Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

COMMITTEE REPORT NO, £225

ON TRADE AND INDUSTRY on

Re :  HouseBillNo.___ 4842.

Recommending its approval in substitution of House Bill Nos. 123, 352, 1966, 3495, 3869.
4143, 4295 and 4532

Sponsors; ——_ Representatives Albert Raymond S. Garcia, Tomas V. Apucible, Maria
Carmen Zamorra-Apsay. Bernadette R. Herrera-By, Susan A. Yap.
Maria Amelita “alimbas-Villarosa, Mark A. Villar, Cesar V.
Sarmiento, Wilfrido Mark M, Enverga, Rufuss B. Rodriguez, Maximo
B, Rodriguez. Jr., Roger G. Mercado, Augusto Boboy Syjuco, Carmelo
P,and Lazatin

Mr. Speaker:

The Committee on Trade and Industry to which were referred House Bill No. 123,

introduced by Reps. Maria Carmen Zamorra-Apsay and Bernadette R. I lerrera-Dy. entitled:
AN ACT

STRENGTHENING CONSUMER PROTECTION IN THE PURCIIASE OF BRAND

NEW MOTOR VEHICLES AND FOR OTHER PURPOSES

House Bill No. 352, introduced by Reps. Susan A. Yap and Maria, Amelita Calimbas-
Villarosa. entitled:

AN ACT.
SIRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OLHER PURPOSES

House Bill No. 1966, introduced by Reps. Mark A. Villar, Ma. Amelita Calimbas-Villarosa
and Cesar V. Sarmiento, entitled:

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES.


House Bill No. 3495, introduced by Reps. Wilfrido Mark M. Enverga and Bernadette R-
Herrera-Dy, entitled:

AN ACT
PROVIDING FOR MOTOR VEHICLE WARRANTY ENFORCEMENT AND FOR
OTHER PURPOSES

House Bill No. 3869, introduced by Reps. Rufus B. Rodriguez and Maximo B. Rodriguez,
Jr, entitled:

AN ACT
STRENGTHENING CONSUMER PROTECTION {N THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES

House Bill No. 4143, introduced by Rep. Roger G. Mercado, entitled:

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES

House Bill No. 4295, introduced by Rep. Augusto Boboy Syjuco, entitled:

AN ACT
PROTECTING CONSUMERS AGAINST THE SALE OF MOTOR VEHICLE,
MAHINERIES AND APPLIANCES USSUALLY SOLD TO COMMON
CONSUMERS AND IMPOSING PENALTIES FOR VIOLATION THEREOF

and House Bill No, 4532, introduced by Rep. Carmelo F. Lazatin. entitled
AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES 484
Ad

have considered the same and recommends that the attached House Bill No.
entitled:

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES

be approved in substitution of House Bill Nos. 123, 352, 1966, 3495, 3869, 4143, 4295 and
4532, with Representatives Zamorra-Apsay. Herrera-Dy, Yap S., Calimbas-Villarosa,
Enverga. Rodriguez R., Rodriguez Ir. M., Mercado R.. Syjuco, Lazatin, Sarmiento C.,
‘A. Apacible, Duavit, Biron, Defensor, Alvarez A.. Trefias, Casifio, Villarica, Mandanas,
Femandez, Garay, Teodoro, Del Rosario A.R.. Sacdalan, Osmefia, Joson, Rodriguez I.
Lacson-Nocl. Yu, Ferrer J., Sahidulla, Lagdameo A., Boncan-David, Mcllana, Sakaluran,
Quisumbing, Unabia, Batocabe, Colmenares. Haresco, Pancho, Cojuangco E., Cajavon,
Tugna, Ty, Romualdez, Arroyo D., Gonzales A.. Panotes. and Bagasina as authors thereof,

2



‘ommittee on Trade and Industry

THE HONORABLE SPEAKER
HOUSE OF REPRESENTATIVES



peipeeris cpeggpepen it:

Cae Nauru n =

3

in)
12

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS

First Regular Session
ar x
HOUSE BILL NO. 484%

(In substitution of House Bill Nos. 123, 352, 1966, 3495, 3869, 4143, 4295 and 4532)

Introduced by

Representatives Zamorra-Apsay, Herrera-Dy, Yap S.. Calimbas-Villarosa, Villar. Enverga,
Rodriguez R., Rodriguez Jr. M., Mercado R., Syjuco, Lazatin, Sarmiento C., Garcia A.
Apacible, Duavit, Biron, Defensor, Alvarez A., Trefias. Casifio, Villarica, Mandanas, Fernandez,
Garay, Teodoro, Del Rosario A.R., Sacdalan, Osmefia, Joson, Rodriguez I, Lacson-Noel, Yu.
Ferrer J.. Sahidulla, Lagdameo A., Bonoan-David, Mellana, Sakaluran, Quisumbing, Unabia,
Batocabe, Coimenares, Haresco, Pancho, Cojuangco E., Cajayon, Tugna, Ty, Romualdez,
Ammoyo D., Gonzales A., Panotes, and Bagasina

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 L. Short Title. - This Act shall be known as the “Lemon Law of 20
SEC. 2. Declaration of Poliey. - Ik is hereby declared the policy of (he 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
imerest.
‘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
viotations thereof,
SEC. 3. Definition of Terms. - 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” refers to the fees paid to the Land Transportation Office (LTO) for
the registration of a brand new motor vehicle and other incidental expenses, including

the cost of insurance pertaining to the said vehicle;



hie

v

Bw

Sowmraan

_ saben -

(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 valves,
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;

(a) “Consumer” refers to any person, natural or juridical, who is a purchaser, either by cash

or credit, of a brand new motor vehicles

(¢) “Dealer” or “Seller” refers to any person other than a manufacturer which sells motor
vehicles to the public;

(f) “Distributor” refers (© any person or entity other than a manufacturer who sells brand

* new motor vehicles to their duty authorized dealers or retailers;

(g) “Impiementing 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 1o 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, as
defined in paragraph (k) herein, to the standards and specifications of the manufacturer,
distributor, authorized dealer or retailer, and pursue eny 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 distributing motor
vehicles to motor vehicle dealers;

()) “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,
pick-ups, vans, sports utility vehicles (SUVs) and Asian Utility Vehicles (AUVs) but
excepting motorcycles, delivery tucks, dump trucks. buses, road rollers, trolley cars,
street sweepers, sprinklers, lawn mowers and heavy equipment, such as, but not lirnited
to, bulldozers, paylcaders, graders, forklifis. 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. 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) “Non-Conformity” refers to any defect or condition that substantially impairs the use,

value or safety 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

2



eon

Sowmuaw

ul

13
4
iS
16
7
18
9

excluding conditions resulting from non-compliance by the consumer of his or her

obligations under the warranty, modifications not authorized by the manufacturer or

distributor, abuse or neglect, and damage due to accident or force majeure;

(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 manufacturer would guarantee the materials used. workmanship and
roadworthiness 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:

2. noncompliance by the consumer of his or her obligations under the warranty;

b. modifications not authorized by the manufacturer or distributor:

¢. abuse or neglect of the brand new motor vehicle; and

Gd, damage to the vehicle duc to accident or force 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 or her rights
under this Act.

SEC. 6. Notice of Availment of Lemon 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 intemtion to invoke his or her rights under this Act
within the Lemon Law rights period.

‘The warranty booklet issued by the manufacturer, distributor, authorized dealer or
retailer shall clearly state the manner und form of such notice to constitule @ valid and leyal

notice to the manufacturer, distributor, authorized dealer or retailer.



3

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 complaint of the consumer to
his or her satisfaction.

It shall be the duty of the manofacturer, distributor, authorized dealer or retailer, ypon
receipt of the motor vehicle and the notice of non-conformity required under Section 6 hereof, to
atiend to the complaints of the consumer including, as may be necessary, making the repairs and
undertaking such actions to make the vehicle conform to the standards or specifications of the
manufacturer or distributor for such vehicle.

Jn case the consumer remains unsatisfied with the dealer-manufacturer’s efforts to repair
the vehicle, pursuant to the consumer's availment of his or her Lemon Law rights, the consumer
may file a complaint before the DTI as provided for under this Act: Provided, however, That if
the vehicle is not returned for repair based on 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 within the Lemon Law rights period, the repair is deemed successful: Provided, finally,
‘That, in the event the consumer still remains unsatisfied after the thirty (30) day period but still
within the Lemon Law tights period, the consumer may be allowed to 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 @ reasonable daily
transportation allowance equivalent to first class taxi fare as evidenced by actual reciepts, or a
service vehicle at the option of manufacturer, distributor, authorized dealer or retailer. Any
disagreement on this matter shall be resolved by the DTI.

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. AMI disputes arising
from the provisions of this Act shall be settled by the DTI in accordance with the following
dispute resolution mechanisms:

{a) Mediation

(1) The principle of negotiation, conciliation, and mediation towards amicable settlement
between the manufacturer oF distributor and consumer shall be strictly observed;

2) in the course of its dispute resolution efforts. the DTI shall endeavor to independently

establish the validily of the consumer's outstanding complaint. The DT} shall likewise



13
14
15
16
17
18
i
20
21

23
24

26
27
28
29
30

32
33

: ap

retein the services of other government agencies or independent private entities in the
it. Any cost incurred in

ascertainment of the validity of the consumer's complait
establishing the validity of the consumer's complaint shall be bome jointly by the
consumer and the dealer-manufacturer.

3) The complaint shall be deemed valid if itis independently established that the vehicle
does not conform to the standards or specifications set by the manufacturer.

(4) Upon failure of the negotiation or mediation between the manufacturer or distributor and
consumer, the parties shall execute a certificate attesting to such failure.

(5) At any time during the dispute resolution period, the manufacturer or distributor shal! not
be precluded from offering easier remedial terms to the consumer to reach amicable
settlement al 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 DT!

(b) Arbitration

(1) In the event there is a failure to settle the complaint during the mediation proceedings,
the parties may voluntarily enter into arbitration proceedings. likewise to be supervised
by the DTL The DTI shall rely on the independent findings as to conformity to standards
and specifications established herein.

2) In case a non-conformity of the vehicle is found by the DTI, it shall rule in favor of the
‘consumer and direct the desler-manufacturer (o grant either of the following remedies to
the consumer:

. replace the motor vehicle with a similar or comparable motor vehicle in terms of
specifications and vaiues, subject to availability; or
ii. accept the return of the moter vehicle and pay the consumer the purchase price
plus the collateral charges.
In case the consumer decides to purchase another vehicle with a higher value and
specifications from the same dealer-manufacturer, the consumer shall pay the difference in cost
In both cases of replacement and repurchase, the reasonable allowance for use, as
provided for in this Act, shall be deducted in determining the value of the non-conforming
vehicle.

(3) In case 2 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-manifacturer the

costs incurred by the latter in validating the consumer's complaints.



*

SEC. 9. Determination of Reasonable Allowance for Use. - For purposes of this Act,
“reasonable allowance for use” shal! mean twenty percent (20%) per anmum deduction from the
purchase price, or the product of the distance traveled in kilometers and the purchase price
divided by one hundred thousand (100,000) kilometers, whichever is higher.

SEC. 10. Disclosure on Resale. - Should the returned vehicle be made available for
resale, the manufacturer or distributor shall, prior to sale, or transfer, disclose to the dealer in
writing that:

a. the motor vehicle was retumed to the manufacturer, distributor, factory or branch;
b. 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.

It shall be the responsibility of the dealer to make the same disclosure in writing, in tum,
to the next purchaser prior to sale. The responsibility of the dealer under this section shall cease
upon the sale of the affected motor vehicle to the first purchaser.

SEC 11. Penalty. - 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 (P100,000.00) 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. 12. Assistance by Other Agencies. - The Department of Transportation and

Communications and other agencies, political subdivisions. local government units. including
government-owned-and-controlled corporations. shall render such assistance as required by the
D1) in orderto effectively implement the provisions of this Act

SEC. 13. Implementing Rules and Regulations. - The Department of Trade and Industry
shail promulgate the necessary implementing rules and regulations within ninety (90) days from
the effectivity of this Act.

SEC. 14, Separabitity Clause. - If, for any reason, any part of provision of this Act is
declared invalid, such declaration shall not affect the other provisions of this Act,

SEC. 15. Repealing Clause. - All laws, decrees, executive orders, issuances, rules or
regulations of parts thereof which are inconsistent with the provisions of this Act are hereby
deemed repealed, amended or modified accordingly.

SEC 16, Effectivity, -‘Vhis Act shall take effect fifteen (15) days after its publication in

the Official Gazette or in two national newspapers of general circulation,

Approved,



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FOFTEENTH (15") CONGRESS
First Regular Session

MINUTES OF THE MEETING OF THE COMMITTEE ON TRADE &
INDUSTRY HELD ON MARCH 8, 2011 AT CONFERENCE ROOMS 9 & 10,
RAMON V. MITRA, JR. BUILDING, HOUSE OF REPRESENTATIVES
COMPLEX, BATASAN HILLS, QUEZON CITY

AGENDA:

Deliberation on the following House Bills re: PHILIPPINE LEMON LAW

N

L

House Rill No. {23 entitled: SAN ACT STRENGTHENING CONSUMER
PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
AND FOR OTHER PURPOSES,” introduced by Rep. Maria Carmen Zamora-Apsay;

House Bill No. 352 entitled: “AN ACT STRENGTHENING CONSUMER
PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
AND FOR OTHER PURPOSES,” introduced by Rep. Susan A. Yap;

House Bill No, 1966 entifed: ~AN ACT STRENGTHENING CONSUMER
PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
AND FOR OTHER PURPOSES,” introduced by Rep. Mark A. Villar;

House Bill No, 3495 entitied: “AN ACT PROVIDING FOR MOTOR VEHICLE
WARRANTY ENFORCEMENT AND FOR OTHER PURPOSES” Rep. Wilfrido
Mark M. Enverga

House Bill No, 3869 entitled: “AN ACT STRENGTHENING CONSUMER
PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
AND FOR OTHER PURPOSES, introduced by Reps. Rufus B. Rodriguez and Maximo
B. Rodriguez, Jr; and

House Rill No. 4143 entitled: “AN ACT STRENGTHENING CONSUMER

PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
AND FOR OTHER PURPOSES,” introduced by Rep. Roger G. Mercado

CALL TO ORDER

Rep. Albert S, Garcia, Chairman and Presiding Offiver, called the meeting to

order at 1:57 pm.



IL ROW. CALL AND DETERMINATION OF QUORUM

On motion of Rep. Apacible, duly seconded by Rep. Trefias and there being no
‘objection, the Committee dispensed with the Calling of the Roll.

IX. APPROVAL OF THE MINUTES OF THE PREVIOUS MEFTINGS

On motion of Rep. Ty, duly seconded and there being no objection, the
Committee dispensed with the reading of the Minutes of the Meeting held on
February 22, 2011 and thereafter approved the same.

IV. OPENING REMARKS OF THE CHAIRMAN

Rep. Garcia welcomed and thanked the Members and resource persons who
responded to the Committee's invitation to the meeting.

In his welcome remarks, Committee Chairman Albert Garcia cited that all
six (6) bills seek to promote and protect the rights of buyers of brand new motor
vehicles by providing them with remedies should these same cars repeatedly fail to
meet standards of quality and performance.

He stressed that the proposed Philippine Lemon Law recognizes that a new
motor vehicle is a major consumer purchase, and that a defective motor vehicle is
likely 10 create hardship for, or may cause injury to, the Filipino consumer

Likewise, Rep. Garcia emphasized that the proposed law prescribes the
obligation of car manufacturers and assemblers through the enforcement of warranties
in the case of defective or lemon cars.

In calling for the swift approval of the bills, the Chair noted that the passage of
a Philippine Lemon Law is one of the legislative priorities of the Committee for the
First Regular Session under the present Fifteenth (15%) Congress.

He added that the proposed measure had undergone extensive deliberations
and was subsequently passed on Third Reading by the House both during the
Thirteenth (13%) and Fourteenth (14) Congress.

V. DELIBERATION ON THE PROPOSED PHILIPPINE LEMON LAW

Bureau of Trade Regulation & Consumer Protection Director Victorio Mario
Dimagiba affirmed that the Department of Trade and Industry fully supports the
passage of the proposed Phifippine Lemon Law:

‘As amendments thereto, he suggested the inclusion of motorcycles in the
coverage of the proposed measure, and the use of taxi fare receipts in the
computation of transportation allowance for non-usage of the vehicle while under
repair and during the period of availment of lemon law right.



srt!

