New House bill seeks to make a Lemon Law Act for used cars

Back in August of 2021, a new senate bill was filed which seeks to make several improvements to the Lemon Law in the Philippines. Senate Bill No.2356 is a protective measure for new car buyers if they receive a problematic vehicle. The bill also outlines the specific consumer rights if there are problems after the buyer purchase a brand new vehicle from a reputable automotive company. In conjunction with this, another bill has been filed but this time about the second-hand car market.

House Bill (HB) No.443 or the Used Car Lemon Act functions similarly to the Lemon Law as the bill aims to protect the rights of the consumers when it comes to the sale of second-hand motor vehicles. The bill also covers any defects or safety issues that could cause harm to individuals when it comes to the sale of a used car.

That being said, if HB No.433 does get passed in its current form it could make buying a second-hand car from a private dealership much easier as it will require these entities to include a warranty with the purchase of a vehicle. This written warranty will cover the full cost of both parts/labor that will be needed if the vehicle sold has any defects that will impair its use. However, it is important to note that defects that only affect the appearance of the vehicle will not be covered by the warranty. 

As part of the new bill, dealerships who receive a unit that is still under the written warranty have the option of fixing it themselves or hiring another party to deal with the repair. Once the dealer returns the used car to the affected party after the repair, the dealer will be required to explain the repairs made to the vehicle as well as other work performed to fix the problem. Aside from this, the dealer is also required to inform the customer of any parts replaced while the repair was performed. 

If the dealer fails to repair the defect in the vehicle within three attempts or if the used car is out of service for more than 10 business days after the consumer has returned it for repair, then the dealer must accept the return of the vehicle from the consumer and give them a full refund. The consumer, on the other hand, has the option of retaining the use of any vehicle returned until the dealer has tendered the refund. 

The house bill also outlines what should be included within the written warranty for used cars and it is as follows:

• Cars with 64,500 km on the odometer must come with a 90-day or 6,035 km warranty

• Cars with 64,500 km to 128,764 km must have a 60-day or 4,023 km warranty

• Cars with 128,764 km to 201,167 km must come with a 30-day or 2,012 km warranty

In the event that the true mileage of the vehicle is unknown at the time of the sale, the warranty period will be determined by the age of the vehicle. The warranty period is as follows:

• Vehicles that are 3 years old or less will have a 90-day or 6,035 km warranty

• Vehicles that are between 3 to 6 years old will have a 60 day or 4,023 km warranty

• Vehicles that are older than 6 years will come with a 30-day or 2,012 km warranty.

Any dealer that will be found in violation of this new bill will have to pay between P50,000 to P100,000 as damages to the customers affected. 

It is important to note that House Bill No.443 also covers rules for private sellers that are selling their vehicle to another private individual. However, these rules aren’t as strict as it states that the private seller must disclose the history of their vehicle to the buyer which is the norm for those privately selling their vehicles.