FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPMES 
First Regular Session 
SENATE 
Senate Bill No, 
~ 
-~ 
~~ 
~ 
. ._ 
.. 
- 
EXPLANATORY NOTE 
The number of car-owners is fast,rewing 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 craRed primarily to r e m  to the consumer the full value of his money. 
full. 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 be may suitable to our country’s setting. 
The prompt and immediate passage of this bill deserves utmost attention. 
MANNY 
LLAR 
T 


FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPNES 
First Regular Session 
SENATE 
Senate Bill No. 
Y 
INTRODUCED BY HON. MANNY VILLAk 
. . . 
~~~~~~ 
~ 
~ 
~ _ ~ _ _ _  
1 
2 
3 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
21 
28 
29 
30 
31 
32 
33 
34 
35 
36 
31 
38 
39 
40 
41 
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." 
SEC. 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 ofredress. 
SEC. 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, "buyer" shall mean a person who is a purchaser 
either by cash or credit, of a brand new or second-hand motor vehicle. "Sellev" 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. "Manufuctzirerr'' means any person who manufactures, assembles 
or processes motor vehicles, except @at if the motor vehicles are manufactured, 
assembled or processed for another person who attaches his own brand name to the said 
motor vehicles, the latter shall be deemed the manufacturer. In case of imported motor 
vehicles, the manufacture's representative or, in his absence, the importer, shall be 
deemed the manufacturer. 
SEC. 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 substantially 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. 


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 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
SEC. 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. 
SEC. 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. 
SEC. 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. 
SEC. 8. Mileage Deduction.-The 
seller shall be entitled to deduct from the recovered 
value of the motor vehicle an amount which corresponds 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 
aotuatprice paid or Rayable by the buyer. 
SEC. 9. Attorney’sfees. -In addition to the foregoing sections, a buyer is also entitled to 
an award ofattorney’s fees and other costs of litigation. 
SEC. 10. Civil liability of seller who refixes 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. 
SEC. 11. Inscription of ownershl;a of reacquired lemon vehicles. -- Any manufacturer 
wflo 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 h e w  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. 
SEC. 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 
(c) the nature of each nonconformity reported by the original buyer or lessee of 
(d) repairs, if any, made to the vehicle in attempt to correct each noncomformity 
(e) The notice shall be on a from 8 % x 11 inches in size and printed in no smaller 
Law Buyback.” 
the vehicle; 
reported by the original buyer or lessee. 
than 10-point black type on a white background. 
SEC, 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 
kansferee with a disclosure statement signed by the transferee that states: 


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 
21 
28 
29 
30 
31 
32 
33 
34 
35 
36 
31 
38 
39 
40 
41 
42 
43 
44 
45 
46 
41 
48 
49 
so 
5I 
52 
53 
54 
55 
56 
51 
“THIS VgHICLE 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.” 
SEC 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 doing either ofthe following: 
(1) 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 non- 
financial terms of the reacquisition. 
(2) 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. 
(b) 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. 
(c) 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. 
SEC. 15. Penalties. -(a) Any person who shall violate any provision of Article of the 
next preceding Section, upon conviction, be subject to a fine ofnot less than ten lhousand 
pesos (Pl0,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. 
@) If the offender is an alien, he shall be deported after servjce of sentence and 
payment of fine without further deportation proceedings. 
(0) 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 snbject to penalties to which that corporation 
may be subject. 
(e) Jn 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 prescrjbed by the Secretary of the Department of 
Transportation and Communication without prejudice to civil or criminal liabilities. 
SEC. 17. Prescriptiort 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. 


1 
4 
5 
6 
I 
8 
9 
10 
11 
12 
13 
14 
1s 
16 
17 
18 
SEC. 18. Repealing CIause.-- All laws, decrees, executive orders, rules, and issuances 
inconsistent with this Act are hereby repealed, amended or modified accordingly. 
SEC. 19. Implementing Rules and Regulations. -- The Secretary of the Department of 
Transportation and Communication shall promulgate the appropsiate rules and 
regulations to implement this Act. 
SEC. 20. 
Separability Clause. If any portion or provision of this Act is declared 
unconstitutional or invalid, the other portions or provisions hereof which are not affected 
thereby shall continue in full force and effect. 
SEC. 21. Eflectividy Clause. This Act shall take effect fitken days following its 
publications in the Official Gazette or in any two newspapers of general circula!ion. 
Approved.