Mr. Homer Maranan, Secretary General of the Chamber of Automotive
Manufacturers of the Philippines, Inc. (CAMPI), submitted that the proposed
Philippine Lemon Law should strike @ reasonable balance between the rights of the
buyer and the seller of motor vehicles where both are also entitled to the mantle of
equal protection of the law.

‘The Authors present, namely Reps. Susan Yap (HB 352), Wilfrido Mark
Enverga (3495), and Maximo Rodriguez, Jr. (HB 3869}, unanimously agreed that the
6 bills should be consolidated. In this regard, Rep. Enverga moved for the
preparation of a draft substitute bill which incorporates the amendments proposed by
Director Dimagiba.

VI. ACTION TAKEN BY THE COMMITTEE
‘The motion of Rep. Enverga for the preparation of a draft substitute bill which

incorporates the amendments as proposed by Director Dimagiba was subsequently
approved by the Committee, duly seconded by Rep. Ma. Theresa Bonoan-David.

Vil. ADJOURNMENT

‘There being no other matters to be taken up, the meeting was adjourned at
2:17 pm.

Thereby certify to the correctness of the foregoing.
Prepared by:
RAFAELICO # MALIMET

SLSO!
‘Committee on Trade & Industry

Certified Correct by:

fmmitiee Secretary
‘ommitice on Trade & Industry

Noted by:

C GARCIA

imitice on Trade & Industry



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH (15") CONGRESS
First Regular Session

MINUTES OF THE MEETING OF THE COMMITTEE ON TRADE &
INDUSTRY HELD ON MAY 24, 2011(TUESDAY), 1:30 PM AT CONFERENCE
ROOMS 9 & 10, RAMON V. MITRA, JR. BUILDING, HOUSE OF
REPRESENTATIVES COMPLEX, BATASAN HILLS, QUEZON CITY

AGENDA:

(A) Deliberation on the draft bill in substitution to House Bill Nos. 2262, 2985, 4100 and 4301 i.
amendments to Republic Act No. 7581, otherwise known as the Price Act

{B) Initial Deliberation on House Bill No, 2189 ie, strict conformance to advertisemert standards in
the mamafscture, distribution and sale of herbal medicines, supplementary health preducts and
alternative healthy foods

(C) Reconsideration of certain provisions of the proposed Philippine Lemon Law of 201 ipreviousty
approved by the Committee

(D) Report of Accomplishments of the Committee for the First Regular Session of the Fifteenth (15)
‘Congress

L CALL TO ORDER
Rep. Tomas Apacible, Presiding Officer and Senior Vice Chairman of the Committee on
Trade and Industry, called the meeting 10 order at 1:45 P.M..

D. ROLL CALL AND DETERMINATION OF QUORUM
On proper motion, duly seconded and there heing no objection. the Committee dispensed
with the Calling of the Roll.

I. APPROVAL OF THE MINUTES OF THE PREVIOUS MEETING
On proper motion, duly seconded and there being no objection. the Committee dispensed

with the reading of the Minutes of the Meeting held on March 22, 2011 and thereafter
approved the same,



OPENING REMARKS OF THE PRESIDING OFFICER

On behalf of the Committee Chairman, Rep. Apacible welcomed the Members and
resource persons present and thanked them for responding to the Committee's invitation
to the meeting.

He explained that the meeting was called for primarily in order for the Committee 9
deliberate on the draft bill in substitution to House: Bill Nos. 2262, 2985, 4160 and 4301,
all seeking to amend certain provisions of Republic Act No. 7581, otherwise known as
the Price Act.

Likewise, he stated that the Committee had scheduled the initial hearing on House Bill
No. 2189 mandating the strict conformance to advertisement standards in, the
manufacture, distribution and sale of herbal medicines, supplementary health products
and alternative healthy foods.

DELIBERATION ON THE DRAFT BILL IN SUBSTITUTION TO
HOUSE BILL NOS. 2262, 2985, 4100 AND 4301

Rep. Apacible narrated that after the Committee had considered House Bills Nos. 2262,
985, 4100 «and 4301 during its meeting last March 22, 2011, the same were
subsequently referred to the Subcommittee on Consumer Protection and Trade
Regulation for its review with the goal of consolidating the various amendments to the
Price Act as proposed by the subject bills, as well as to imiroduce other omnibus
revisions to RA 758 | following said review

Subsequently. the Subcommittee conducted 1wo (2) Technical Working Group (TWG)
meetings on the subject matter with the participation by representatives of various
stakeholders and government agencies.

Rep. Apacible reported that the resulting draft substitute bill prepared by the
Subcommittee has the following salient features:

4. Itamends Section 3 (1) of RA “S81 by

providing a descriptive deGnition of the ineaning of “Basie Necessities
including the phrase “SUCH AS. BU NOT LIMITED TO” prior tw the
cnuniecation of items considered as “Basic Necessities"

«including PROCESSED POTABLE WATER IN CONTAINERS inthe Hist of
Rasic Necussities in consideration of HB 2262:

including NOODLES in the list of Basic Necessities in consideration of HB
2985:

«including HOUSEHOLD HIQUEFIED PETROLEUM GAS (LPG) AND
KEROSENE in the list of Basic Necessities in consideration of HB 4100:

«including FRUITS in the fist of Basic Necessities in consideration of the

jon by the TWG:

jg the items included in the fist Le, ROOT CROPS on top of list afer

CORN:
© including the phrase “AND SUCH OTHER GOODS AS MAY BE
FNCLUDED UNDER SECTION 4 OF HIS ACT: and



Eee

© correcting rypographical and clerical errors found thercon

Ir amends Section 3(8) of RA 7581 by

descriptive definition of the mewning of “Prime —_ Commodities:
including the phrase “SUCH AS. BUT NOT LE ITED TO” prior © the
emumeration of items considered as “Prime Commod
«replacing SWINE AND CATTLE feeds with LIVESTOCK AND
FISHERY feeds.

including the phrase “AND SUCH OTHER GOODS AS MAY BE
INCLUDED UNDER SECTION + OF THIS ACT™: and

= correcting typographical and clericat errors found thereon.

E

.

tt amends Section 4 of RA 758! by granting the implementing agency, upon petition
of concemed parties or motu proprio action with the approval of the President, ihe
power not only to exclude certain items from the coverage of R.A. 7581, but it also
eilows the same to INCLUDE. types and brands of goods in the definition of basic
necessities or prime commodities. in consideration of House Bill No. 4301.

4. tramends Section 6 of RA 7581 by providing that, IN THE CASE OF TH BASIC
NECESSITIES THAT ARE WHOLLY IMPORTED and DERE ULATED
UNDER EXISTING LAWS, SUCH AS, NUT NOT LIMITED TO HOUSEHOLD
LIQUEFIED PETROLEUM GAS (LPG) AND KEROSENE, PRICE CONTROL
THEREON SHALL REMAIN EFFECTIVE FOR A PERIOD OF NOT MORE
THAN FIFTEEN (15) DAYS. TAKING INTO CONSIDERATION THE
CURRENT INVENTORY OR SUPPLY LEVELS THEREOF.

5. amends Section 11 of RA 7581 by including the DEPARTMENT OF ENERGY as
a MEMBER of the Price Coordinating Council,

6. Itamends Section 12 (2) of RA 7581 by requiring the Price Coordinating Council to
report AT LEAST SEMFANNUALLY to the President and to the Congress of the
Republic of the Philippines the status and progress of the programs. projects and
mesures undertaken by each implementing department, agency or office as well as
the comprchensive strategies developed by the Council to stabilize the prices of basic
necessities and prime commodities. Further, THE REPORT SHALL INCLUDE
GOODS THAT HAVE BEEN INCLUDED OR EXCLUDED FROM THE LIST OF
BASIC NECESSITIES AND PRIME COMMODITIES AS PROVIDED FOR
UNDER SECTION 4 OF (THIS ACT) the Price Act.

7. Itdirects the Department of Trade and Industry, in consultation with the members of
the Price Coordinating Council and stakeholders, to promulgate the necessary ules,
regulations and procedures for the effective implementation of this Act within
NINETY (90) DAYS upon its effectivity and to monitor strict compliance therewith
‘This process shall involve the review of existing implementing rules and regulations
of RA 7581. and its revision as may be appropriate.

Rep. Roman Romulo, author of HB 2262. reiterated the urgency of amending the Price
‘Act to include drinking water in the list of Basic Necessities under the same law.
Recounting his congressional district's sad plight during the onslaught of Typhoon
‘Ondo in 2009, he underscored that water is one of the most essential needs of Tife, and

3



In this regard, Rep. Apacible emphasized that making consumers fully aware of what
these products are all about and how it affects their health falls squarely under the scope
‘and jurisdiction of the Committee on Trade and Industry thru the Subcommittee on
Consumer Protection and Trade Regulation.

Rep. Pedro Romualdo, author of HB 2189. stated that there as been an alarming
proliferation in the market of well-commerciatized herbal and alteriative medicines
Tehich might pose danger to public health and imperil the lives of wor-discrievinating
consumers.

White the government is mandated to promote traditional and altemative healthcare. as
mandated by Republic Act 8423. otherwise known a5 the Traditional and Alternative
Medicine Act (TAMA) of 1997, Rep. Romualdo stressed that it is the government's
primordial duty to educate and disseminate to the public adequate information and guide
paths cational, appropriate, proper application and safe use of herbal and alternative
medicines.

In Hight of this, he underscored that the objectives of his bill include among others, the
heed to indicate appropriate markings in the packaging, advertising, marketing and
promotion of produets and the language be in English, Tagalog, Visayan and other major
Fisleets for easy reading, and understanding of the consumers; the provision of stiffer
penalties for manufacturers, distributors. sale, advertisers, marketers and promosers of
herbal products wha fail to comply with the provisions of the bill; and determine the
tetent pf compliance by concerned government agencies such as the Department of
Trade & Industry to Department of Health, Food & Drugs Administration and DOH
Administrative Order No. 2010 in monitoring manufacturers of herbal preducts and food
supplements.

Ms. Yolanda R. Robles, Public Retations Officer of the Philippine Pharmaceutical
‘Association (PHA), expressed her agency's support to HB 2189, indicating that food
Supplements, specifically marked with the phrase, “no therapeutic claim” should not
indicate that they ace cure to certain ailments: otherwise, this is tantamount to betrays!
of public trust.

‘She specified that food supplements shall comply with certain registration requirements
before they are allowed the benefit of advertisements as well as market exposure abroad

Ms, Ma, Victoria Pinion, NutritionisvDietician of the Food and Drugs Administration
(FDAYDOH, substantiated PPhA’s position oa the necessity of product registration She
identified the mandatory information necessary for such purpose.

She added that the FDA has no objection to the introduction of certain products
provided that the required nutritional facts are indicated.

Atty. Rudolph Jularbal, General Counsel of Kapisanan ng mga Brodkaster so Pilipioas
(KBP) & AD Standards Council, provided information on the process thru
Ndvertisements for certain product are evaluated by the KBP. He assured the
Committee that the KBP continuously monitors the requisite approval of FDA as to
pharmaceutical products and food supplement, and that the same organization strictly
Dbserves the standards which prohibit claims not approved by the FDA.

‘Atty, Jularbat also identified certain problems encountered in advertising where the
fabels of vertain products require FDA's approval, but the “inserts” to these do not

5



necessarily require approval of the same. He also affirmed that he has long been an
gdvocale of transtating, markings in health and simaitar products in the focal dialects.

Whereupon, the Committee agreed to conduct further deliberations in its next meeting on
HB 2189. and to review its provisions for possible revisions in order to come up with &
more comprehensive bill. The Committee also requested the resoures persons to submit
their position paper on the subject matter within the week in order for the Members to
consider and study the same.

RECONSIDERATION OF CERTAIN PROVISIONS OF THE PROPOSED
PHILIPPINE LEMON LAW OF 2011

Rep, Albert Garcia, Committee Chairman, recalled that on March 8, 2011, the
Committee conducted its deliberation on House Bill Nos, 123, 352, 1966, 3495. 3869
and 4143. all of which seek to strengthen consumer protection in the purchase of brand
new motor vehicles and for other purposes.

During the same meeting, the Committee approved the preparation of a draft bill in
Substitution t0 the subject bills which, among others, incorporates the following
provisions:

1. The inclusion of MOTORCYCLES as part of the definition of MOTOR
VEHICLES covered by the substitute bill: and

2. The use of actual TAXI FARE RECEIPTS in the computation of trensportation
allowance for non-usage of the vehicle while under repair and during the period
of availment of lemon law rights.

‘Thereafter, Rep. Garcia retated that the matter of including motorcycles within the
coverage of the proposed Philippine Lemon Law was referred to the same sect
particularly to the Motorcycle Development Program Participants Association
{MDPPA) for their comments.

The MDPPA is an association of six (6) motorcycle manufacturers with eighty-five
percent (85%) overall stake in the Philippine motorcycle industry whose members
include Honda, Kawasaki, Suzuki, Motorstar. Yamaha And Kymeo

Subsequently, in its fetter dated April 13. 2011, the MDPPA expressed its view that
separate stipulations should be provided for motorcycles , which are two-wheeled
vehicles, as most of the provisions of the proposed Philippine Lemon Law of 2011 are
applicable to four-wheeled motor vehicles

Likewise, the MDPPA cited the disparity between motorcycles and four-wheeled motor
vehicles in terms of the nature of the product, price, warranty coverage, function or use,
and financing scheme.

The same fettcr-comment was furnished to the DTL, particularly thru Atty. Victor Mario
Dimagiba, Director of the Bureau of Trade Regulation and Consumer Protection
(BTRCP).

[After considering MDPPA’s comments. Director Dimagiba has recommended that
motorcycles should be removed from the jist of motor vehicles to be covered by the



RHE

vo.

proposed Phitippine Lemon Law of 2011 so as not 10 impede further the progress of the
same legislative measure in the Lower House.

On May 9, 2011, House Bill No, 4532, also secking to strengthen consumer Proce
in the purchase of brand new motor vehicles and for other purposes, was referred on First
Reading to the Committee on Trade and Industry

Upon review thereof, the provisions of House Bill No: 4532 are similar with those of
House Bill Nos. 123, 352, 1966, 3495. 3869 and 4145.

In view of the foregoing, Rep. Garcia recommended that:

1. The approval by the Committee to drafts bill in substitution to House Bill Nos

125, 332, 1966, 3495, 3869 and 4143 be amended to exclude motorcycles a5 pant

Uf the definition of MOTOR VEHICLES covered by the proposed Philippine

Lemon Law of 2011;

House Bill No, 4532 be included in the list of measures considered by the

Committee in preparing the draft Philippine Lemon Law of 2011; and

3, The aforementioned motions be formally manifested and approved duri
Committes meeting on May 24, 2011 and subsequently reflected in the
proceedings theteof.

Whereupon, on motion of Rep. Victor Yu, the Committee approved the aforesaid
recommendations and instructed the Secretariat to implement the same.

REPORT OF ACCOMPLISHMENTS OF THE COMMITTEE DURING THE
FIRST REGULAR SESSION OF THE FIFTEENTH {18™) CONGRESS

Thereafter, Rep, Garcia also presented the Accomplishment Report on the Legislative
Priorities for the First Regular Session of the Fifteenth (15h) Congress agreed upon Py
the Committee during its Organizational Meeting last September 14, 2010

Chairman Garcia noted that the Committee Report on the proposed Philippine Fair
Competition Act of 2011 is now ready for submission after months of detberatons
Taenswn and with the recent approval by the Committee on Appropriations on the budget
provisions thereof,

Likewise, House Bill 3841, prepared and submitted by the Committee which amends
certain provisions of Republic Act No. 8293 otherwise known as the Intellectual
Property Code of the Philippines. was approved on Third Reading by the House of
Representatives last May 23, 2071.

Moreover, the Committee Chairman conveyed that the respective Committee Reports on
the, forthcoming 2011 Philippine Lemon Taw, the proposed Philippine Trade
Representative Office. the long-anticipated LPG Industry Regulation and Safety Act of
AGP hand the much.awaited Fiscal and Non-Fiscal Incentives Act will be submined by
the Committee prior to the sine die adjournment on June 9, 2011



i

ue peep

FACT SHEET

House Bill No:__4842
(In substitution of House Bill Nos. 123, 352, 1966, 3495, 3869, 4143, 4295 and 4532)

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE
PURCHASE OF BRAND NEW MOTOR VEHICLES AND FOR
OTHER PURPOSES

Introduced by: REP. MARIA CARMEN ZAMORRA-APSAY, REP. BERNADETTE R.
HERRERA-DY, REP. SUSAN A. YAP, REP. MARIA AMELITA A. CALIMBAS
VILLAROSA, REP. MARK A. VILLAR, REP. CESAR V. SARMIENTO. REP.
WILFRIDO MARK M. ENVERGA, REP. RUFUS B. RODRIGUEZ, REP. MAXIMO B.
RODRIGUEZ, JR, REP. ROGER G. MERCADO, REP. AUGUSTO BOBOY
SYJUCO AND REP, CARMELO F. LAZATIN.

