FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENAlJO 
S.B. No. 1310 
INTRODUCED BY SEN. MANNY VILLAR 
EXPLANATORY NOTE 
The number of car-owners is fast revving up as the present time demands the 
necessity of owning at least one automobile. With this fact, there is a deeper call to 
protect buyer of cars from the wily and fraudulent schemes of lemon· motor vehicles 
dealers. 
The historical antecedents of the lemon law originated in the United States. The 
lemon law was crafted primarily to return to the consumer the full value of his money. 
The law provides that if a manufacturer or its authorized dealer cannot successfully 
repair a defective product within a reasonable number of repair attempts, the 
manufacturer must either promptly replace or repurchase the product. Stated otherwise, 
the law provides for legal remedies to buyers who face the ill fate of lemon automobiles 
ending up in their hands. 
This bill seeks to adopt the US lemon law to our own jurisdiction subject to some 
appropriate modifications, which may be may suitable to our country's setting. 
The prompt and immediate passage of this bill deserves utmost attention. 
MANNYV LAR 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENAY310 
S.B.No. __ ~ 
INTRODUCED BY SEN. MANNY VILLAR 
'I 
AN ACT PROVIDING PROTECTION AND REMEDIES TO BUYERS OF NEW AND 
USED MOTOR VEHICLES 
Be it enacted by the Senate and House of Representatives of' the Philippines in 
Congress assembled: 
SECTION 1. Short Title. -This Act shall be cited as the "Philippine Lemon Law." 
SECTION 2. Declaration of State Policies.-- It is the policy of the State to 
protect the consumers from wily and fraudulent sellers of automobiles. The State shall 
promote the right to fill disclosure of information involving the condition of the motor 
vehicles for sale in order to promote transparency, fairness and the return of the full 
value of money. 
Toward these ends, the State shall implement measures to achieve protection 
against deceptive, unfair and unconscionable sales acts and practices and the provision 
of adequate rights and means of redress. 
SECTION 3. Coverage. - The provisions of this Act shall apply to buyers of new 
motor vehicles as well as used motor vehicles to the extent provided for under this Act. 
Motorcycles, conversion vans or farm equipment are not included under this Act. 
For the purpose of this Act: 
a) "Buyer" shall mean a person who is a purchaser either by cash or credit, of a 
brand new or second-hand motor vehicle. 
b) "Seller" shall mean a person engaged in the business of selling motor vehicles 
directly to buyers, which shall include a supplier or distributor if (1) the seller is a 
subsidiary or affiliate of the supplier or distributor; (2) the seller interchanges 
personnel or maintains common or overlapping officers or directors with the 
supplier or distributor; or (3) the supplier or distributor provides or exercises 
supervision, direction or control over the selling practices of the seller. 
c) "Manufacturer" means any person who manufactures, assembles or processes 
motor vehicles, except that if the motor vehicles are manufactured, assembled or 
processed for another person who attaches his own brand name to the said 
motor' vehicles, the lalter shall be deemed the manufacturer. In case of imported 
motor vehicles, the manufacturer's representative or, in his absence, the 
importer, shall be deemed the manufacturer. 
SECTION 4. When a motor vehicle is deemed a lemon.-A motor vehicle shall 
be presumed to be a lemon, when the following conditions concur: 
a) the motor vehicle was purchased within the Philippines; 
b) the buyer must have reported the failure to repair the non-conformity to the seller 
or manufacturer within the first 12 months or 12,000 miles, whichever is first; 
c) the defect of the automobile must substar)tially impair the use, value, or safety of 
the automobile; and 
d) the automobile has been out of service for the same defect for a cumulative total 
of thirty (30) days or more or the defect was not corrected within the reasonable 


number of attempts. Four (4) attempts to repair the same defect is presumed to 
be reasonable. 
SECTION 5. Buyer's remedy when motor vehicle is a lemon. -- A buyer of a 
new motor vehicle shall have the right to either the remedy of a prompt repurchase or 
replacement from a seller or manufacturer should his automobile is shown to be a 
lemon in accordance with the next preceding section. A buyer of used motor vehicle 
shall have the same right to the extent of the seller's warranty as provided for in this Act. 
SECTION 6. Replacement. - The buyer who chooses replacement as a remedy 
is entitled to a motor vehicle identical to the vehicle being replaced. The seller or 
manufacturer shall be responsible for paying all taxes and licensing fees. 
SECTION 7. Repurchase.-- A buyer may at his option be entitled to a refund of 
all monies invested in the lemon including the down payment, monthly finance 
payments and payoff of the finance contract. In both cases of replacement or 
repurchase, the buyer is also entitled to recover expenses such as towing costs and 
repair costs. 
SECTION 8. Mileage Oeduction.-The seller shall be entitled to deduct from the 
recovered value of the motor vehicle an amount which corresponds to the use of the 
lemon vehicle prior to the first repair attempt. The mileage deduction shall be computed 
, 
as the mileage at the time of the first repair attempt of the defect, divided by 120,000 
multiplied by the actual at price paid or payable by the buyer. 
SECTION 9. Attorney's fees. -In addition to the foregoing sections, a buyer is 
also entitled to an award of attorney's fees and other costs of litigation. 
SECTION 10. Civil liability of seller who refuses to comply. - A seller of a 
lemon motor vehicle who willfully fails to comply with his obligations to repurchase or 
replace lemon products after final judgment shall be subject to a civil penalty of up to 
two times the buyer's actual damages. 
