The basics of Philippine Lemon Law

The Philippine Lemon Law otherwise known as Republic Act No. 10642 took into effect back in 2014. It is a law that can protect your consumer rights against some car dealer’s trade malpractices. With new cars being sold by the thousands every year chances are a few “lemon” vehicles will make their way into the hands of the customers, that in mind, we have compiled a few frequently asked questions about the Philippine Lemon law.

What is a lemon car?

A “lemon” car is a vehicle that is brand new and has defects straight out of the showroom or dealership floor. These are vehicles that are also bought from official and authorized dealerships in the country. 

What vehicles are covered by the Lemon Law?

The Philippine Lemon law covers a wide range of vehicles in the country, these include passenger cars, hatchbacks, crossovers, SUVs, and pickup trucks. This law, however, does not cover motorcycles, buses, delivery trucks, dump trucks, and other kinds of heavy equipment such as bulldozers or cranes.

What is the scope and coverage of the law?

Consumers are protected by the law up to 12 months after purchase or within the vehicle’s first 20,000 km of total distance traveled, whichever comes first. The period may be short, but on the bright side, most car manufacturers these days offer warranty benefits and free preventive maintenance services (PMS) for up to 3 years or more which may help in resolving potential factory defects.

What kinds of defects does the law acknowledge?

The Philippine Lemon Law acknowledges any factory defects that are found in or around the brand new unit that do not meet the manufacturer’s specifications or warranty claims that are covered by the law. It is still up to the dealership or manufacturer to assess these “defective” units and find a way to take action and resolve these issues. 

When and how can the consumer avail his/her rights under the law?

The consumer may request (in writing) the dealer to have the defective unit fixed within the 12-month time period for at least 4 attempts. This, however, comes with an agreement that the consumer must return the unit within 30 days from the previous repair attempt, should the issue still persist. If unreturned within 30 days, the previous repair may be considered as successful.

If the dealer didn’t resolve the issue beyond 4 attempts or if the issue persists after several repairs, the consumer may then issue a Notice of Availment of Lemon Law Rights to the dealer. If both parties agree with the notice, the consumer shall then return the unit for a final repair attempt. If the dealer still fails to resolve the issue, the consumer can bring the case up to the Department of Trade and Industry (DTI) for assistance.

Are there any issues that go beyond the law’s protection?

Yes. These issues include; non-compliance to the warranty terms and conditions, unit modifications within the warranty period, and careless use of the unit. Damages caused by accidents or acts of nature like flash floods and earthquakes are likewise not honored.

This aspect of the law is important so as to protect the honest dealers’ rights against some consumers who may have wrongful intentions that would damage credibility and reputation.

Is there any compensation for the customer during repair of the unit or availment of Lemon Law rights?

Yes. During the period of unit repair or availment of Lemon Law rights, the dealer shall provide the consumer with either a daily transportation allowance or a service vehicle.

If ever the DTI deemed the issue in favor of the consumer, he or she can request the dealer to replace the unit with a similar model or a vehicle of higher value. Should the consumer choose to have a more expensive model, he or she has to pay the additional cost. On the other hand, the consumer may return the defective unit and demand a full refund with collateral damage pay. 

What if the DTI rules in favor of the dealer?

If it’s proven that there's no defect on the unit, the DTI will order the consumer to pay or reimburse the total amount that’s spent by the dealer in repairing the otherwise non-defective unit.

Can the consumer or dealer make an appeal?

Yes. Both parties can seek help from the DTI in appealing the case within 15 days after the decision has been made. This, of course, has a few grounds to meet, most especially with regard to the possible factual errors in the decision-making.

What will happen to the non-defective unit if returned or replaced?

The dealer may resell it, provided that the new buyer is given full documentation of the unit’s history. Not doing so may result to the dealer paying P100,000 in damages to the new buyer.

These are 10 of the basic questions that we hope will help you in better understanding the Philippine Lemon Law. Not only does it protect your rights as a car buyer, it also protects the rights of those honest car dealers. For a more in-depth look at the Lemon Law, check out the Official Gazette of the Republic of the Philippines.