Committee Referral: COMMITTEE ON TRADE AND INDUSTRY

(COMMITTEE ON TRADE AND INDUSTRY

Committee Chairperson: REP. ALBERT RAYMOND S. GARCIA

REP. ALBERT RAYMOND S. GARCIA

OBJECTIVES:

+ To strengthen the Consumer Protection Act, specifically on the purchase of
brand new vehicles.

«To provide the consumers with relief upon purchase of brand new vehicle with
factory defect that substantially impairs its use and safety through a refund of
the full value of the consumer's financial investment for the purchase of their
vehicles

= To clearly define the parameters in handling consumer compiaints involving
brand new vehicles.

KEY PROVISIONS:

+ Covers brand new motor vehicles with non-conformity to manufacturer's or
distributor's standards or specifications; or condition that substantially impairs
its use or safety, reported by the consumer within twelve (12) months from
date of original delivery or twenty thousand (20,000) kilometers of operation
whichever comes first;

© Mandates that if the manufacturer or distributor was not able to correct the
defect which impairs the motor vehicle's use and safety after at least four (4)
separate repair atiempts by the same dealer-manufacturer for the complaint,
consumer, if still unsatisfied with the results of the said repairs, may invoke his
rights under this law within the lemon rights period;



Provides for the determination of reasonabie allowance for use computed as
follows:

Product of the distance traveled in kilometers and the purchase price divided
by one hundred thousand (100,000 kms.} or twenty percent (20%) per annum
deduction from the purchase price whichever is higher.

Mandates that the DTI shall exercise exclusive and original jurisdiction over
disputes arising from the provisions of this law.

Provides that in case non-conformity to the manufacturer's or distributor's
standards and specifications of the vehicle is found by the DT, it shall rule in
favor of the consumer and direct the dealer-manufacturer to grant either of the
foliowing remedies to the consumer.

4) Replace the motor vehicle with a similar or comparable motor vehicle in
terms of specifications and values, subject to avaitability; or

2) Accept the return of the motor vehicle and pay the consumer the purchase
price plus collateral charges.

Provides that in case non-conformity to the manufacturer's or distributor's
standards and specifications of the vehicie 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

Mandates that should the retumed vehicle be made available for resale, the
manufacturer ot distributor shall, prior to sale, lease or transfer, disclose to the
dealer in writing that,

4) The motor vehicle was retumed to the manufacturer, distributor, factory or
branch;

2) The specifications and/or standards not conformed with which caused the
tetum of the vehicle, and

3) The condition of the motor vehicle at the time of the transfer to the dealer.

Provides that the manufacturer, distributor or dealer adjudged to have violated
the provisions requiring disclosure shall be liable to pay a minimum amount of
one hundred thousand pesos (P 100,000.00) as damages to the aggrieved
party, without prejudice to any civil or criminal liability the responsible officer
may incur under existing laws.

Mandates that the Department of Trade and Industry shall promulgate the
necessary implementing sules and regulations within (90) days from effectivity
of this law.

RELATED LAWS:

Republic Act No. 7394 — The Consumer Act of the Philippines



Repmbtie uf the Philippines
HOUST OF REPRESENTATIVES
‘Oneron City

First Regulur Session
taPTERNTH CONGRESS

House Hit N 23

Intradnced hy Rep. Maria Carmen Zamora-Apsay

EXPLANATORY NOTE

Tn the United State. He: os cutled Lemon Laws of the various states of the
Union were enacted fi the express purpose of protecting consumers from buying
new, but faulty. motor chicks Hhese laws seek to make sure ‘hat the
manufacturer of the velw.l* fixes the problems or defects that were originally
covered under the misnufictngr’s scmcanty and were reported by the owner
within the so called lemon laws rights period or certain mileage as reflected by the
odometer of the vehicle In exteme vases where the factory defects of the car are
extensive, the laws alu wanant the refund of the consumet’s money or the
delivery of a new cnr rephicins the !ewon automobile,

In our country eywhln Avi No 7394 or the Consumer Protection Law in
the Philippines provides for the protection of consumers from scheming
manufacturers and « penducts, It gives the Department of Health (DOH)
Jurisdiction with respvet te fred. digs. cosmetics, devices and substances; the
Department of Agricultur (1.41 with respect to products-related to agriculture;
and the Department of Trice and Industry (DTD with respect to other consumer
products not specified under the 611 (wo jurisdictions. DTI, therefore. has sole
jurisdiction over cen ling lemon vehicles.

Out of the averse 180 NOH unis of sold new automobiles per year, about
100 of these are Jater teperted te be suffering from factory defects. Complaints
received by the DUE are yenerall, resolved through mediation because of the
absence of a legislate? mechanism wherein remedies are available for the
aggrieved consumer and the manufacturer or vehicle dealer. Hence, the need for
this proposal to bolster te Cousun'r Protection Act by specifically focusing on
Jemon cars.

As a note. thiv necasure way originally Gied during the 13" Congress
wherein my father ‘vas ‘he principal author in the House of Representatives. Both
Hoses of Congress approved the me:sime on Thitd Reading. Unfortunately,



cox. that while the Senate rutifiec the
hill, the House of Representatives
Tne fy time constraints.

what prevented its bas yet
bicameral conferences
avas unable to faverahl:

This refile
members of the bicamn
incorporates and represest
manufacturing indus
agencies of governmeri went
actively participated and orci fisnly |
of legislation. It is, therefore 2 version
we see no reason why ‘l
and its passage compre:
During the 14” Cony the peop
of Representatives bat Hie So

< the same version adopted by the
voor pmittee during the 13" Congress. It
can orapesals of the stakeholders of the car
protection organizations, the concerned
ial canstaners. All of these groups actually
hear time and elfort in crafling ‘his piece
ast acceptable to all concerned. As such,
net snagged by the legislative mill again
levislative processes it has to get through
1 wae passed on thitd reading by the House
cnet able (o approve @ parallel measure

ress, the bill will be expeditiously
unites eit s timely. beneficial and necessary.

It is hoped thet
acted upon and finatly

on

MARIA confi ZMKORA-APSAY


Republic of the Philippines
HOUSE OF REPRESENTATIVES

Hy HEENTH CONGRESS

Honse Rit No.

cia Carmen Zamora-Apsay

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF
BRAND NEW MOTOR VEHICLES AND FOR OTHER PURPOSES.

Be it enacted bythe Senn cont te thuse of Representatives of the Philippines in
Congress.as f,

SECTION 1. Shor) Title Hic Act shall be known as the “Lemon Law of
2010."

SEC. 2, Declaration uf Potiey - ICis hereby declared the policy of the State to
promote fall protection tu th: rixlts a1 consumers in the sale of motor vehicles against
sales and trade practices whic we deceptive, unfair or otherwise inimical to the
consumers and the pubic interest

Ther State recognizes that a motor vehicle is 9 major consumer purchase or
investment. The consumer rights should (hus be clearly defined including the means for
redress for violations thereat .

Act, the following terms

SEC, 3. Definition of Tere
shall mean:

purposes of thi

(4) “Brand new outer vehicte” rotees toa vehicle constructed entirely from new
parts that tu never bren sold or registered with the Department of
Transportation and Communications or an appropriate agency or authority
and operated on the hivlovav of the Phitippines, or in a foreign state or

comntry
(b) “Collateral Chewyes” refer 12 toes paid to the Land Transportation Office for
the registration af 9 hraud new vehicle.

ic) “Comparable Motor Veli te” refers toa motor vehicle that is identical or
reasonably cyuivalem ie the motor vehicle to be replaced, in terms of
specificatinns ant values subject ( availability as the-motor vehicle existed



wont paced jorete! Phat there shall be an offset ftom this
nse.

at the
vale for te sonslih

(d) “Cosine

either be rts ores

{e) “Dealey* or et

sells mobo os br fe

eyes en or entity other than a manufacturer who

(B “Distribater | tow
jules to their duly authorized dealers or retailers.

sells brand ten meetin y

(g) “implements Syre 9 Be ee the Department of Trade and industry

(DTD).

{h) “Lemon La Webs Pesiad” refers to the period ending twelve (12) months
after the dats of the wteenal debsory of a brand new motor vehicle to @
Gomeureet 2 the Heat Hcaty desasand (20,000) kilometers of operacion after

over cates fist, This shall be the periew! during which
tort nis wn.conformity fo the manufacturer, distributor,
lor and urs any right provided for under this

such delive
the consumer sen»
authorized shales ew

Act.

- voters tev person, partnership, association, corperation or
in business avinufactiring or assembling motor vehicles, or
wicoshinte. maton vehicle dealers,

G) “Manwfacrr
entity engaw:
disributi

Gi) “Motor Yeti > stirs we oy setfpropelled four-wheeled road vehicle
designed ts < metering, hut not limited to, sedans, coupes,
station wars 1 pick-nps. vans. sports utility vehicles (SUVs)
and Asian Dol Vabwtes (AUVs) but excepting motorcycles, delivery
tracks. dump tracks, Sie. road rollers, trolley cars, street sweepers,
sprinklers. nite onnwers arnt heat equipment, such as, but not limited (o,
bulldozers pa ters. foeklifis, amphibian trucks, cranes, and
vehicles whieh mn sile er tracks. and tractors, trailers and traction
engines of ill Kinds for agricultura purposes. Trailers having
any number of = hook, kon propelled or intended by attachment to a moter
vehick shal! be: b ys separate motor vehicle with no power rating.

(k) “Non-eont sedition of a brand new motor vehicle
which preveuts a fren
standards 9° spe
conditions resutting fr
unauthorize | ieee tific

fieatoas
11 accident, force majeure, abuse
fy akertion of the brand new motor vehicle.

(1) “Purchase Biv refivs 9 Un imsoice price oF the amount of money which
the dealer ar eetiler acutally received for the brand new motor vehicle in
‘considerations of the sale -¥'-10.F Brand new motor vehiéle.



jeurmee, so labeled, of the manufacturer of
ding any term or condition precedent to the
‘arranty.

tiny Warranty 6 6 oa
ab
enforcement nt elites

Jes, meee 2

1s ts the petiod provided for under the contract

(ny “Warrants Riot Potala

of sale whe ~ isnald eaarantee.the materials used, workmanship
and fitness wow rawtor vehicle for ordinary use or reasonable
intended puny Ps
SEC. 4. Cove Sos staf! caver brand new motor vehicles wita non-
conformity reported! fo the consumer within welve (12) months (rom date of

criginal delivers. the consumer ov twenty thousand (20,000) Kilometers of
fperation after wick sotivers. sesithev gr comes first, The following emuses of

non-conformity Lal

tv cansumer of his obligations under the

a. nopennglows

Toone fests are rest wat erized hy the manufacturer or distributor,

Inand new motor vebicle; and

ce. abyecsrscuk fe

de danaye Gets eohe.te fue wy accident or force majeure,

SEC. 5. Repaiy Atempts Stan Cine within the lemon law rights period, and
afer af least Hor 1 1b ssparote resus attempts by the same dealer-manufacturer
for the same compheat abe -cteuner, if stil unsatisfied with the results of the
said repairs, swine mn oA bebe riahds wmode dis Act.

SEC. 6. Nolire of \oitent af Lemon Law Rights ——Before availing of any
Femedy uincler thi- Sct and sit ject te compliance with the provisions of Section 5
hereof. the consine shall, a waiting, notify the manufacturer, distributor,
authorized sealer det fe anresalved complaint, and the consumer's
cntention te invoks his fights enue: this Act within the Femon law rights period.

by Ihe manufacturer, distributor, authorized
sh canke the manner and form of such notice to
at notice 10 the manufacturer, disteibutor, authorized

dealer or retait=i

SEC. 7, Availment of Lemon Law Rights —Subsequent to filing the rotice of
availnent refervi 1 in the seceding section, the consumer shall bring the
vehicle ta the if-al:r from s-Lich the vehicle was purchased for a final attempt to
address the conser» his satisfaction.

«<f the manufacturer, distributor, authorized dealer or
retailer, upon reenapt af the mutor velricle and the notice of availment referred to
in Section 6, hercuf, t» attend tn the complainant of the cOnsumer including, as
may be necessary. msking such ecpairs and andertaking such actions as to make
the vehicle conforms ve the ctwdaeds or specifications of the manufacturer or
distributor for sah ets tr

It shalt be the



Trias de coosanee saan ansotisfied with the dealer manufacturer's

i auecuzut ta the consumer's availment of his temon

2 complaint before the DTT as provided under

Feo of the vehicle is not seturned for repair for the

endar days from the date of notice of release

of the motor vehinbe 1. the mcr following this repair attempt under the

ayailment al rnin bye steht. period’ the repair is deemed success:

finaly, Thor shwubl he: own tefovt seene following the thirty (30) day period,

sett the lemon fats rsrhte peri slalt have lapsed, the consumer may still avail
of the same reniedic. unde Seetic 4 and 6 hereof.

same complaint +s ithe thi

To compre fo the now usage of the vehicle while under repais and
during the pel ” ‘of femon faw rights, the consumer shalt be
provided 1 reas ‘on allowance equivalent to first class taxi,
in such ame pen hy the partics. or a service vehicle al the option
of mani Sauce, authorized dealer or retailer. Any disagreenient on
this matter chal! te + mplementing agency provided for under this
Act.

transport

it toy bee

Nothine bese shall be construed to Fimit or impair the rights and
remedies of a concmmier ander ae onber law.

tics lor Dispute Resatution.—The DTT shall exercise exclu:
wer .figputes arising from the provisions of this Act. AUL
jens of this Act shall be settled by the DTT in
uite resolution mechanisms:

inle ot acgotiatinn, conciliation, and mediation towards
men! between the manufacturer or distributor and
lv observed:

cu Ub

am

ts sfspuite resolution efforts, the DT] shali endeavor
esablish the ¥ of the consumer's outstanding
complaint 101 shall likewise retain the services of other
governmnes jes or independent private entities in the
acer uf the validity of the consumer’s complaint. Any cost
incuereil in establishing. the validity of the consumer’s complaint
shall he bare jointly by the consumer and the dealer-manpfacturer.

(bY Ir the sen
Jor incteyncneh

fo) ‘The complaint Salt be deemed valid if it is independently
cxtahlished that che vehicle does not conform to the stardards or

specifications cet hy she manufactsrer.

(ay of the negotiation of mediation between the
Jistvibutor and consumer, the parties shall execute 3

such failure.



1s sf the dealer to, make the same disclosure in

st purchaser prior to sale. A’ delaer’s

setivn shall cease upon the sale of the affected
cer

Tefal he the
writ
respon
moter

tor or dealer adjudged to have violated the
1 the preceding section shall be liable to
rnd peses (P100,000.C0) as damages to the

il or criminal liability they and/or the
jaws :

SEC 10. Penalty. ‘Fhe ni
provisions requiring
pay a minimum am:
aggrieved party svithon! i
responsible officer may wwrur

gemies The Department of Transportation and

Niciee potitical subdivisions, local government units,

-controtied corporations, shall render such assistance as
yslernent the provisions of this Act.

including government-nxnew an
required by the DITI io ers to AP tives

SEC. 12, Implementing Kates and Regulations —The Department of Trede and
dustry shall promgare the nosecexe+ fmplementing roles and regulations within ninety

(90) days from the effectis ts of thig Ait

SEC. 13. Separability Clanve.- | tor any reason, any part of provision of this
‘Act is declared invalid, stich devlartinn shail not affect the other provisions of
this Act.

alecrres. nitles or regulations or parts thereof,
cone ‘Act, are hereby deemed sepealed,

Claws. ME
sith the
amended or modified w-casdlingly

his act att eke effect fifteen (15) days after
in tien nettional w= wespapers of general circulation.

SEC 15. Effeeti publication in

the Official Gazette

Approved.


