported by a consumer to be in nonconformity with the manufacturer's 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

• Non-conformity (Definition)

Any defect or condition that substantially impairs the use, value, or safety of a brand new motor vehicle, which prevents it from conforming to the manufacturer's or distributor's standards or specifications, and which cannot be repaired.

• Non-conformity (Exclusions)

Conditions resulting from noncompliance by the consumer of obligations under the warranty, modifications not authorized by the manufacturer or distributor, abuse or neglect, and damage due to accident or force majeure.

• Lemon Law Rights Period (Duration)

Within (12) months from the date of original delivery to the consumer, or up to (20,000) kilometers of operation after such delivery, whichever comes first.

• Repair Attempts (Condition for Invoking Rights)

After at least 4 separate repair attempts by the same manufacturer, distributor, authorized dealer, or retailer for the same complaint, and the nonconformity issue remains unresolved within the Lemon Law rights period.

• Repair (Scope)

May include replacement of parts, components, or assemblies.

• Notice of Availment (Requirement)

Before availing of any remedy, the consumer must, in writing, notify the manufacturer, distributor, authorized dealer, or retailer of the unresolved complaint and the intention to invoke Lemon Law rights within the Lemon Law rights period.

• Warranty Booklet (Content)

Must clearly state the manner and form of notice to constitute a valid and legal notice, and clearly state the responsibility of the consumer.

• Availment of Lemon Law Rights (Process)

Subsequent to filing notice, the consumer brings the vehicle to the seller for a final attempt to address the complaint to satisfaction.

• Seller's Duty upon Notice of Nonconformity

Upon receipt of the vehicle and notice, to attend to the consumer's complaints, including making repairs and undertaking actions to make the vehicle conform to standards.

• Deemed Successful Repair

If the vehicle is not returned for repair based on the same complaint within (30) calendar days from the date of notice of release to the consumer following a repair attempt within the Lemon Law rights period.

• Invoking Rights After 30-Day Period

If the nonconformity issue still exists or persists after the thirty (30)-day period but still within the Lemon Law rights period, the consumer may still invoke their rights.

• Compensation for Non-use (Consumer Right)

The consumer shall be provided a reasonable daily transportation allowance to compensate for non-usage of the vehicle while under repair and during the period of availment of Lemon Law rights.

• Forms of Daily Transportation Allowance

Air-conditioned taxi fare (evidenced by official receipt), or an amount agreed upon by the parties, or a service vehicle at the option of the manufacturer/seller.

• Resolution of Compensation Disagreements

Any disagreement on compensation for non-use shall be resolved by the DTI.

• Jurisdiction for Lemon Law Disputes

The Department of Trade and Industry (DTI) shall exercise exclusive and original jurisdiction.

• Dispute Resolution Mechanisms (Lemon Law)

Mediation, Arbitration, and Adjudication.

• Mediation (Governing Principles)

The principles of negotiation, conciliation, and mediation towards amicable settlement between the manufacturer/seller and the consumer shall be strictly observed.

• DTI's Role in Mediation

The DTI shall endeavor to independently establish the validity of the consumer's outstanding complaint, and may retain services of other government agencies or qualified independent private entities for this purpose.

• Cost of Validating Complaint (Mediation)

Any cost incurred in establishing the validity of the consumer's complaint shall be borne jointly by the consumer and the manufacturer/seller.

• Complaint Deemed Valid (Mediation)

If it is independently established that the motor vehicle does not conform to the standards or specifications set by the manufacturer/seller.

• Mediation Settlement Period

All disputes submitted for mediation shall be settled not later than ten (10) working days from the date of filing of the complaint with the DTI.

• Arbitration (Lemon Law)

In the event of failure to settle during mediation, both parties may voluntarily decide to undertake arbitration proceedings.

• Adjudication (Lemon Law)

In the event parties do not undertake arbitration, at least one party may commence adjudication proceedings, administered by the DTI.

• Adjudication (Time Limit)

Adjudication proceedings shall in no case exceed twenty (20) working days.

• Remedy for Nonconformity (Adjudication)

If nonconformity is found, DTI directs the manufacturer/seller to either replace the motor vehicle with a similar or comparable one, or accept the return of the vehicle and pay the purchase price plus collateral charges.

• Collateral Charges (Definition)

Fees paid to the Land Transportation Office (LTO) for registration of a brand new motor vehicle and other incidental expenses such as insurance cost, chattel mortgage fees, and interest expenses if applicable.

• Consumer Purchasing Higher Value Vehicle (Adjudication)

If the consumer decides to purchase another vehicle with a higher value/specifications from the same seller, the consumer shall pay the difference in cost.

• Reasonable Allowance for Use (Deduction in Remedies)

Deducted in both replacement and repurchase to determine the value of the nonconforming motor vehicle.

• Ruling for Seller (Adjudication)

If nonconformity is not found, DTI rules in favor of the manufacturer/seller and directs the consumer to reimburse the seller for costs incurred in validating the complaints.

• Appeal from Adjudication Officer (Procedure)

Filed within (15) days from receipt of final judgment/order by filing a Memorandum of Appeal with the DTI Secretary, with notice to the Adjudication Officer and a copy to the adverse party.

• Grounds for Appeal (Adjudication)

Grave abuse of discretion

• Determination of Reasonable Allowance for Use (Option 1)

20% per annum deduction from the purchase price.

• Determination of Reasonable Allowance for Use (Option 2)

Calculated using the formula: (Distance Travelled in kms * Purchase Price) / 100,000 kms.

• Disclosure on Resale (Requirement)

Manufacturer/seller must, prior to sale or transfer of a returned vehicle, disclose in writing to the next purchaser that the vehicle was returned, the nature of the nonconformity, and its condition at the time of transfer.