FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
) 
S E N A T E  
S. No. 
107 
INTRODUCED BY THE HONORABLE MAR ROXAS 
EXPLANATORY NOTE 
Consumer welfare is a primary concern in commerce, as protection of the consuming 
public raises quality standards of products and services, naturally boosting the economy. 
There are few properties that are as important, both symbolically and in practical 
application, as a motor vehicle. For an average family, the purchase of such requires large 
savings made possible by blood, sweat and tears exhausted in one’s occupation. 
Needless to say, there must be a certain level of guarantee in the vehicle’s investment. 
The warranties available for vehicles do not allow the return of a defective vehicle with 
recurring problems, but only continued repairs, that is, until the warranty period expires. 
Buyers are at risk of being left with a hunk of junk, or a “lemon,” while car manufacturers 
and dealers find business elsewhere, perhaps from another unwitting victim. 
If only these automakers and dealers would willingly guarantee a return of a defective 
vehicle within a specified time. This would make perfect business sense, as buyers would be 
less hesitant to spend their hard-earned money on a product that will break down 
prematurely. But this is not the reality. As long as the auto companies are able to make their 
millions without guarantees to customers, they will continue to do so. This is what this bill 
hopes to rectify, in the pursuit of fair business practice. 
I propose a one (1) year period in which buyers of brand-new vehicles can avail of the 
provisions of this “Lemon Law,” which allows up to four repairs on the same defect before a 
replacement or refund of the vehicle can be claimed. This would ensure that the investment 
on a vehicle is money well-spent. 
This bill has been thoroughly deliberated during the 13fh Congress, and it is my 
fervent hope that we manage to finally enact this proposal into law. 
In view of the foregoing, approval of this bill is earnestly sought. 


1 
9 
10 
11 
12 
13 
14 
15 
16 
FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
1 
S E N A T E  
S. No.’ 
107 
INTRODUCED BY THE HONORABLE MAR R O U S  
AN ACT 
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND 
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. -This Act shall be known as the “Lemon Law of 2007.” 
SEC. 2. Declaration of Policy.- 
It is hereby declared the policy o f  the State to promote 
full protection to the rights of consumers in the sale of motor vehicles against sales and trade 
practices which are deceptive, unfair or otherwise inimical to the consumers and the public 
interest. 
The State recognizes that a motor vehicle is a major consumer purchase or investment. 
The consumer rights should thus be clearly defined including the means for redress for violations 
thereof. 
SEC. 3. Definition of Term. - For purposes of this Act, the following terms shall 
mean: 
(a) “Brand new motor vehicle” refers to a vehicle constructed entirely from new parts 
that has never been sold or registered with the Department of Transportation and 
Communications or an appropriate agency or authority and operated on the highway of the 
Philippines, or in a foreign state or country. 
(b) “Collateral Charges” refer to the fees paid to the Land Transportation Office for the 
registration of a brand new motor vehicle. 
1 


5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
(c) “Comparable Motor Vehicle” refers to a motor vehicle that is identical or reasonably 
equivalent to the motor vehicle to be replaced, in terms of specifications and values subject., to 
availability, as the motor vehicle existed at the time of purchase; Provided, That there shall be 
an offset from this value for reasonable allowance for its use. 
(d) “Consumer” refers to any person, natural or juridical, who is a purchaser, either by 
cash or credit of a brand new motor vehicle. 
(e) “Dealer” or “Seller” refers to any person other than a manufacturer which sells motor 
vehicles to the public. 
(Q “Distributor” refers to any person or entity other than a manufacturer who sells brand 
new motor vehicles to their duly authorized dealers or retailers. 
(g) “Implementing Agency” refers to the Department of Trade and Industry (DTI). 
(h) “Lemon Law Rights Period” refers to the period ending twelve (12) months after the 
date of the original delivery of a brand new motor vehicle to a consumer or the first twenty 
thousand (20,000) kilometers of operation after such delivery, whichever comes first. This shall 
be the period during which the consumer can report any non-conformity to the manufacturer, 
distributor, authorized dealer or retailer, and pursue any right provided for under this Act. 
(i) ”Manufacturer” refers to a person, partnership, association, corporation or entity 
engaged in the business of manufacturing or assembling motor vehicles, or of distributing motor 
vehicles to motor vehicle dealers. 
(‘j) “Motor Vehicle” refers to any self-propelled four-wheeled road vehicle designed to 
carry passengers including, but not limited to, sedans, coupes, station wagons, convertibles, picli- 
ups, vans, sport utility vehicles (SUVs) and Asian utility vehicles (AUVs) but excepting 
motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley cars, street sweepers, 
sprinklers, lawn mowers and heavy equipment, such as, but not limited to bulldozers, payloaders, 
graders, forklifts, amphibian trucks, cranes, and vehicles which run only on rails or tracks, and 
tractors, trailers and traction engines of all kinds used exclusively for agricultural purposes. 
2 