FIFTEENTH CONGRESS >

‘OF THE REPUBLIC OF THE PHILIPPINES

rut Reguiar Sesion }
HOUSE OF REPRESENTATIVES

House Bin No, __ 352

Introduced by Represemative Susan A. Yap

EXPLANATORY NOTE

Consumer welfce is a primary concern i commerce, as protection of the consurning
pubhe raises quality standards of produar and services, narurally boosmug the econo

‘There axe few properties thae aze a5 enportan:, Low) symbolically and in proceal
application, as # motor vehiele. Por an average fary, the purchase of such sequizes large
‘Sivings made possible by blood, swea: and tears exhausted in one's occupation

Needless to say, there must he a cempin level of guaramtcc in the vehicle's investinent.
The warranties availible for vehicles do not allow the return of a defective vehucie with
recuring problems, bac only continued repairs, that is, until the wareanty period expires
Borers are at ask of being left with 2 hunk of mnk, or a “lemon,” while car avanuficturees
land dealers fuad business cleewhere, pethays from another unwitting viet,

Mang Vlipinos have been vietinized by ialse wamranses sud théy cannot resort ro eal
remedies because of rhe ubsence of a law addressaiy ther concerns. This bill seeks to
{promote fill protection to the rigs of coasumets or dhe sale of mutot wehucles spaunse sales
hd nade pracnces Which are deceptive, undar, of otherwise inimical to consumers andl the
prblic interest. Jr recognizes that & moto: vehicle is 4 mayar consumer investment, defines
the sights of the buyer and imposes penalues Zor viuladons thereof,

“The hill proposes a one {1} year period in which buyers oF beatud-new rehncles can
‘avai of the provisioas of this “Lemon Las.” wiueb allows uy
etect before a eplacanent ar refved of te Veluele car. be chimed. 14 contnmer happens
te buy a defecdive car ot any oiler product, he or she as ented to get his oF her eoner
back, pr to at least get a prompt replacement, thereby casuring dhat car buyers get Gull vabse
ior dheir money.

to four repairs on the same

This bib bus been thoroughly deliberated dunog the 3ch and 14¢h Conyzess, and us
fervent hope thac we manage to finally enact this pruposal mto law

SUSAN rT

Representative, 2" Daten! of Tarlac


FIETEENTH CONGRESS )

OF THE REPUBLIC OF THE PHILIPPINES
3 Bea Reger Sesvnn )
é HOUSE OF REPRESENTATIVES
8 Hiduse Bit No, 352
8

Iuuoduced by Kepresentative A. Yap,

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF
BRAND NEW MOTOR VEHICLES AND FOR OTHER 'URPOSES

1° Heat enacted by the Senate und Howee of Repressecice#” © us om Comgeess sree:

18

9; SECTION 1. Short Title, This Sct abai. he eae ne rhe “Lemans Lane of 2800

20 SEC. 2. Declaration of Policy. - 1. ¥ nereby declared che pohey of the State to prxiaoce

21 fl protecan two che nights of con: ig the sie of mutol vohneles against sa

ace deceptive, natin o° iea} -y the consume

4 aavesrment The consumer fights should cass ne clearly defined includinys the

saterest, “The State recognizes dat am

veal: ik a wiajor euasumer purciuse 42

25 redress for violations thereof,

26 SEC. 3. Definition of Terms. - F

ose nt ting Aer, she fulinwing tems eral

28 3) “Brand ew moror vehicie” ase vf vehule constructed encirens fam ew §

2) thst lias weve heen sold OL reyetered anh the Departmen

of Trausposracou and

30 Comumumeations (OTC fo: anchors and operated ain the higkws

31 of the Philippmes, or ia 2 Zoreigm svare ot fou

neve Gwe Land Trimepuriaaun OFfce sk ECP

fo) "Collnteral clumgen" covers ce the fees )

‘or the regstzation of @ brand new and other meweatal expestses, inciuding the



ty

2

cor of snsurance perraining 10 che suid vebucie

ie ‘Comparable motor vehicle” refers ee 9 moter vehicle chat 1s Weatical or keas0r

cqonalenr to the moror #ehacle to be replace

rae of spe

aqvailabsler, 26 the motor velucle existed at tbe ome of purcbese: Provided, That thece shall be

an oifeet fiom this vale [or reasonable allowance for is Use.

ia) “Consumer” keters so ans pers. eatesat or iene, who 1s > purchaser,

cash or cicdit, of a Leand aew motor vebicle.

fe} "Dealee" or “Seller” refers to auf pemon nther than # munagacturee who sells motor

vebieles 19 the puiblic.

sQererminanua of veasonadie allowance tur use”, for pusposes of thes Art

wcextonable altowance for use" shall mean. owenty pestent (20%) per annum deduction

fae Gatente taveled in

the purchase price, ot the produc jomerers and the pe

pee dinled by one hundted thowsand (PICEA, whichever is nigher.

ag’ ~Distriburar” eefers co a0;

bucnd new motor velucles to cheis diab

th} “Implementing ayence” eaters

¢ Depamuien: of Frade und Indusere (DIT:

tis “Lamon Law nights pesiod” cede: che pend enieg swelre £12) grambe stter die

ior vehicle 19 9 commnuer ar the

date of tke original delivery of 2 Laacd eens

thousand [20,0iI0) Inlometers of aperatior siter such delivery, whichever comes Avr, Tie

sual! be the pesiod doring whick the eva

Jer enn sepant aay non cantusmsity, ay

paragraph {hy frend, 10 dhe stands ad smecimensine oF ake wanwiacit

authonsed dealer or crater, and puisue an nynt provided for onder uve Act

aj “Manufaevurer” cefers 294 perser paninersiip. exenciaitun, corpoIanow <r eutt

abhi moun veineles, or of Sere

earpaged in he business of mzoriastuciaz oe



moves vehicles to motor reiucle deale:s

(kj “Motor vehicle” teeters 10 a0) AT) wheeled road vehicle designed

co carty passengers including, but nor limvted Ww. dens, raupes, station wagons, convertibles

pickups, vans, sport wnlity echick frau sniiny vehicles (UTS) bt

cepune,
motorcycles, delivery crucks, dtunp trucks, huses, toad rollers, wolley Gass, street sweepers,

apnoklers, lawn inowers and leary equipment. such 95. tut nov Lined to, Bulidostss

gavloaders, graders, forkiiis, amphibian wicks. cranes and rebnelee which pin only an rails o:

of all hinds esed exclusively fu

tacks, and noctars, craters and Gactiog: engzae grreulreai

prposes. Tellers having ay pumbes oz wheels, when propelled o: iateuded by aciachmen: 1

a rnorn: vebicke, shall be classified a» separare morn: velnele with mo power eating,

“Non-comformity” 1°

oudivion rhat substantially rmpasrs che se.

vaiue ot safecy of a brand ew moror vehicle winch prevents i: om conforming te rhe

qaaanfscturers oF distribuwor’s standards nz sperieaons, which esnnor be reparred.

by the cunsu

excluding, conditions cesulting iron

es a his gishigarious wages

he warranrs, modifications aot au:konzé Se manufacerer ve dhsrbutor, abuse oF

egleet, and dasmage dur co accident

fs te the tarwire pritr oe ie cmnunt oF money whi 2

aa} *Purchaye prize’

Gealer 0: teraile: actually received for the brand 2

sale of such heaud arw motor vebicTe

(at “Wercuagy” refers a he w

Laand wes motor vehicle. weluding aay rem or coudinow othe enforcement 0°

obligations under the earrauly

A for undlet the eunstacr of eae

Warranty nghts period

when the manuluemorer would guarantee the mate: , wochmauslip and rewdwortnaess

rprand new motor vebicle for ordmart use o1 ressonale intended puaposes



neand new motor vehicles with aon

i SEC. 4. Coverage. -

= conformicy reported by rhe consun 3: monrhs fram the date of orgies,

3 delivery to the consuiner or owe: ad operstion a

4 delivers, whichever eomes first, The fotinw ir eno cougusonny shalt be excludect
. ‘aj Noncompliance hy the consuraes tion under the warranty

6 {hy Modifications uor auihorzed by the mansiarruret oF distnbutor

> fc) Abuse or neglect of the brad new motor veiuele: and

8 adh Damage to che velucle due co an acciciens of wer mae.

s SEC. 5. Repair Arrempts. - At sag cane wiun ibe Temon Law rgbis pesod sed ate

10 ac Yeas four (} separate sepate arremprs by she some denier, manotscnurer for che same

Je resus of rie said eepairs, may renoke

11 complamnt, the consvaner, ifs

12 sights uader thes Aet

Novice of Availment of the Lemon Law Rights, Yelore walling of

Jz with the provisions of Secunn 3 le

18 consumer sill, in writing, noris the ann aiberor, aithotized dealer ur seca 9°

56 the unresolved ‘complaint and the conscen

muvoke his rights wader cs

in che Lemun Law sighee peso

1B sane warranty booklet issued by che aninuiserurer, gisutihuros, aurlonzed dealer 9°
19 cemales shall cleutly state the cesponsibity vf the consuuner ware this section. Te shall Hisewsse

29 proiie the manacr and form oi

Litoce a vahdl andl lege! notice sa the

21 manuiacnien, distrburor, surhouzed 4

SEC. +, Avuilment of the Lemon Law Rights.

Subsequent to the filing of the sence

of availmene referred co in the prsceding § Je consumer shall bring the veanele co Ete

24 deale: from which the velucle was narsissed fos a mal anempr 10 asbdeess the oo



Leanplauis to his sutisfacton

Iz shall be she dury uf dhe manudiemres, distaibmor, actlonzed desles or

teceiot of the moror vehicle and sas extice oF nua-conformiy, ssquured under Seer

hereod. to attend co Une complunrs of tke ©

che tepairs and underevkuye svch sctuons

specuications of the mauufnerurec or distninuta: for sucht vehicle

In case the consumer remacts uasarMited
she veLiele, pursuant 10 the consumer's avaiiment of his Lemon Law rights, the confumer rity

ie « complaint befnre the DTH as provided fo: under this Ser: Pronithd, however, Thac 3 the

vehuele is nor retwined foe reparr bused on rhe same complaior watman thirty (30) ealendas 6

from the dare of aotice uf release of du metur vehicle co the cemsmer [ollewwing thes repulr

axtempr within che Lemon Law sights netiod. the repuis is deemed mnceessful: Pore,

That, ia che event the consumer still rematns eusaciched after the chirty 30) dave pened bur

sesamez ma: be allowed se avail a she

call within che Lemon Law sighs ps

remedies onder Secnipax 4 and 6 hereof,

Tu compensate for the nor-uaye of che veimcle while under repay and

arumet shel! be jnvente nie

genat of availment of the Lemoa Taw

daily reanspuctonon allowance, an ame Jpustutioa of raz Lensumnes

from big ov let cesulence to hav or ker regular workpace and liv wens, egmvarect ty at

ronditioned rast {ate oF in such amuua: (be agreed upon Ty the parnes, us a sermee vehicle

as the option of the isnuiscturer, disrabutor, authusized dealer on actailer.

on this suattes shall be tesalved by rhe umplementmy agency provided for under this Acr

othe herein shal he canscrued te kame ox impare che sights and resedies of =

tnasames under any ather law

SEC. 8. Remedies for Dispute Resolution The [II shal, exes


naga} iurisdicaua over disputes arinny & < of this See. AD dispures atissog,

kom the provisions of thas Act shal! b> seuise &* che <TH ia arrondance wl the falinweaz

Sicpnte :esolution mechatusuns

a) Medianon

1) The prinapies ob peilavion sad meauution lowards om

serlement berween the manufacture: or Eatiuier and Ge consuener shall be snes:

observed.

(Yo che course of te daute rexzlonon efforts, she DTT shall endeavor tc

aadepeodently estublish the validasy of the cos

es's outstunding complaint. The DIT shat:

likewise cetam the services of ther goveenmens wen

sey vi independent private entities in the

ertainment of the validiry of che consul omplain: Any coat incerred in establshuag

fae valiciey of te consumer's conmplatet si! he Borne roindl; by the consumer aud the deal

sagnfacturer:

dé vahd i

13) The enmplaine stall he des ingepeniendy esrabliyhed that cre

oum te tine srandses

vemcic sipes aot co iors st by the manulactoret,

4) Upon failure af the aeys between the manufacnicer us

asmburor anu! dhe ennsvmer, te pace

shot eyerure a cetrificare auesting te such failure

and

G) Ar any nme dung ce éipore reschenon period, the manwiactan

eisteiburor and che consumer skall be encouraged ' setsle arracahle

[AD dhaputes that baee heea sobmtted “oF mie katos: shall he settbed aor lees than fore

the cesnplouit with the DIL

working days from the date of fiat

fo) Arbaeranon


8

9

2%

is Gait seule the

pian dusiag the meskanoe

In che event

proceedings, the parties may voluatariiy exer mais abiteanon proceedings, likewise 1 he

copervited hy the D1. The DIT shali gels or che independent imdityes #2 (© confaernan

standards and epecaticutions estab

12) tn case x non-conformuy of the eehisie » found by the DT), shall zule ia favor or

tne consumer and ditect the dealee mamnéscrures (© piant either of the following temadtes +

Replace the motor vehicle with ¢ omaiar ox comparahie motue vebicle ia teem:

specifications and values, subject to avanlzinkes: ox

ii) Accept che retura of the moor veiteie anti pay the cunsuuner the purchase peice plus

collutesat charges

Ja case che consunuer decxiey 1 puschase another veiicte with » higher value anc

emnns from the same dealer massac

the consomer shall pay she dif

Sefined an this Ae

and

fa case a nou-coaformin: af the ¢ciscie 16 nor Zound be the DIL, it dul! reas trae

ot che deaiee oanulacturer ard diree: tae eomsumer 19 reimburse Une dealee mamtacrarer ibe

validaong de coneamer’s com

cours ancuceed by the latter in

SRC. 9. Determination of Reasonable Alowance for Lise. ~ Po. puipaces ot this Act.

al mes

reasonable allowance for ese” swent; percent (200%) yer aumem deduction trae

rhe purchase price, or the pioduct nf tie datance traveled an kilometers and tie parc

pice drvided by ong hundred thousand LaeGd . wintchever ir bngher.



1 SEC. 10, Disclosure on Resale Stove the zeurned vehicle be sade avails

least or transfer, disclose co tse

resale, the manutyerare, of Gietabutas ->31

deale: in writing chee

4 var the mocor veluele was rerumed te the manuacturer, distributor, factory oF branch

> dy; che narare of the nva-contouma; witer saused Uae renirus and

é 1g che condition of the motor yehucle F the cime of tae ramaes 10 the deales

me disslosure ms WEIR. in

A: shall be the rexponsibiliry of the deaie: tor mahe tHe

der tins seco

& to the nest purchaser prior ta sale, Tre

9 ceate upon the sale of the affecred mator vel

je co the first purchasee

0 SEC. 1, Penalty. The maouiaccares, distributer oa desler adjudged to ave vrolared

rf the preceding secnon shalt be tiabi

Fae provisons requiring disclosure as mesisoned
{2g munimam amount of One hundzed thowsand pases (Php 10,007.00} ar damages te she

jeved party without peeisice ro uar cri oF caimival Hinility they andue the Fesponmisie

4 afficer may wneus wader exisung lawn

SRC. 12, Assistance by Other Agencies, The DUTC and other axen:

cies, pal

16 subdeoaions and local yovermnent unit. including gewertueat-owned aed cunt

reyuiret by the DTI in arser us ei

I> cerpnrations, shall render such asvstan

18 mplemea: the glovasions ni cine Ace

19 SEC 13. Implementing Rules and Regulations. - Tre DIIT sbsll promolgare the

niners £91) days tom the

necessary mplemennny tiles and 3

21 this Ace

al SFC. 14. Separabilite Clause. {¢. for say resvon, at part oF provision ¢

dinealid, suul doclaenonn shale wuz aver ine cher yrowrsacins oF thes Net


1 SEC. 15. Repealing Clause, - Ni iaws. decrees, cseeutws ones, smaceny rules 9°

iis the prownuns of this Act are Reeeby

2 cegulations ve parts thereoi which are incon:

3 deemed repealed, amended o: modified a«:

4 SHC. 16. Bfecrivigy This Act shail sane fificens (135 clays after ies pubbcanon ia

» nauona! newsnspers of gene:al cxcculanon,

S$ the Official Gazerte. or in nwo ©

od.