SECTION 11. Inscription of ownership of reacquired lemon vehicles. -- Any 
manufacturer who reacquires or assists a seller or lien-holder to reacquire a motor 
vehicle registered in the Philippines shall prior to any sale, lease or transfer of the 
vehicle within the country cause the vehicle to be re-titled in the name of the 
manufacturer, request the Land Transportation office to inscribe the ownership 
certificate with the notation "Lemon Buyback," and affix a decal to the vehicle if the 
manufacturer knew or should have known that the vehicle is required by law to be 
replaced, accepted for restitution due to the failure of the manufacturer to conform to the 
vehicle to warranties. 
SECTION 12. Notice to buyers of condition of reacquired cars. -In addition to 
the requirement in the next preceding section, the manufacturer shall prior to the sale, 
lease, or other transfer of the vehicle, execute and deliver to the subsequent transferee 
a notice and obtain the transferee's written acknowledgement of a notice stating the 
following: 
a) year, make, model, and vehicle identification number of the vehicle; 
b) whether the title to the vehicle has been inscribed with the notation 
"Lemon law Buyback;" 
c) the nature of each nonconformity reported by the original buyer or lessee 
of the vehicle; 
d) repairs, if any, made to the vehicle in attempt to correct each 
noncomformity reported by the original buyer or lessee; 
e) The notice shall be on a from 8 % x 11 inches in size and printed in no 
smaller than 1 O-point black type on a white background. 
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SECTION 13. Disclosure Statement. - Any person, including any manufacturer 
or dealer, who sells, leases, or transfers ownership of a motor vehicle when the 
vehicle's ownership certificate is inscribed with the notation "Lemon Law Buyback" in 
accordance with Section 10 shall prior to the sale, lease, or ownership transfer of the 
vehicle, provide the transferee with a disclosure statement signed by the transferee that 
states: "THIS VEHICLE WAS REPURCHASED BY ITS MANUFACTURER DUE TO A 
DEFECT IN THE VEHICLE PURSUANT TO THE LEMON LAW. THE TITLE TO THIS 
VEHICLE HAS BEEN PERMANENTLY BRANDED WITH THE NOTATION "LEMON 
LAW BUYBACK." 
SECTION 14. Prohibitions. - Any automobile manufacturer, seller, importer, 
distributor, dealer or lien-holder who reacquires, or assists in reacquiring a motor 
vehicle, whether by judgment, decree, arbitration award, settlement agreement, or 
voluntary agreement, is prohibited from doing either of the following: 
a) Requiring, as a condition of the reacquisition of the motor vehicle, that a buyer or 
lessee who is a resident of the Philippines agree not to disclose the problems 
with the vehicle experienced by the buyer or lessee or the nonfinancial terms of 
the reacquisition. 
b) Including, in any release or other agreement, whether prepared by the 
manufacturer, seller, importer, distributor, dealer, or lienholder, for signature by 
the buyer or lessee, a confidentiality clause, gag clause, or similar clause 
prohibiting the buyer or lessee from disclosing information to anyone about the 
problems with the vehicle, or the non-financial terms of the reacquisition of the 
vehicle by the manufacturer, importer, distributor, dealer, or lienholder. 
1) Any confidentiality clause, gag clause, or similar clause in such a release 
or other agreement in violation of this section shall he null and void as 
against the public policy of this state. 
2) Nothing in this section is intended to prevent any confidentiality clause, 
gag clause, or similar clause regarding the financial terms of the 
reacquisition of the vehicle. 
SECTION 15. Penalties. -(a) Any person who shall violate any provision of 
Article of the next preceding Section, upon conviction, be subject to a fine of not less 
than ten thousand pesos (PIO,OOO.OO) but not more than thirty thousand pesos 
(P30,OOO.OO) or imprisonment of not less than two (2) months but not more than one (1) 
year, or both upon the discretion of the court. 
b) 
If the offender is an alien, he shall be deported after service of sentence and 
payment of fine without further deportation proceedings. 
c) In case the offender is a naturalized citizen, he shall, in addition to the penalty 
prescribed herein, suffer the penalty of cancellation of his naturalization 
certificate and its registration in the civil registrar and immediate deportation after 
service of sentence and payment of fine. 
d) any director, officer or agent of a corporation who shall authorize, order or 
perform any of the acts or practices' constituting in whole or in part a violation of 
Article 14, and who has knowledge or notice of non-compliance received by the 
corporation from the concerned department, shall be subject to penalties to 
which that corporation may be subject. 
e) In case the violation is committed by, or in the interest of a foreign juridical 
person duly licensed to engage in business in the Philippines, such license to 
engage in business in the Philippines shall immediately be revoked. 
SEC 16. Administrative sanctions. -- Any automobile manufacturer, seller, 
importer, distributor, dealer or lien-holder who violates the next preceding section shall 
be liable to administrative sanctions to be prescribed by the Secretary of the 
Department of Transportation and Communication without prejudice to civil or criminal 
liabilities. 
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SECTION 17. Prescription of action for repurchase or replacement. -- The 
right to file an action for repurchase or replacement shall prescribe after the lapse of 
four (4) years from the date the buyer knew or should have known that the vehicle is a 
lemon. 
SECTION 18. Implementing Rules and Regulations. -- The Secretary of the 
Department of Transportation and Communication shall promulgate the appropriate 
rules and regulations to implement this Act. 
SECTION 19. Separability Clause. - If any part or provision of this Act is held 
unconstitutional or invalid, the other parts or provisions hereof which are not affected 
thereby shall continue to be in full force and effect. 
SECTION 20. Repealing Clause. - All laws, orders, rules or regulations which 
are inconsistent with or contrary to the provisions of this Act are hereby amended or 
repealed accordingly. 
SECTION 21. EFFECTIVITY -This Act shall take effect fifteen (15) days after its 
publication in at least two (2) national newspapers of general circulation. 
Approved, 
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