1 
2 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
Trailers having any number of wheels, when propelled or intended by attachment to a motor 
vehicle, shall be classified as separate motor vehicle with no power rating. 
(k) 
“Nan-Conformity” refers to any condition of a brand new motor vehicle which 
prevents it from conforming to the manufacturer’s or distributor’s standards or specifications, 
which cannot be repaired, but excluding conditions resulting from accident, force majeure, 
abuse, neglect, or unauthorized modification or alteration of the brand new motor vehicle. 
(1) “Purchase Price” refers to the invoice price or the amount of money which the dealer 
or retailer actually received for the brand new motor vehicle in consideration of the sale of such 
brand new motor vehicle. 
(m) “Warranty” refers to the written assurance, so labeled, of the manufacturer of a 
brand new motor vehicle, including any term or condition precedent to the enforcement of 
obligations under the warranty; 
(n) “Warranty Rights Period” refers to the period provided for under the contract of sale 
when the manufacturer would guarantee the materials used, workmanship and fitness of a brand 
new motor vehicle for ordinary use or reasonable intended purposes. 
SEC. 4. 
Coverage. - This Act shall cover brand new motor vehicles with non- 
conformity reported by the consumer within twelve (12) months from date of original delivery to 
the consumer or twenty thousand (20,000) kilometers of operation after such delivery, whichever 
comes first. The following causes of non-conformity shall be excluded: 
a. noncompliance by the consumer of his obligations under the warranty; 
b. modifications not authorized by the manufacturer or distributor; 
c. abuse or neglect of the brand new motor vehicle; and 
d. damage to the vehicle due to an accident orforce majeure. 
SEC. 5. Repair Attempts. - At any time within the lemon law rights period, and after at 
least four (4) separate repair attempts by the same dealer-manufacturer for the same complaint, 
the consumer, if still unsatisfied with the results of the said repairs, may invoke his rights under 
this Act. 
3 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
SEC. 6. Notice ofAvailment ofLemon Law Rights. - Before availing of any remedy 
under this Act and subject to compliance with the provisions of Section 5 hereof, the consumer 
shall, in writing, notify the manufacturer, distributor, authorized dealer or retailer of the 
unresolved complaint, and the consumer’s intention to invoke his rights under t h  Act within the 
lemon law rights period. 
The warranty booklet issued by the manufacturer, distributor, authorized dealer or retailer 
shall clearly state the responsibility of the consumer under this section. It shall likewise provide 
the manner and fom of such notice to constitute a valid and legal notice to the manufacturer, 
distributor, authorized dealer or retailer. 
SEC. 7. Availment of Lemon Law Rights. - Subsequent to filing the notice of availment 
referred to in the preceding section, the consumer shall bring the vehicle to the dealer from 
which the vehicle was purchased for a final attempt to address the consumer’s complaints to his 
satisfaction. 
It shall be the duty of the manufacturer, distributor, authorized dealer or retailer, upon 
receipt of the motor vehicle and the notice of availment referred to in Section 6 hereof, to attend 
to the complaint of the consumer including, as may be necessary, making such repairs and 
undertaking such actions as to make the vehicle conform to the standards or specifications of the 
manufacturer or distributor for such vehicle. 
In case the consumer remains unsatisfied with the dealer-manufacturer’s efforts to repair 
the vehicle, pursuant to the consumer’s availment of his lemon law rights, the consumer may file 
a complaint before the DTI as provided under this Act, Provided, however, That if the vehicle is 
not returned for repair for the same complaint within thirty (30) calendar days from the date of 
notice of release of the motor vehicle to the consumer following this repair attempt under the 
availment of lemon law rights period, the repair is deemed successful; Provided,finally, That in 
the event that the consumer still remains unsatisfied after the thirty (30) day period, but is still 
within the lemon law rights period, the consumer may still avail of the same remedies under 
Sections 5 and 6 hereof. 
To compensate for the non-usage of the vehicle while under repair and during the period 
of availment of lemon law rights, the consumer shall be provided a reasonable daily 
4 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
transportation allowance equivalent to first class taxi, in such amount to be agreed upon by the 
parties, or a service vehicle at the option of manufacturer, distributor, authorized dealer or 
retailer. Any disagreement on this matter shall be resolved by the implementing agency 
provided for under this Act. 
-
.
 