AP

Le


CONGRESS OF THE PHILIPPINES
FIFTEENTH CONGRESS
First Regular Session

Introduced by REP, MARK A. VILLAR

EXPLANATORY NOTE

Given the fast-paced nature of our times, owning a motor vehicle now is not
considered a luxury but more of.a necessity to cope with our everyday duties and
responsibilities. | Complying with this necessity, however, doES not come cheap.
‘Owning a motor vehicle is a big investment and could take a substantial chunk of one's
savings. For some unfortunate buyers, an investment in this endeavor has become for
naught after they acquired a “emon* or thase that fail to meat the standards of quality
‘and performance; they continue with the burden of retaining the “lemon” and paying the
expensive cost thereof, without equitable redress for their unlucky fate.

It is oné' of the guarantees of the State under our Constitution to protect
consumers from trade malpracticas and from substandard products (Section 9, Article
XVI, 1987 Philippine Constitution). In support of this State guarantee, | believe it
appropriate to recommend the adoption into law of the attached bill that would give
ample protection to buyers of motor vehictes, particularly those that are “lemon”.

The historical antecedents of the lemon law originated in the United States. It was
crafted primarily to retum to the consumer the full value of his money. Among others, it
provides that if @ 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. In sum, the measure provides for
legal remedies to buyers who face the ill fate of lemon automobiles ending up in their
hands.

Tho attached bill seeks {0 adopt the Philippine version of the US lemon tw, with
provisions appropriate to our country’s setting. .

In view of the foregoing, | reiterate my recommendation for the approval of this

MARK A. VILLAR
Representative, Lone District of Las Pifias City

bill


CONGRESS OF THE PHILIPPINES
FIFTEENTH CONGRESS
First Regular Session

HOUSE OF REPRESENTATIVES

House Bill No. LO

Introduced by REP. MARK A. VILLAR

AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF
BRAND NEW MOTOR VEHICLES AND FOR OTHER PURPOSES:

Se it enacted by the Senate and House of Representatives of the Philiopines in
Congress assembled:

SECTION 1. Short Title. — This Act shall be know as the “Philippine Lemon
Law of 2070.°

SEC. 2. Deciaration of Policy. — itis hereby declared the policy of 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 radress for violations thereof.

SEC. 3. Definition of Terms. — For purposes of this Act, the following terns
shall mean:

{a) “Brand new motor vehicie” refers to a vehicle constructed entirely from
new parts that has never been sold or registered with the Department
of Transportation and Communications (DOTC) or an appropriate


{b)

()

@

(e)

(9)

{ny

@

agency or authority and operated on the highway of the Philippines, or
jin a foreign state or country;

“Collateral charges” refers to the fees paid to the Land Transportation
Office (LTO) for the registration of a brand new motor vehicle and other
incidental expenses, including the cost of insurance pertaining to the
said vehicle,

“Comparable motor vehicle” refers to a motor vehicle that is identical or
reasonably equivatent to the motor vehicle to be replaced, in terms: of
specifications and values subject to availability. as the motor vehide
existed at the time of purchase: Provided, That there shall be an offset
from this value for reasonable allowance for its use;

“Consumer” refers to any person, natural or juridical, who is a
purchaser, either by cash or credit, of a brand new motor vehicle;

“Dealer” or “Seller” refers to any person other than a manufacturer who
sells motor vehicles to the public;

“Reasonable allowance for use”, for purposes of this Act, shal} mean

* swenty percent (20%) per annum deduction from the purchase price, or

the product of the distance traveled in kilometers and the purchase
prica divided by one hundred thousand (1 00,000), whichever is higher,

«Distributor refers to any person or entity other than manufacturer who
sells brand new motor vehicles to their duly authorized dealars or
retailers;

"implementing agency” refers to the Department of Trade and Industry
(DTN;

“Lemon Law rights period” refers to the period ending twelve (12)
months after the date of the original delivery of brand new motor
vehicle to a consumer or the first twenty thousand (20,000) kiicmeters

i
i 2
|
;


0]

0)

of operation after such delivery, whichever comes first This shall be
the period during which the consumer can report any non-conformity,
as defined in paragraph (k} herein, to the standards and specifications
of the manufacturer, distributor, authorized dealer or ratailer, and
pursue any right provided for under this Act;

“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;

“Motor vehicle" refers to any self-propelled four (4)-wheoled road
vehicle designed to cary passengers including, but not limited to,
sedans, coupes, station wagons, convertibles, pickups, vans, sport
utility vehicles (SUVs) and Asian utlity vehicles (AUVs) but excepting
motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley
cars, street eweepers, sprinkiers, 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. Trailers having any number of wheels, when
propelled or intended by attachment to a motor vehicio, shall be
classified as-separate motor vehicle with no power rating:

“Non-conformity" refers to any defect or condition that substantially
impairs the use, value or safety of a brand new motor vehicle which
Prevents it from conforming to the manufacturers or distributor's
standards or specifications, which cannot be repaired, but excluding

“conditions resulting from noncompliance by the consumer of his

obligations under the warranty, modifications not authorized by the
manufacturer or distributor, abuse or neglect, and damage dus to
accident or force majeure;


(m) ‘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;

{n) “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;

(0) _° “Warranty rights period” refers to the period provided for under. the
contract of sale when the manufacturer would guarantee the materials
used, workmanship and roadworthiness of a brand new motor vehicle
for ordinary use or reasonable intended purposes.

SEC. 4. Coverage. - T his Act shall cover brand new motor vehicles with non-
conformity reported by the consumer within twelve (12) months from the 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 nen-conformity
shall be exctuded:

{@) Non-compliance by the consumer of his obligations under the warranty;
(0) Modifications not authorized by the manufacturer or distributor:

(c} Abuse or neglect of the brand new motor vehicie; and

(d) Damage te the vehicle due to an accident or force majeure.

SEC. 5. Repair Atempts. - 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.

SEC. 6. Notice of Availment of the Lemon 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, authcrized


deaier or retailer of the unresolved complaint and the consumer's intention to invoke:
his rights under this Act within the Lemon Law rights period.

The warranty booklet issued by the manufacturer, distributor, authorized
dealer or retailer shail clearfy state the responsibility of the consumer under this
section. It shaif likewise provide the manner and form of such notice to constitute a
valid and legal notice to the manufacturer, distributor, authorized dealer or retaiter.

SEC. 7. Availment of the Lemon Law Rights. — Subsequent to the filing of
the notice of availment referred to in the preceding section, the consumer shalt bring
the vehicle to the dealer from which the vehicle was purchased for a final attempt to
address the consumer's compiaints 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 non-conformity required
under Section 6 hereof, to attend to the complaints of the consumer indluding. as
may be necessary, making the repairs and undertaking such actions to make the
vehicle conform to the standards or specifications of the manufacturer or distributor
for such vehicle. :

Jn case the consumer remains unsatisfied with the dealer manufacturer's
efforts to repair the vehicle, pursuant to the consumer's availment of his Leman Law
rights, the consumer may file a complaint before the DTI as provided for under this
Act. Provided, however, That if the vehicle is not ratumed for repair based on the
same complaint within thirty (30) calendar days from the date of notice of retease of
the motor vehicle fo the consumer following this repair attempt within the Lemon Law
rights period, the repair is deemed successful: Provided, finally, That, in the event
the consumer stil remains unsatisfied after the thirty (30) days period but stil within
the Lemon Law sights period, the consumer may be allowed to 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 pariod of availment of the Lemon Law rights, the consumer shall be provided a
reasonable daily transportation allowance, an amount which covers the


transportation of the consumer from his or her residence to his or her regular
workplace and vice versa, equivalent to air-conditioned taxi fare of in such amount to
be agreed upon by the parties, or a service vehicie at the option of the manufacturer,
distributor, authorized dealer or ratailer. Any disagreement on this matter shall be
resolved by the implamenting agency provided for under this Act.

Nothing herein shail be construed to limit or impair the rights and remadies of
a consumer under any other fay.

SEC. 8 Remedies for Dispute Resotution. — The DTI shall exercise exclusiva
and origina! jurisdiction over disputes arising from the provisions of this Act Alt
disputes arising from the provisions of this Act shall be settied by the DTI in
accordance with the following dispute resolution mechanisms:

(A) Mediation

(1) The principles of negotiation, conciliation and mediation towards
amicable settlement between the manufacturer or distributor and the
consumer shall be strictly observed;

(2} in the course of its dispute resolution efforts, the DTI shall endeavor to
independently establish the validity of the consumer's outstanding
comptaint. The DTI shalt likewise retain the ssrvices 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 shail
be bome jointly by the consumer and the dealer manufacturer;

(3) The compiaint shall be deemed valid if it is independently established
that the vehicle does not conform to the standards or spectfications set
by the manufacturer,


(B)

(4)

(5)

Upon failure of the negotiation or mediation between the manufacturer
of distributor and the consumer, tha parties shall execute a certificate
attesting to such failure; and

At any time during the dispute resolution period, the manufacturer or
distributor and the consumer shall be encouraged to sattia amicably.
All disputes that have been submitted for mediation shail be sectied not
later than forty-five (45) working days from the date of filing of the
complaint with the DTI.

Arbitration

(4)

(2)

In the event there is a failure to settle the complaint during the
mediation proceedings, the parties may voluntarily anter into arbitration
proceedings, likewise to be supervised by the DTI. The D7 shall rely
‘on the independent findings as to conformity to standards and
specifications established here;

In case a non-conformity of the vehicle is found by the DTI, it shail rule
in favor of the consumer and direct the dealer-manufacturer to grant
either of the following ramedies to the consumer.

@ Replace the motor vehicle with a similar or comparable motor
vehicle in terms of specifications and values, subject to
availability; or .

(ii) Accept the retum of the motor vehicle and pay the consumer the
purchase price plus collateral charges.

In case the consumer decides to purchase another vehicle with
a higher value and specifications from the same dealer-manutacturer,
the consumer shall pay the difference in cost.



In both cases of replacement and repurchase, the reasonable
allowance for use, as defined in this Act, shall be deducted in
determining the value of the non-conforming vehicle.

(3) __ In case a non-conformity of the vehicie is not found by the DT), it shall
tule 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. Determination of Reasonable Afowance far Use. - For purposes of
this Act, “reasonable allowance for use” shall mean twenty percent (20%) per annum
deduction from the purchase price, or the product of the distance traveled in
Kilometers and the purchase price divided by one hundred thousand (100,000),
whichever is higher.

SEC. 10. Disclosure on Resale. ~ Should the retumed vehicle be made
available for resale, the manufacturer or distributor shall, prior to sale, lease or
transfer, disclose to the dealer in writing that

(2) The motor vehicle was returned to the manufacturer, distributor, factory
or branch;

(b) The nature of the non-conformity which caused the ratum; and

(c) The condition of the motor vehicle at the time of the transter to the
dealer.

It shall be the responsi ‘of the deaier to make the same disclosure in
writing, in tum, to the next purchaser prior to sale. The responsibility of the dealer
under this section shall caase upon the sale of the affected motor vehicle
to the first purchaser.

SEC. 11. Penalty. — 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


(Php100,000,00) 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. 12. Assistance by Other Agencies. - The DOTC and other agencies,
Political subdivisions and focal govemment units, including government-owned and -
controlled corporations, shall render such assistance as required by the DT1 in order
to effectivaly implement the provisions of this Act.

SEC. 13. implementing Rules and Regulations. — The DTI shalt promulgate
the necessary implementing niles and regulations within ninety (90) days from the
effectivity of this Act.

SEC. 14. Separabilty Clause. — ff, 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. 15. Repealing Clause. - A\ll laws, decreas, execulive orders,
issuances, rules or regulations or parts thereof which are inconsistent with the
Provisions of this Act are hereby deemed repeaied, amended or modified
accordingly.

SEC. 16. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in two (2) national newspapers of general

circulation.

Approved,


Republic of the Philippines
HOUSE OF REPRESENTATIVES

—--Quecen City; Metro: Manita—

. ~~ "FIFTEENTH CONGRESS
First Regular Session

HOUSE RILLNO. 3495.

Introduced by Rep. Witfrida Mark M. Enserga

EXPLANATORY NOTE

Protecting the interests of the cansumers is paramount in the social and economic
activities of the country. It is the policy of the State to protect the interests of the consumer, promote
his general welfare and to establish standards of conduct for business and industry.

Section 9, Article XVI of the constitution provides that the state shall protect consumers
from trade malpractices and from substandard or hazardous products. For these reasons. the
government enacted consumer protection law (RA 7394) as means to protect consumers against

‘malpractices such as substandard goods and unsatisfactory services

Among the many industrics and services, consumers in the motor vehicle sector needs to
be protected against hidden defects, defective and substandard vehicles While we do have RA. 7394
which makes the Department of Trade and Indostry (DTN) as primary government regulatory agency
in charge for the motor vehicles trade and industry, there is a need to enact a law which will give

full protection to the rights of consumers in the sale for motor vehicles against sales and trade

Practices which are deceptive, unfair, or otherwise inimical to consumers and the public interest.

* ~ In other countries a in the United States, the law is called Lemon Law that provide a
remedy for purchasers of cars in order to compensate for cars that repeatedly fail to meet standards
of quality and performance. These cars are called lemons which is the slang sense of “worthless
thing", Over time, ‘lemon’ came to refer to anything that was defective or broken or which breaks
Constantly, particulatly « car. Hence, a motor vehicle is considered a lemon if it is unfit, unreliable,
or unsafe for ordinary use.

= There is no lemon taw yet enacted in the Philippines. Although several attempts had
made in the previous congresses, due to time constraints, all bills filed in relation to lemon motor
vehicles were not enacted. Hence, the attached bill

is necessary and very timely.



‘The bill in the hindsight provides protection to buyers to new motor vehicles. Tf a new

IMs Out in be defective-and has not heen property repaired after a reasonable number of
attempts, the law requires a refimd or replacement vehicle

Only a small percentage of new vehicles will be declared lemons. However, alt new
vehicle buyers will benefit from this law. The manufacturer and the dealer now have a stronger

economic incentive to deliver the vehicle free from defects, and if problems develop, to correct

them quickly and accurately

cis the intent of the proposed bill that 2 good faith motor vehicle warranty complaint by
a consumer be resolved by the manufacturer within a specified period of time. It is further the intent
of the bill to provide the statutory procedures whereby a consumer may receive a replacement motor
vehicle, or a full refund, for a motor vehicle which cannot be brought into conformity with the
warranty provided for. However, nothing in the bill shall in any way limit or expand the rights at

remedies which are otherwise available to a consumer under any ather existing law,

At the core of this proposed legislation is the manufacturer's breach of warranty. A
manufacturer's warranty (express or implied) is what makes the manufacturer legally responsible
for repairs to the consumer's vehicle or good. The law imposes these obligations on the manufacturer,
the seller or both as a matter of public policy. Hence the public palicy behind the proposed legislation
is to place upon the manufacturers of motor vehicles the duty to meet their obligations and

responsibilities under the terms of the express warranties extended (o the consumers- buyers of motor
vehicles.

In view of the foregoing, approval of the Bill is earnestly sougtn.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
_ Quezon City, Metro Manila —-.

5
7

FIFTEENTH CONGRESS
First Regular Session

3495

HOUSE BILL N

Shtsaduced by Rep. Wilfride Mark M. Emerge

AN ACT PROVIDING FOR MOTOR VEHICLE WARRANTY ENFORCEMENT
AND FOR OTAER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION. 4. Title - This Act shall be known as the “Philippine Lemon Law of 2010"

SEC. 2. Declaration of Policy - tt is hereby declared the policy of the State to
Protect the interests of the consumers in the sale of motor vehicles against deceptive and unfair sales
and trade practices, promote their welfare and establish statutory procedures on enforcement of
warranties extended to motor vehicle buyers

The State shall promote the right of the consumers for full disclosure of information
on the condition of the motor vehicles for sale in order to promote transparency, fairness and the
*eturn of the full value of money. It shall likewise ensure that consumers are madle aware of their
Tights under this Taw and are not refused the information, documents, or service necessary to
exercise their rights

SEC. 3, When a motor vehicle is deemed a lemon» A motor vehicle shall be
Presumed to be a lemon, when the following conditions concur:
4) the motor vehicle was purchased within the Philippines;

5) the buyer must have reported the failure tn repair the non-conformity

to the seller or manufacturer within the first 6 months from the date of original
- Selivery.to.the consumeror fifteen thousand (3,000) kilometers of operation
after such delivery, whichever comes first



2 ¢ }

The following causes of non-conformity shall be excluded
(2) Noncompliance by the consumer of his obligations under the warranty;

(2) Modifications not authorized by the manufacturer or distributor,
(3) Abuse or neglect of the brand new motor vehicle; and

(4) Damage to the vehicle due to an accident or force majeure.

©) the defect of the automobile must substantially impair the use, value, or safety

of the mator vehicle; and

d) the motor vehicle has been out af 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,
Motorcycles, conversion vans or farm equipment are not included under this Act

SEC. 4, Repair Attempts. — At any time within the Lemon Law rights period and
~ after at least four (4) Separate répair atteapis 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.

SEC. 5. Notice of Availment of the Lemon Law Rights. — Before availing of any
-- Temedy,under this Act and subject to-compliance with the pravisions of Section 4 hereof, the
consumer shall, in writing, notify the manufacturer, distributor, authorized dealer or retailer of
the unresolved complaint and the consumer's imention to invoke his rights under this Act
within the Lemon Law rights period,

‘SEC. 6. Buyer's remedy when motor vehicle is a lemon —A buycr 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 femon in accordance with the
next preceding section, Nothing in this law shall in any way limit or expand the rights or
semedies which are otherwise available to a consumer-buyer of mator vehicle under any other

cxisting laws or jurisprudence

SEC, 7. Replacement,

the buyer who chooses replacement as a remedy is entitled 10
4 motor vehicle identical to the vehicle being replaced The seller or manufacturer shall be
responsible for paying all taxes and licensing fees.

SEC. 8, Repurchase.—A buyer may at his option be entitled to a refiind 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 ar repurchase, the buyer is also entitled to



SEC. 9. Attorney's Fees. -In addition to the foregoing sections, a buyer is also
entitled 1 an award of aitarney’s fees and other costs of litigation.

SEC. 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 10 two times the
buyer's actual damages

SEC.11. Implementing Rules and Regulations. — The DTI shall promulgate the
necessary implementing sules and regulations within ninety (90) days from the affectivity of
this Act.

SEC. 12. Assistance by Other Agencies. — The DOTC and other agenci

, political
subdivisions and local government units, including gavernment-owned and -controlled

Corporations, shall render such assistance as required by the DTT in order to effectively
implement the provisions of this Act.

SEC. 13. Separability Clause. — If. for any reason, any part or provision of this Act
is declared invalid, such declaration shail not affect the other provisions of this Act

SEC.

Repeating 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. Effectivity - "Vis Act shall take effect immediately upon its publication in
‘two (2) newspaper of general circulation.

APPROVED,



FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES _)
First Regular Session

HOUSE OF REPRESENTATIVES

introduced by Representative Rufus B. Rodriguez and
Representative Maximo 8. Rodriguez, Jr.

House BillNo. 3869
EXPLANATORY NOTE

From January to September 2010, there were approximately 126,901 units of
vehicies sold in the Philippines and from these units, there are more or fess 100-150
units that were reported to have factory defects. There have been reports that newly
bought brand new vehicles from dealers suffer from defects that no matter how many
times it is brought back for repairs simply just would go away.

For majority of the population in the Philippines, the purchase of a new vehicle
is a huge expenditure which resulted from hard work. And it would be very unjust if
all their hard work would result in something that is defective and they have no
recourse in the law,

Also, there have numerous recalls of motor vehicles in the Philippines, and all
over the world, The difference, however, is that in other countries, the buyers are
protected by their laws and have some recourse or remedy that entitles them to be
properly compensated

As such, it is high time that legislation be enacted to give buyers of motor
vehicles protection and added rights against factory defective vehicles and false
warranties.

in view of the foregoing. immediate approval of this bill is earnestly requested,

MAXIMO B. RODRIGUEZ, JR.



FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES —)
First Regiila? Session >

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B, Rodriguez, Jr.

House BillNo. 3869

AN ACT
STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND
NEW MOTOR VEHICLES AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Lemon Law of 2010".

SEC. 2. Declaration of Policy. — it is hereby declared the policy of 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 Terms. — 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 (DOTC) or an appropriate agency or authority and operated on the
highway of the Philippines, or in a foreign state or country.

(b) "Collateral charges" refers to the fees paid to the Land Transportation Office (LTO)
for the registration of a brand new motor vehicle and other incidental expenses,
including the cost of insurance pertaining to the said vehicie.

(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 who sells motor
vehicles to the public.
“Determination...

“reasonable allowance for use” shall mean twenty percent (20%) per annum deduction
from the purchase price, or the product of the distance traveled in kilometers and the
purchase price divided by one hundred thousand (100,000), whichever is higher.

(9) “Distributor” refers to any person or entity other than a manufacturer who sells brand
new motor vehicles to their duly authorized dealers or retailers.

{h) “implementing agency” refers to the Department of Trade and Industry (DTI).

(i) "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 te 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-confommity,
as defined in paragraph (k) herein, to the standards and specifications of the
manufacturer, distributor, authorized dealer or retailer, and pursue any right provided for
under this Act.

(@) “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.

{k) “Motor vehicle” refers to any self-propelled four (4)-wheeled road vehicle designed to
carry passengers including, but not limited to, sedans, coupes, station wagons,
convertibles, pickups, 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. 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.

(Q “Non-conformity” refers to any defect or condition that substantially impairs the use,
value or safety 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 noncompliance by the consumer of his obligations
under the warranty, modifications not authorized by the manufacturer or distributor,
abuse or neglect, and damage due to accident or force majeure.

(m) *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.

(n) “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.

{0} “Warranty rights period” refers to the period provided for under the contract of sale
when the manufacturer would guarantee the materials used, workmanship and
roadworthiness of a brand new motor vehicle for ordinary use or reasonable intended

purposes.

-of_reasonable._allowance_for_use", for...purpeses_of this. Act,_____ —


SEC. 4. Coverage. - This Act shall cover brand new motor vehicles with non-conformity
reported by the consumer within twelve (12) months from the date of original delivery to
--—— the-censumer-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 or force majeure.

SEC. 5. Repair Aitempts. — At any time within the Lemon Law sights 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.

SEC. 6. Notice of Availment of the Lemon 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 this Act within the Lemon Law rights period.

The warranty bookiet issued by the manufacturer, distributor, authorized dealer
or retailer shalt clearly state the responsibility of the consumer under this section. It shall
likewise provide the manner and form of such notice to constitute a valid and legal
Notice to the manufacturer, distributor, authorized dealer or retailer.

SEC. 7. Availment of the Lemon Law Rights. — Subsequent to the filing of the notice of
availment referred to in the preceding section, the consumer shail 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 non-conformity required under Section 6 hereof, to attend to the complaints of the
consumer including, as may be necessary, making the repairs and undertaking such
actions 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 for under this Act: Provided,
however, That if the vehicle is not retumed for repair based on 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 within the Lemon Law rights period, the
repair ts deemed successful: Provided, finally, That, in the event the consumer still
remains unsatisfied after the thirty (30) days period but still within the Lemon Law rights
Period, the consumer may be allowed to avail of ihe 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 the Lemon Law rights, the consumer shall be provided a
reasonable daily transportation allowance, an amount which covers the transportation of
the consumer from his or her residence to his or her regular workplace and vice versa,



equivaient to air-conditioned taxi fare or in such amount to be agreed upon by the
parties, or a service vehicle at the option of the manufacturer, distributor, authorized
"dealer or retailer” Any disagreement—on this matter ~staltbe- resotved—by—the ———---
implementing agency provided for under this Act.
Nothing herein shat! 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:
{2) Mediation
(1) The principles of negotiation, conciliation and mediation tewards amicable
settlement between the manufacturer or distributor and the consumer shall be
strictly observed;
(2} In the course of its dispute resolution efforts, the DTI shafl endeavor to
independently establish the validity of the consumer's outstanding complaint. The
DT! 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 bome jointly by the consumer and the dealer/manufacturer,
(3) The complaint shal! be deemed valid if it is independently established that the
vehicle does not conform to the standards or specifications set by the
manufacturer;
(4) Upon failure of the negotiation or mediation between the manufacturer or
distributor and the consumer, the parties shall execute a certificate attesting to
such failure; and
(5) At any time during the dispute resolution period, the manufacturer or
distributor and the consumer shall be encouraged to settle amicably.

All disputes that have been submitted for mediation shall be settled not
later than forty-five (45) working days from the date of filing of the complaint with
the DTI.

{b) Arbitration
(1) In the event there is a failure to settle the complaint during the mediation
proceedings, the parties may voluntarily enter into arbitration proceedings,
likewise to be supervised by the DTI. The DTI shail rely on the independent
findings as to conformity to standards and specifications established herein;
(2) In case 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:
{0 Replace the motor vehicle with a similar or comparable motor
vehicle in terms of specifications and values, subject to availability;

or
(i) Accept the retum of the motor vehicle and pay the consumer the
purchase price plus collateral charges.



{n case the consumer decides to purchase another vehicle with a higher
value and specifications from the same dealer-manufacturer, the consumer shall

pay the differenci Er rrnrmmenmmnnns

In both cases of replacement and repurchase, the reasonable allowance
for use, as defined in this Act, shall be deducted in determining the vaiue of the
non-conforming vehicle: and
{3) In case non-conformity of the vehicle is not found by the DTI, it shall mle 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. Determination of Reasonable Allowance for Use. — For purposes of this Act,
“reasonable allowance for use” shall mean twenty percent (20%) per annum deduction
from the purchase price, or the product of the distance traveled in kilometers and the
purchase price divided by one hundred thousand (100,000), whichever is higher.

SEC. 10. Disclosure on Resale. — Should the retumed vehicle be made available for
resale, the manufacturer or distributor shall, prior to sale, lease or transfer, disclose to
the dealer in writing that:
{a) The motor vehicle was returned to the manufacturer, distributor, factory or branch;
(b) The nature of the non-canformity which caused the return; and
{c) The condition of the motor vehicle at the time of the transfer to the dealer.

It shall be the responsibility of the dealer to make the same disclosure in writing,
in turn, to the next purchaser prior to sale. The responsibility of the dealer under this
section shall cease upon the sale of the affected motor vehicle to the first purchaser.

SEC. 11. Penalty. — 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 (Php100,000.00) 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.

. Assistance by Other Agencies. - The DOTC and other agencies, political
subdivisions and local government units, including government-owned and -controlled
corporations, shail render such assistance as required by the DTI in order to effectively
implement the provisions of this Act.

SEC. 13. Implementing Rules and Regulations, - The DTI shall promulgate the
necessary implementing rules and regulations within ninety (90) days from the effectivity
of this Act.

SEC. 14. 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. 15. 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. 16. Effectivity. — This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in two (2) national newspapers of general circulation.

Approved,



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS

First Regular Session
House Bill No. 4143 _

Introduced by Representative ROGER G. MERCADO -

EXPLANATORY NOTE

Every consumer wants nothing but get the fair value of his money. The State
recognizes the right of the consumers and assures its full protection against unfarr

rade practices

In normal practice, ail brand new products provide warranty against defects
apparent or otherwise, allowing consumers to seek redress, within a fix period. under
certain circumstances. However, there are some instances where warranties do not
apply as when adequate remedy cannot be given to the satisfaction of the consumer

like in the case of automobile industry.
We heard a jot of reports involving large car manufacturers recalling their units
due to complaints relating to product standards rendering the unit unfit and unsafe for

use. This initiative, however, belongs to the manufacturers who in the first place
have all the liberty in designing the vehicles coming out of their plants.

While every vehicle is coupled with warranty, in most cases, the remedies
provided to the consumers seem not enough to fairly address the complained defects
particularly those requinng major rectification

It was for this reason that the United States, majonty of the European states
and some of the countries around the world enacted what is globally known as the
“Lemon Law"

it is the objective of this measure to afford the same protection which cur
consumers cannot fairly avail under the product's warranty.

Thus, passage of this bill is eamestly sought.

LYE. a

ROGER G. MERCADO



Republic of the Phifippines
HOUSE OF REPRESENTATIVES
..Quezon City. — _ _

FOURTEENTH CONGRESS
First Regular Session

HOUSE BILLNO. 4143

Introduced by Representative ROGER G. MERCADO

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 :he
Plulippines in Congress assembled.

1 SECTION 1. Short Title. — This Act shall be known as the “Lemon Law of
2030.

SEC. 2. Declaration of Policy. — Itis hereby declared the policy of the S:
to promote full protection to the rights of consumers in the sale of mo:

ah

vehicles against sales and trade practices which are deceptive, unfair or
co) otherwise inimical to the consumers and the public interest
7 The State recognizes that a motor vehicle is a major consumer purchase or
8 investment The consumer rights should thus be clearly defined including tne
9 means for redress for violations thereof.
19 SEC. 3. Definition of Terms. — For purposes of this Act, the following terms
I shail mean”
in (a) “Brand new motor vehicle” refers to a vehicle constructed entirely from
3 new parts that has never been sold or registered with the Departmen: of
14 Transportation and Communications of an appropnate agency or
3 authority and operated on the highway of the Philippines, or in 2 foreign
16 state or country.
7 Collateral Charges” refer to the fees paid to the Land Transportation
6S Office for the registration of a brand new motor vehicle
19 (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.



(3)

ie)

ify

{g}

iy

"Consumer" refers to any person, natural or juridical. who is a purchaser
onher by Cash’or cr6sir ora brand new motor vehicle

Dealer’ or "Seller refers to any person other than @ manufacturer wn
sells motor vehicles to the public.

Distributor’ refers to any person or entity other than a manufacturer wno
sells brand new motor vehicles to their duly authorized dealers or

retailers.

“Implementing Agency” refers to the Department of Trade and Industry

‘Lemon Law Rights Period” refers to the period ending twelve é
months after the date of the original delivery of a brand new motor venicie
to a consumer or the first twenty thousand (20,000) kilometers of
operation after such delivery, whichever comes first. This shali be tne
period during which the consumer can report any non-conformity to tne
manufacturer, distributor, authorized dealer or retailer, and pursue any
fight provided for under this Act.

“Manufacturer” refers to a person, partnership. association, corporation or
entity engaged in the business of manufacturing or assembiing Tio:27
vehicles, or of distributing motor vehicles to motor vehicle dealers

Motor Vehicle” refers to any self-propelled four-whesled road venice
gesigned to cary passengers including. but not limited to. secars
coupes, station wagons, converbles, pick-ups, vans, sport utlity ven.cies
;SUVs} and Asian utility vehicles (AUVs) but excepting motorcyc:
delivery trucks, dump trucks, buses. road rollers, trolley cars. sire
sweepers, sprinklers, lawn mowers and heavy equipment. such asc
not limited to bulldozers. payloaders. graders. forklifts. amphib an trucks
cranes, and vehicles which run only on rails or tracks, and tractors
traliers and traction engines of all kinds used exclusively for agricutura
purposes. Trailers having any number of wheels, when propelie:
niended by attachment to a motor vehicle, shall be classified as sezz
motor vehicle with no power rating

a

Non-Confosmity” refers to any condition that substantially impairs :-e
use. or safety of @ brand new motor vehicie whicn prevents it from
conforming to the manufacturer's or distributor's standards or
specifications, which cannot be repaired, but excluding conditocs
resulting from accident, force majeure, abuse, neglect, or unautnonzed
modificauen or alteration of the brand new motor vehicle

Purchase Price” refers to the invoice price cr the amount af money wr.c>
tne dealer or retailer actually received for the brand new motor yehicie io
consideration of the sale of such brand new motor vehicle



Warranty” refers to the written assurance, so labeled of the

1 4m)
manufacturer of a brand new motor vehicle, including any term o-
_—--. condition precedentte the-enforcement-of obligations under the-warranty—~

“Warranty Rights Period” refers to the period provided for under the
contract of sale when the manufacturer would guarantee the materats

5
6 used, workmanship and fitness of a brand new motor vehicle for orarary
7 use or reasonable intended purposes.

8 SEC. 4. Coverage. - This Act shail cover brand new motor vehicles with non-
9 conformity reported by the consumer within twelve (12) months from date of

10 original delivery to the consumer or twenty thousand (20,000) kilometers of
it operation after such delivery, whichever comes first. The following causes of
12 non-conformity shall be excluded
13 @. non-compliance by the consumer of his obligations under the
14 warranty;

5 b. modifications not authorized by the manufacturer or distributor
16 c abuse or neglect of the brand new motor vehicle; and
WF ¢ damage to the vehicle due to an acoadent or force mayeure.

Is SEC. 5. Repair Attempts. — At any time within the lemon law rignts perioc.