Nothing herein shall be construed to limit or impair the rights and remedies of a 
consumer under any other law. 
SEC. 8. Remedies for Dispute Resolution. - The DTI shall exercise exclusive and 
original jurisdiction over disputes arising from the provisions of this Act. All disputes arising 
from the provisions of this Act shall be settled by the DTI in accordance with the following 
dispute resolution mechanisms: 
8.1 Mediation 
(a) The principle of negotiation, conciliation and mediation towards amicable settlement 
between the manufacturer or distributor and consumer shall be strictly observed; 
(b) In the course of its dispute resolution efforts, the DTI shall endeavor to independently 
establish the validity of the consumer’s outstanding complaint. The DTI shall likewise retain the 
services of other government agencies or independent private entities in the ascertainment of the 
validity of the consumer’s complaint. Any cost incurred in establishing the validity of the 
consumer’s complaint shall be borne jointly by the consumer and the dealer-manufacturer. , 
, 
(c) The complaint shall be deemed valid if it is independently established that the vehicle 
does not conform to the standards or specifications set by the manufacturer. 
(d) Upon failure of the negotiation or mediation between the manufacturer or distributor 
and consumer, the parties shall execute a certificate attesting to such failure; 
(e) At any time during the dispute resolution period, the manufacturer or distributor shall 
not be precluded from offering easier remedial terms to the consumer to reach amicable 
settlement at any stage of the dispute mechanism. 
All disputes that have been submitted for amicable settlement shall be settled not later 
than forty five (45) working days from the date of filing of the complaint with the DTI. 
28 
8.2 Arbitration 
29 
(a) 
In the event there is a failure to settle the complaint during the mediation 
5 


9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
proceedings, the parties may voluntarily enter into arbitration proceedings, likewise to be 
supervised by the DTI. The DTI shall rely on the independent findings as 'to conformity to 
standards and specifications established herein. 
(b) In case a non-conformity of the vehicle is found by the DTI, it shall rule in favor of 
the consumer and direct the dealer-manufacturer to grant either of the following remedies to the 
consumer: 
(i) 
replace the motor vehicle with a similar or comparable motor vehicle in 
terms of specifications and values, subject to availability; or 
(ii) accept the return of the motor vehicle and pay the consumer the purchase 
price plus collateral charges. 
(c) In case a non-conformity of the vehicle is not found by the DTI, it shall rule in 
favor of the dealer-manufacturer and direct the consumer to reimburse the dealer-manufacturer 
the costs incurred by the latter in validating the consumer's complaints. 
SEC. 9. Disclosure on Re-suk- 
Should the returned vehicle he made available for 
resale, the manufacturer or distributor shall, prior to sale, lease, or transfer, disclose to the dealer 
in writing that: 
(a) 
(b) 
(c) 
It shall be the responsibility of the dealer to make the same disclosure in writing, in turn, 
to the next purchaser prior to sale. A dealer's responsibility under this section shall cease upon 
the sale of the affected motor vehicle to the first purchaser. 
the motor vehicle was returned to the manufacturer, distributor, factory or branch; 
the nature of the non-conformity which caused the return; and 
the condition of the motor vehicle at the time of the transfer to the dealer. 
SEC. 10. f'enulty- 
The manufacturer, distributor or dealer adjudged to have violated 
the provisions requiring disclosure as mentioned in the preceding section shall be liable to pay a 
minimum amount of One hundred thousand pesos (Php100,OOO.OO) as damages to the aggrieved 
party without prejudice to any civil or criminal liability they and/or the responsible officer may 
incur under existing laws. 
SEC. 11. Assistance by Other Agencies.- The Department of Transportation and 
6 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
Communications and other agencies, political subdivisions, local government units, including 
government-owned and controlled corporations shall render such assistance as required by the 
DTI in order to effectively implement the provisions of this Act 
SEC. 
12. Implementing Rules and Regulations.- 
The Department of Trade and 
Industry shall promulgate the necessary implementing rules and regulations within ninety days 
(90) days from the effectivity of this Act. 
SEC. 13. Separability Clause.- If, for any reason, any part or provision of this Act is 
declared invalid, such declaration shall not affect the other provisions of this Act. 
SEC. 14. Repealing Clause.- 
All laws, decrees, executive orders, issuances, rules or 
regulations or parts thereof, which are inconsistent with the provisions of this Act, are hereby 
deemed repealed, amended or modified accordingly. 
SEC. 15. Efectivity- This Act shall take effect thirty (30) days after its publication in 
the Ofjcial Gazette or in two national newspapers of general circulation. 
Approved, 
7