9 and after at least four (4) times by the same dealer- manufacturer for the
same complaint, the consumer, if still unsatisfied with the results of the saa

a repairs, may invoke his rights under this Act.

hv shah be understood that a reasonable number of repair attempts nave
undertaken to make the vehicle conform to the standards or specifications '
during the lemon law rights period, but before the filing of the notice of non-
conformity under the succeeding section, the same non-conformity has ceer
subject to repair as the case may be, and the same non-conformity continues

to exist
28 SEC. 6. Notice of Availment of Lemon Law Rights — Before availing of acy
29 remedy under this Act and subject to compliance with the provisions of

Section 5 hereof, the consumer shall. in writing, notdy the manufact.
' distributor, authorized dealer or retailer of the non-conformity of tne

2 vehicle, and the consumer's intention to invoke his rights under this Act w
3 the lemon law rights period

Tne warranty bookiet issued by the manufacturer, distnbutor, author zez
dealer or retailer shall clearly state the responsibility of the consumer unae

this section. It shall likewise provide the manner and form of such aotce to
constitute a valid and legal notice to the manufacturer. distributor authorized
dealer or retailer
39 SEC. 7. Availment of Lemon Law Rights — Suosequent to filing of notce cf
46 availment referred to in the preceding section. the consumer shal! pring sre
al vehicle to the dealer from which the vehicle was purchased for a fina’ 2

42 = 19 address the consumer's complaint to his satisfaction.



os mrp :

20

see

it shail be the duty of the manufacturer, distributor, authorized dealer or
retailer, upon receipt of the motor vehicle and the notice of non-conformny..

requrred-urder Section 6 hereof, attend to the complaint of the consumer
including. as may he necessary. make the repairs and undertaking sucn
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 the dealer-manufacturer's efor to
fepair the vehicle, pursuant to the consumer's availment of his temon law
rights. the consumer may file a compizint before the DT! as providec under
this Act, Provided, however, That if the vehicle is not returned for reparr far the
same complaint within thirty (30) calendar days from the date of notice of
release of the motor vehicle to the consumer following this repa:r attempt
under the availment of lemon law rights period, the repair is deemed
successful; Provided, finally, That in the event that the consumer stu remains
unsatisfied after the thirty (30) day penod, but still within the lemon jaw rignts
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 +
consumer shalt be provided a reasonable daily transportation al'owance
equivalent to first class taxi fare from the second repair attempt. in suse
amount to be agreed upon by the parties. of a service vehicle at the option of
manu‘acturer. distributor, authorized dealer or retaler. Any disagreenent 2

this matter shall be resolved by the imptementing agency provided for unae-
this Act.

Nothing herein shall be construed to limit or impair the nghts and remecias >!
a consumer under any other law.

SEC. 8. Remedies for Dispute Resolution. The DT! 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 settied by th D1!
in accordance with the following dispute resolution mechan:sm

8.1 Meoiation
{as Tne principle of negotiation, conciliation and mediation towards amicab:e
settlement between the manufacturer or distributor and consumer sr

strictly be observed:

5i In the course of its dispute resolution efforts, tne DTi shai esdeavar to
moaepéendently establish the validity of the consumers out LES
complaint. The DTi shall likewise retain the services of other governre:
agencies or independent private entities in the ascertainment of tne
validity of the consumer's complaint. Any cost in establishing the valiaity
the consumer's complaint shali be bore jointly by the consumer and th
deaier-manufacturer.

(2) The complaint shall be deemed valid if it is independently established tnat

the venicle does not conform to the standards or specifications szt by t*

manufacturer.



(a) Upon the failure of the negotiation or mediation between the manufacturer

or distributor and consumer. the parties shall execute a cerifi

-attesting te-such failure:~ —
(e) At any time during the dispute resolution period, the manufactu:

distributor shall be precluded from offering easier remedial terms xo ine
consumer to reach an amicable settlement at any stage of the dispute

mechanism.

All disputes that have been submitted for amicable settlement shail be settled
not jater than forty-five (45) days from the date of filing of the complaint with

the DTI

82 Arbitration

{a) In the vent there is a farlure to settle the complaint during the mediaticr:
proceedings, the parties may voluntarily enter into arbitration proceeaings
hkewise to be supervised by the DTI. The DTI shall rely on te
independent findings as to conformity to standards and specifications
established herein

tb) In case a non-conformity of the vehicle is found by the DTI. it shall rule n
favor of the consumer and direct the dealer-manufacturer to grant einer of
the following remedies to the consumer.

()) replace the motor vehicle with similar or compatible motor
vehicle in terms of specrfications and values, subject to
availability, Provided, That there be an offset frorn its value for
reasonable allowance for use as defined in the immediately
succeeding section, or

(ii) accept the return the motor vehicle and pay the consumer
purchase price plus collateral charges

ic) In case a non-conformity of the vehicle is not found by the DTI. # sna.
rule in faver of the dealer-manufacturer and direct the corsum
reimburse the dealer-manufacturer the cost incurred by the later
validating the consumer's complaint

SEC. 9. Determination of Reasonable Allowance for Use. ~. For pur
this Act, ‘Reasonable Allowance for Use" shatl mean twenty per c
per annum deduction from the purchase price, or the product of the d
traveled in kilometers and the purchase price divided by one nunares
thousand (100,000), whichever is higher

SEC. 10. Disclosure on Re-sale. — If the returned vehicle is then ma:

availaple for resale, the manufacturer or distributor shalt, prior to sale. lease

or transfer, disclose to the dealer in writing that:

#3} the motor vehicle was retumed to the manufacturer. distributor fa
pran:

iD1 Ine nature of the non-conformity which caused the seturn: ang

¢} In€ condition of the motor vehicle at the time of the transfer to the ces

ht shali be the responsibility of the dealer to make the same disclos.
writing. in flim, to the next purchaser prior to sale. A dealers respon:



7
18

19

6

under this section shall cease upon the sale of the affected motor venicie to

the first purchaser

SEC. 11. Penalty. — The manufacturer. distributor or dealer adjudgea to nave:
vioiated the provisions requiring disclosure as mentioned in the preceaing
section shall be liable to pay a minimum amount of One hundred tneusand
pesos (Php100,000.00) as damages to the aggrieved party without preyudice
to any civil or criminat liability they and/or the responsible officer may incur

under existing laws

SEC. 12. Assistance by Other Agencies. — The Department of Transportation
and Communications and other agencies. political subdivisions. ‘oca
government units. including government-owned and controlled corporatr
shali render such assistance as required by the DT! in order to effectwayy
implement the provisions of this Act

SEC. 13. Implementing Rules and Regulations. — The Department of Trade

and industry shalt promulgate the necessary implementing rules anc
regulations within ninety days (90) days from the effectwity of this Act

SEC. 14. Separability Clause. — If. for any reason, any part or provis:on of
thys Act is declared invalid, such declaration shall not affect tne other

provisions of this Act

SEC. 15. Repealing Clause. - All laws. decrees, executive orders
issuances, rules or regulations or parts thereof, which are inconsistent ws
the provisions of this Act. are hereby deemed repealed. amended or mos:f.e2

accordingly

SEC. 16.  Effectivity. — This Act shall take effect thiny (30) days
publication in the Official Gazette or in two national newspapers of gare:
ation

Aoorovec



* Republic of the Philippines
‘HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 4295

introduced by: ‘Representative AUGUSTO Boboy SYIUCO, PhD.

EXPLANATORY NOTE

This bill seeks to‘ provide protection for consumers against the fraudulent
sale of defective motor vehicles machineries and appliances and breach of
warranties by its seller or manufacturer.

“There have been'reported cases of newly purchased motor vehicle proving
to be defective or failing to mect standards of quality and performance guaranteed
by its seller or manufacturer. Unfortunately, there is 90 “Lemon Law" in the
Philippines. In the United States, the “Lemon Law” provides full protection to
aanservere against sales and trade practices of sellers or manufacturer ‘of motor
vehicles which are deceptive, unfair or otherwise inimical to consumers: and the
public interest. With the proposed "Lemon Law” protection is provided not only
qo buyers of motor vehicles but it also protects the right of buyers of machineries
and appliances

Under the proposed measure, ifthe seller or the manufacturer fails 0 repair
a new motor velole machinery of appliance to meet the terms. of an ExETC®
4 aiuen warranty, after reasonable notice and attempts, the manufacturer shall be
required to replace the vehicle machinery or appliance with a new OW of the same
deere value, or return the purchase price to the buyer, atthe option of the latter.
The manufacturer shall also be responsible to pay for sales or license, registration
and other official fees including, incidental damages that the buyer or lessee may
have incurred due to the breach of warranty.

‘This measure inténds to provide the same protection to consumers in the
Philippines against breach of warranties of motor vehicle machinery and appliance
sellers or manufacturers. This bill will also cnsure that the consumers will get the
fall value of their hard earned money or investment when buying @ new ‘motor
vehicle machinery or appliance.

In view of the forégoing, approval of this bill is urgently recoramended.

——
ann a

AUGUSTO BOBOY SYJUCO, Ph.D.


‘Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

FIFTEENTS CONGRESS
First Regular Session

HOUSE BILL NO. 4295

Tanaduced by. Representative AUGUSTO Baboy_ S¥IUCO, Ph.D.

i ANACT
PROTECTING CONSUMERS AGAINST THE SALE OF DEFECTIVE MOTOR
VERICLE, MACHINERIES AND APPLIANCES USUALLY SOLD TO
COMMON CONSUMERS AND IMPOSING PENALTIES FOR VIOLATION

THEREOF

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled: .

SECTION 1. Short Title, - This Act shall be known as the “Philippine
Lemon Law."

‘SEC.2. Declaration of Policy. — Xt is hereby dectared the policy of the State
to promote consumer rights and provide full protection to buyers af motor vehicles,
tmachineties and appliances usually sold to common consumers against trade practices of
savers of manufacturers which are inimical to the economy and the public interest.

SEC. 3. Definition of Terms. — As used in this Act:

2) Common Consumer refers to the purchaser, other than for purposes of
resale, of a motor vehicles, machineries and appliances which is used-primarily for
personal, family, or household puxposes, and any person 10 whom the motor vehicle,
Per imcries or appliance is transferred for the same purposes during the duration of any
warranty applicable to the the item bought, and any other person entitled by the terms of
such warranty to enforce the obligations of the warranty

b) Manufacturer refers to a person, partnership, association, corporation or
emity engaged in the business of manufacturing or ‘assembling motor vehicles,
machineries or appliances or of distributing motor vehicles, machineries and appliances
to sellers;

©) Express warrant) refers to the written warranty of the manufacturer of a
new motor vehicle, machinery or appliance including any terms or conditions precedent
to the enforcement of obligations under that warranty,

a) Motor vehicle refers to passenger cars, pick-up oF panel -trucks, sports
utility vehicles, Asian utility vehicles, vans, motorcycles, and demonstrators or Jease
purchase vehicles which was subject to ¢ manufacturer's exPress warranty at the time of
the delivery and was purchased and registered in the Philippines;


' 2

e) Machineries-devise designed to yield a high mechanical advantage to reduce the
effort needed to do that work. . .

{) _Appliances- A device or instrument designed to perform a specific function,

especially an electrical device usually used within the household
g) Seller refers to.any person other than & manufacturer which sells motor

vehicles, machineries or appliances to the public. It includes marmufacturers’ authorized
dealer, retailer, distributor or agent,

h) Collateral charges vefer to sales-related charges including but not jimited to
sales tax, license fees, finance charges and interest, transportation charges, dealer
preparation charges or any ottier charges for service contracts, undergoing rust-proofing
ot installed options, not recoverable from a third party;

i) Comparable motor vehicle/machinery/appliance refers to a motor vehicle
‘or machinery or appliance that is identical or reasonably equivalent to the motor vehicle
‘or machinery or appliance to be replaced, in terms of specifications and value;

3) Non-conformity refers to failure to conform to a warrenty, @ defect or a
condition, including those that do not affect the Griveability of the vehicle or the
operation of machinery or the.appliance but significantly impairs the use, market value,
or safety of a motor vehicle;

k) Notification means a written complaint of the defect or defects
communicated to the manufacturer .who has responded to the consumer in writing
regarding said complaint, or that a representative of the manufacturer ot seller has either
inspected the vehicle or machinery or the appliance or met with the consumer
regarding the non-conformity;

1) Reasonable allowance for use refers to cwenty percent (20%) per annum
deduetion from the purchase price, or the product of the distance traveled in kilometers
and the purchase price divided by ane hundred ‘thousand (100,000), whichever is higher;
and

k) Warranty refers! to any undertaking, written or otherwise, of the
manufacturer, or any affirmations ‘of fact or promise made by the manufacturer in
connection with the sale of a taotor vehicle/machinery oF appliance that become part of
the basis of the bargain whichj includes the obligations of the manufacturer in relation to
materials, workmanship, and fitness of a motor ‘yehicle/machinery/appliance for
ordinary use or reasonable intended purposes throughout the duration of the lernon law
rights period as defined in this section.

SEC. 4. Lemon Law Rights Period. — The period ending twenty four (24)
months after the date of original delivery of a brand new moror vehicle to a consumer or
the first ten (10) thousand kilometers of operation after such delivery, whichever comes
first, during which the consumer can report any non-conformity to the standards and
specifications of the manufacturer or selles, and pursue any right provided for under this
‘Act. In the case of machineries, the period of 24 months after the date of original
delivery, the consumer may pursue any right under this Act Consumers who bought
appliances ‘shall have 6 months from the date of purchase to pursue their rights under

is Act.

SEC.5. » Conformity to Warranties. — \f a new motor vehicle or machinery
does not conform to all express warranties, and the consumer reports the non-conformity
suthin the Semon rights period, the seller shall make such repairs within seven (7) days
afier the receipt of the written notice to correct the defect or the non-conformity. The
repair shall be free of any charges against the consumer, notwithstanding the fact hat


3
such repairs are made after the expiration of the manufacturer's ot seller’s warranty
period. In the case of purchasers of appliances, if the appliance prove to be defective
Pithin one month after purchase, the seller is required t© replace the same witha similar
appliance. Any defect of the appliance on the succeding months but not longer than six
months, repair of which shall be made by the seller without cost.

SEC. 6. Lemon Law Rights. — \f the ‘seller does not repair the defect within
the seven (7) day period despite receipt of the notification, ‘the consumer may forward a
written notice of refusal or failure to correct the non-conformity to the manufacturer.
The manufacturer shall repair the non-conformity within twenty (20) days.

Tf the manufacturer fails to repait the non-conformity within the twenty (20) day
period or after a reasonable number of attempts, the manufacturer or seller shall:

a) Replace the motor vebicle or machinery with 6 comparable motor vehicle or
machinery; or

) Accept the return of the motor vehicle or machinery and refund to the
consumer and any lien holder as their interest may appear the full purchase price,
including all collateral charges, incidental charges, incidental damages, less reasonable
allowance for use of the vehicle up to the date of the first notice of non-conformity that
is given to the manufacturer or seller.

The consumer shall have the unconditional right to choose a refund rather than a
replacement vehicle or machinery and to drive @ motor service vehicle or temporary
replacement to be used in cases of machinery which shall be provided by the
manufacturer, until be receives either a replacement or a refund. The subtraction of a
reasonable allowance for the use of the vehicle in excess of the first five thousand
Kilometers of operation shall apply to either a replacement or refund of the motor
vehicle. Mileage, expenses, and reasonable loss of use necessitated by attempts to
conform such motor vehicle to the express warranty may be recovered by the consumer.

Four (4) attempts to repair the same defect shall be presumed to be reasonable,

In the case of appliances if there be failure to replace or repair the defective
appliance, after due notice to the seller, the consumer may right away file complaint
with the Department of Trade and Industry.

‘Any disagreement on this matter shail be resolved by the Department of Trade and
Indusiry (DTD.

SEC.7. Notification Requirement, — Prior to availing himself of the rights
under the preceding section, it shall be the respoasibiliry of the consumer or his
representative to notify the manufacturer or seller in writing of the need for the
correction or repair of the non-conformity and ensure that the same is properly received
by the later. If the seller was the one notified, the latter shall, upon receipt, forward a
copy of such notification to the manufacturer.

SEC. 8. Remedies. - Any consumer who suffers loss:-by reason of a violation
of any provision of this Act may file a complaint before the Department of Trade and
Industry (DTT) for mediation proceedings as provided for in this Act.

Nothing in this Act shall be construed to limit or impair the tights and remedies of
a consumer under any other law.

. SEC. 9. 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 DTT in accordance with the
following dispute resolution mechanisms:


‘

2) Mediation Proceedings. ~ Prior to Jitigation, the parties shall be required to
undergo mediation proceedings under the Bureau of Trade Regulation and Consumer
Protection and the Consumer ‘Welfare and Trade Regulation Group or any office under
DT! as may be designated by the Secretary of the Department of Trade and Industry
which has the necessary capability and expertise pertaining to motor vehicles.

Within six (6) months after the effectivity of this Act, the offices above mentioned
are mandated to draft and promulgate jis rules and procedures for said mediation
proceedings. The rules shail incorporate an evaluation by the experts of the government
on any technical issues, which shall be considered with finality.

The principles of negotiation, conciliation and mediation towards amicable
settlement between the manufacturer or seller and the consumer shali be strictly
observed. :

In the course of its dispute resolution efforts, the DTS shall endeavor to
independently establish the validity of the outstanding complaint of the consumer. The
DTI shall likewise retain the services of other government agencies or independent
private entities in the ascertainment of the validity of the complaint. Any cost incurred in
Establishing the validity of the complaint shal! be borne jointly by the consumer and the
manufacturer.

‘The complaint shall bei deemed valid if it is independently established that the
vehicle does not conform to the standards or specifications set by the manufacturer.

‘Upon failure of the negotiation or mediation between the. manufacturer and the
consumer, the DTI shall issue a certificate attesting to such failure and, at any time
during the dispute resolution period, the manufacturer oF seller and the consumer shall
be encouraged to settle amicably. .

"All disputes that have been submitted for mediation shall be settled not later than
forty-five (45) working days fiom the date of filing of the complaint with the DTL

Tn case a non-conformity of the vehicle is not found by the DTI, it shall rule in
favor of the manufacturer and direct the consumer to reimburse the manufacturer the
costs incurred by the latter in validating the complaints.

(6) Arbitration proceedings. — In the event there is a failure to settle the
complaint during the mediation proceedings, the parties may voluntarily enter into
arbitration proceedings which shall be governed by Republic Act (RA) No. 876,
Stherwise known as “The Arbitration Law” and Republic Act (RA) No. 9285,
stherwise known as “The Alternative Dispute Resolution Act of 2004.”

‘The arbitral tribunal which shall be constituted to settle the dispute arising from
the provisions of this Act shall have a representative from DTI, as member.

“The parties are free to agree on the place of arbitration. Failing such agreement,
the place of arbitration shall -be in Metro Manila, unless the arbitral tribunal, having
regard to the circumstances of the case, including the convenience of the parties, shall
decide on a different place of arbitration.

“The arbitral tribunal may, unless otherwise agreed by the parties, meet at any
place it considers appropriate for consultation among. jts members, for hearing
Witnesses, experts, or the parties, or for inspection of goods, properties or documents.

SEC. 10. Defenses, — The manufacturer or any other person against whom an
action is brought may deny liability by raising the following affirmative defenses:

; a) The alleged non-conformity, defect or condition does not substantially impair
sts value neither there is a significant impairment or is a serious safety defect as defined
under this Act; and


5

b) The non-conformity is the result of abuse, neglect, or unauthorized
modification or alteration of a motor vehicle by a consumer.

SEC. 11. Court Action. — At any time after the mediation proceedings, the
consumer may elect to voluntarily submit to arbitration proceedings or bring an action
with the court to enforce the provisions of this Act. .

SEC. 12. Award of Damages. - In any action brought by the consumer due to
the failure of the manufacturer to comply with the decision rendered in a dispute
resolution proceeding or court. order, the consumer shall have the right to recover
attorneys fees, moral and exemplary damages, and other equitable relief as the court
may deems appropriate.

SEC. 13, Prescriptive Period. — Any action bronght to enforce the provisions
of thig Act shall be commenced within four (4) years from the date of the original
delivery of the motor vehicle to the consumer.

SEC. 14. Disclosure on Resale or Transfer of Vehicles or Machinery. — If a
motor vehicle or machinery that is renamed to the manufacturer or distributor either
under this Act or by judgment, decree or award is then transferred to a dealer, the
manufacturer or distributor shall disclose this information to the dealer prior to any sale,
fease, ar transfer. The manufacturer or distributor shall disclose the same to the Land
Transportation Office (LTO) which shall then inscribe the ownership certificate with
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 or accepted for
restinution due to failure to comply with warranties.

SEC. 15, Tax Refund, ~The manufacturer who accepts a returned motor vehicle,
machinery and appliance shall be entitled to a tax refund or credit for the sales taxes paid
on the returned vehicle: Provided, That the claim for the tax refund or credit was made
in accordance with the provisions of applicable tax laws.

SEC. 16. Prohibitions. — Any motor vehicle/ machinery or appliance
manufacturer or seller or lien-holder who reacquires, or assists in reacquiring a motor
vehicle or machinery or appliance whether by judgment, decree, arbitration award,
settlement agreement, or voluntary agreement, is prohibited from:

a) Requiring as a condition of the reacquisition of the motor vehicle, machinery
or appliance that a buyer or lessee who is a resident of the Philippines agrees not to
disclose the problems with the vehicle experienced by the buyer or lessee or the non-
financial terms of the reacquisition; and

3) Including in any release or other agreement, whether prepared by the
manufacturer, seller or lien-holder for signature by the buyer or lessee, a confidentiality
clause, gag clause, or similar clauses 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 or seller.

‘Any confidentiality clause, gag clause, or similar clauses in such a release or other
agreement in violation of this section shall be nul! and void.

Nothing in this section is intended to prevent any confidentiality clause, gag
acne or similar clause regarding the financial terms of the reacquisition of the
vehicle.

SEC. 17. Consumer Waiver of Rights, - Any agreement entered into by a
consumer for the purchase of a new motor vebicle/machinéry or appliance which
waives, limits or disclaims the rights set forth in this Act shall be void as contrary 10
public policy. Said rights shall inure to a subsequent transferee of such motor vehicle.


: ‘
SEC. 18, Lemon Law Rights Notice. ~ Any motor vehicle machinery or appliance
seller, manufacturer, agent or authorized dealer shall notify its buyers of the lemon law
rights provided under Section 6 of this Act and shall post = written notice of these rights
printed in bold face type, and displayed in conspicuous places jn its sales offices.

SEC. 19. Penalties. ~ Any person found guilty of violating any of the
provisions of this Act shall be penalized with a fine of not less than One hundred
thousand pesos (P}00,000.00) in the case of motor vehicles and machineries and in the
case of appliances the fine equivalent to fifty percent (50%) of the original price of the
said appliance.

"The foregoing penalty shall be without prejudice to any civil or criminal liability
that the offender or the responsible officers of the manufacturer, agent or authorized
dealer may incur under existing law. Tf the offender is an alien, he shall be deported
afier payment of fine without further deportation proceedings.

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 payment of fine.

‘Any director, officer, agent of a corporation who shall authotize, order or perform
any of the acts or practices constituting in whole or in part # violation of the preceding
section, 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.

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.20. Assistarice by Other Agencies. — The Land Transportation Office,
Bureau of lateral Revenue and other government agencies, political subdivisions and
Jocal 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. 21. _Jmplementing Agency. — The Secretary of Trade and Industry shall
promulgate the necessary implementing rules and regulations within ninety (90) days
from the effectivity of this Act.

SEC. 22. 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.23. Separability Clause. — If aay provision or part of this Act is declared
invalid or unconstitutional, the remaining parts or provisions not affected shall remain in
full force and effect.

SEC.24. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in two (2) national newspapers of general
circulation.

Approved,


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL No. _ 4532

ae eee 7] ES
Introdyced by Honorable CARMELO F, LAZATIN

EXPLANATORY NOTE

The protection of consumers against trade malpractices and from substandard products is
guaranteed under our 1987 Philippine Constitution. The consumer satisfaction is a measure
of quality standards and services in a given product or service. Without this element of
satisfaction from consumers, the expansion of business is affected. Conversely, when there
is a positive consumer satisfaction to a particular product or service, business expands.

Specifically in the auto industry, the prevalence of substandard brand new vehicles in the
local market had caused undue damages to many unsuspecting Filipino buyers. To address
this problem, this propose bill aims to protect consumer protection in buying brand new motor
vehicles by defining rights of the buyer, institution of mechanism for redress and providing
penalties for violations thereof.

In line with the above, the approval of this bill is eamestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 4539
Titrpdused by Honorable CARMELO F. LAZATIN
AN ACT

STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND NEW
MOTOR VEHICLES AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Short Title. -This Act shall be known as the “Philippine Lemon Law of 2010".

SEC, 2. Declaration of Policy. - It is hereby dectared the policy of 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 Terms. - 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 (DOTC) or an appropriate agency or authority and operated on the highway
of the Philippines, or in a foreign state or country.

{b) “Collateral charges” refers to the fees paid to the Land Transportation Office (LTO)
for the registration of a brand new motor vehicle and other incidental expenses. including the
cost of insurance pertaining to the said vehicle.

(c) ‘Comparable motor vehicle” refers to a motor vehicle that is identical or reasonably
equivaient 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.



{@) ‘Consumer’ refers to-any person, natural or juridical, who is 2 purchaser, either by
or credit, of a brand new motor vehicle.

{e) ‘Dealer’ or *Selier’ refers to any person other than a manufacturer who sells motor
cles to the public.

{f) “Determination of reasonable allowance for use”, for purposes of this Act,
sonable allowance for use” shall mean twenty percent (20%) per annum deduction from
purchase price, or the product of the distance traveled in kilometers and the purchase
a divided by one hundred thousand (P41 00,000.00), whichever is higher.

{a} Distributor" refers to any person or entity other than a manufacturer who sells brand
motor vehicles to their duly authorized dealers or retailers.

(h) “Implementing agency" refers to the Department of Trade and Industry (DTI).

{i) “Lemon Law rights period” refers to the period ending tweive (12) months after the
» of the original delivery of a brand new motor vehicle to a consumer or the first twenty
isand (20,000) kilometers of operation after such delivery, whichever comes first. This
| be the period during which the consumer can repert any non-conformity, as defined in
agraph (k) herein, to the standards and specifications of the manufacturer, distributor,
lorized dealer or retailer, and pursue any right provided for under this Act.

{) "Manufacturer refers to @ person, partnership, association, corporation or entity
aged in the business of manufacturing or assembling motor vehicles, or of distributing
or vehicles to motor vehicle dealers.

(k) “Motor vehicle” refers to any self-propelled four (4)-wheeled road vehicle designed
sary passengers including, but not limited to, sedans, coupes, station wagons,
vertibles, pickups, vans, sport utility vehicles (SUVs) and Asian utility vehicles (AUVs) but
apting motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley cars, street
epers, sprinklers, lawn mowers and heavy equipment, such as, but not limited to,
dozers, payloaders, graders, forklifts, amphibian trucks, cranes and vehicles which run
on rails or tracks, and tractors, tratlers and traction engines of all kinds used exclusively
agricultural purposes. Trailers having any number of wheels, when propelled or intended
ittachment to a motor vehicle, shall be classified as separate motor vehicle with no power
ig.

(0) ‘Non-conformity* refers to any defect or condition that substantially impairs the use,
e or safety of a brand new motor vehicle which prevents it from conforming to the
iufacturer's or distributors standards or specifications, which cannot be repaired, but
uding conditions resulting from noncompliance by the consumer of his obligations under
warranty, modifications not authorized by the manufacturer or distributor, abuse or



neglect, and damage due to accident or force majeure.

{m) “Purchase price” refers to the invoice price or the amount of money which the
deaier or retailer actually received for the brand new motor vehicle, in consideration of the
sale of such brand new motor vehicle.

(n} *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.

(0) "Warranty rights period’ refers to the period provided for under the contract of sale
when the manufacturer would guarantee the materials used, workmanship and
roadworthiness of a brand new motor vehicle for ordinary use oF 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 the 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 or force majeure.

SEC. 5. Repair Attempt. — At any time.within the Lemon Law rights period and after at least
one (1) separate repair attempt by the same dealer- manufacturer for the same complaint,
the consumer, if unsatisfied with the result of the said repair, may invoke his rights under this
Act.

SEC. 6. Notice of Availment of the Lemon 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 this 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 form of such notice to constitute @ valid and legal notice to
the manufacturer, distributor, authorized dealer or retailer.

SEC. 7. Availment of the Lemon Law Rights. - Subsequent to the filing of 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 non-conformity required under Section 6 hereof,
to attend to the complaints of the consumer including, as may be necessary, making the
repairs and undertaking such actions 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 desler-manufacturer's efforts to
repair the vehicle, pursuant to the consumer's avaiiment of his Lemon Law rights, the
consumer may file a complaint before the DTI as provided for under this Act: Provided,
however, That if the vehicle is not returned for repair based on 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 within the Lemon Law rights period, the repair is
deemed successful: Provided, finally, That, in the event the consumer still remains
unsatisfied after the thirty (30) days period but still within the Lemon Law rights period, the
consumer may be allowed to 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 the Lemon Law rights, the consumer shall be provided a reasonable
daily transportation allowance, an amount which covers the transportation of the consumer
from his or her residence to his or her regular workplace and vice versa, equivalent to air-
conditioned taxi fare or in such amount to be agreed upon by the parties, or a service vehicle
at the option of the 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 shail be construed to limit or impair the rights and remedies of a
consumer under any other law.

SEC. 8. Remedies for Dispute Resolution. - The DT! 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:

(a) Mediation

(1} The principles of negotiation, conciliation and mediation towards amicable
settlement between the manufacturer or distributor and the consumer shall be strictly
observed,

(2) In the course of its dispute resolution efforts, the OT! 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:

{3) The complaint shall be deemed vaiid if it is independently established that the
vehicle does not conform to the standards or specifications set by the manufacturer,

(4) Upon failure of the negotiation or mediation between the manufacturer or
distributor and the consumer, the parties shall execute a certificate attesting to such failure,
and

(5) At any time during the dispute resolution period, the manufacturer or
distributor and the consumer shall be encouraged to settle amicably.

Alt disputes that have been submitted for mediation shall be settled not later than forty-
five (45) working days from the date of filing of the complaint with the DTI.

{b) Arbitration

(1) In the event there is a failure to settle the complaint during the mediation
proceedings, the parties may voluntarily enter into arbitration proceedings, likewise to be
supervised by the DT‘, The DTI shall rely on the independent findings as to conformity to
standards and specifications established herein;

(2) 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-manufactures to grant either of the following remedies to
the consumer:

(0) Replace the motor vehicle with a similar or comparable motor vehicle in terms of
specifications and values, subject to availability, or

(i) Accept the return of the motor vehicle and pay the consumer the purchase price plus
collateral charges

In case the consumer decides to purchase another vehicle with a higher vaiue and
specifications from the same dealer-manufactures, the consumer shall pay the difference in
cost.

In both cases of replacement and repurchase, the reasonable allowance for use, as
defined in this Act, shall be deducted in determining the value of the non-conforming vehicle;
and

{3) In case a non-conformity of the vehicle is not found by the OTI, 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. Determination of Reasonable Allowance for Use. - For purposes of this Act,
“reasonable allowance for use” shall mean twenty percent (20%) per annum deduction from
the purchase price, or the product of the distance traveled in kilometers and the purchase



price divided by one hundred thousand (100,00), whichever is higher.

SEC. 10. Disclosure on Resale. - Should the returned vehicle be made available for resale,
the manufacturer or distributor shall, prior to sale, lease or transfer, disclose to the deaier in
writing that:

(a) the motor vehicle was returned to the manufacturer, distributor, factory or branch;
(b) the nature of the non-conformity which caused the return, and
(c) the condition of the motor vehicle at the time of the transfer to the dealer.

It shall be the responsibility of the dealer to make the same disclosure in writing, in
tum, to the next purchaser prior to sale, The responsibility of the dealer under this section
shall cease upon the sale of the affected motor vehicle to the first purchaser.

SEC. 11. Penalty. -The manufacturer, distributor or dealer adjudged to have violated the
provisions requiring disclosure as mentioned in the preceding section shall be liable to pay 4
minimum amount of One hundred thousand pesos (Php 100,000.00) as damages to the
aggrieved party without prejudice to any civil or criminal liability they andior the responsible
officer may incur under existing laws.

SEC. 12. Assistance by Other Agencies. - The DOTC and other agencies, political
subdivisions and 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. 13. Implementing Rules and Regulations, - The DT! shail promulgate the necessary
implementing rules and regulations within ninety (90) days from the effectivity of this Act.

SEC. 14. 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. 15. 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. 16. Effectivify - This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in two (2) national newspapers of general circulation.

Approved,