,'. 
SIXTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
S. B. 
306 
Introduced by SENATOR CYNTHIA VILLAR 
EXPLANATORY NOTE 
']3 JUL-'( 
Given the fast-paced nature of the current time, 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, dooes 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 "lemon" or those that fail to meet 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 one of the guarantees of the State under our Constitution to protect 
consumers from trade malpractices and from substandard products (Section 9, Article 
XVI, 1987 Philippine Constitution). 
In support of this State guarantee, I believe it 
appropriate to recommend the adoption into law of the attached bill that would give 
ample protection to byyers of motor vehicles, particularly those that are "lemon". 
The historical antecedents of the lemon law originated in the United States. It 
was crafted primarily to return to the consumer the full value of his money. Among 
others, it provides that if a manufacturer or its authorized dealer cannot successfully 
repair a defective product within a reasonable number of repair attempts, the 
manufacturer must either promptly replace or repurchase the product. In sum, the 
measure provides for legal remedies to buyers who face the ill fate of lemon 
automobiles ending up in their hands. 
The attached bill seeks to adopt the Philippine version of the US lemon law, with 
provisions appropriate to our country's setting. 
In view of the foregoing, I recommend the approval of this bill. 
!l/l'M 
;Y~IHI~. VI~ 


SIXTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
S. B. 
306 
Introduced by SENATOR CYNTHIA VILLAR 
AN ACT 
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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: 
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SECTION 1. Shott Title. - This Act shall be known as the "Philippine Lemon Law 
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of 2013." 
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SEC. 2. Declaration of Policy. -
It is hereby declared the policy of the State to 
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promote full protection to the rights of consumers in the sale of motor vehicles against 
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sales and trade practices which are deceptive, unfair or otherwise inimical to the 
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consumers and the public interest. The State recognizes that a motor vehicle is a major 
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consumer purchase or investment. The consumer rights should thus be clearly defined 
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including the means for redress for violations thereof. 
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SEC. 3. Definition of Terms. - For purposes of this Act, the following terms shall 
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mean: 
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(a) 
"Brand new motor vehicle" refers to a vehicle constructed entirely from 
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new parts that has never been sold or registered with the Department of 
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Transportation and Communications (DOTC) or an appropriate agency or 
authority and operated on the highway of the Philippines, or in a foreign 
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state or·country; 
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(b) 
"Coliateral charges" refers to the fees paid to the Land Transportation 
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Office (L TO) for the registration Of a brand new motor vehicle and other 
incidental expenses, including the cost of insurance pertaining to the said 
vehicle; 


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(c) 
(d) 
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(g) 
(h) 
(i) 
(j) 
(k) 
"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; 
"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, 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; 
"Distributor" refers to any person or entity other than manufacturer who 
sells brand new motor vehicles to their duly authorized dealers .or retailers; 
"Implementing agency" refers to the Department of Trade and Industry 
(DTI); 
"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) 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 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)-wheeled road vehicle 
designed to carry passengers including, but not limited to, sedans, 
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(I) 
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; 
"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 
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warranty, modifications not authorized by the manufacturer or distributor, 
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abuse or neglect, and damage due to accident or force majeure; 
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(m) 
"Purchase price" refers to the invoice price or the amount of money which 
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(n) 
(o) 
the dealer or retailer actually received for the brand new motor vehicle, in 
consideration of the sale of such brand new motor vehicle; 
"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; 
"Warranty rights period" refers to the period provided for under the 
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contract of sale when the manufacturer would guarantee the materials 
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used, w?rkmanship and roadworthiness of a brand new motor vehicle for 
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ordinary use or reasonable intended purposes. 
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SEC. 4. Coverage. - T his Act shall cover brand new motor vehicles with non-
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conformity reported by the consumer within twelve (12) months from the date of original 
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delivery to the consumer or twenty thousand (20,OOO) kilometers of operation after such 
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delivery, whichever comes first. 
The following causes of non-conformity shall be 
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excluded: 
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(a) 
Non-compliance by the consumer of his obligations under the warranty; 
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(b) 
Modifications not authorized by the manufacturer or distributor; 
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(c) 
Abuse or neglect of the brand new motor vehicle; and 
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(d) 
Damage to the vehicle due to an accident or force majeure. 
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SEC. 5. Repair Attempts. -
At any time within the Lemon Law rights period and 
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after at least four (4) separate repair attempts by the same dealer manufacturer for the 
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same complaint, the consumer, if still unsatisfied with the results of the said repairs, 
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may invoke his rights under this Act. 
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SEC. 6. Notice of Availment of the Lemon Law Rights. -
Before availing of any 
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remedy under this Act and subject to compliance with the provisions of Section 5 
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hereof, the consumer shall, in writing, notify the manufacturer, distributor, authorized 
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dealer or retailer of the unresolved complaint and the consumer's intention to invoke his 
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rights under this Act within the Lemon Law rights period. 
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The warranty booklet issued by the manufacturer, distributor, authorized dealer 
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or retailer shall clearly state the responsibility of the consumer under this section. It shall 
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likewise provide the manner and form of such notice to constitute a valid and legal 
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notice to the manufacturer, distributor, authorized dealer or retailer. 
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SEC. 7. Availment of the Lemon Law Rights. -
Subsequent to the filing of the 
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notice of availment referred to in the preceding section, the consumer shall bring the 
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vehicle to the dealer from which the vehicle was purchased for a final attempt to 
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address the consumer's complaints to his satisfaction. 
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It shall be the duty of the manufacturer, distributor, authorized dealer or retailer, 
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upon receipt of the motor vehicle and the notice of non-conformity required under 
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Section 6 hereof, to attend to the complaints of the consumer including, as may be 
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necessary, making the repairs and undertaking such actions to make the vehicle 
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conform to the standards or specifications of the manufacturer or distributor for such 
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vehicle. 
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In case the consumer remains unsatisfied with the dealer manufacturer's efforts 
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to repair the vehicle, pursuant to the consumer's availment of his Lemon Law rights, the 
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consumer may file a complaint before the DTI as provided for under this Act: Provided, 
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however, That if the vehicle is not returned for repair based on the same complaint 
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within thirty (30) calendar days from the date of notice of release of the motor vehicle to 
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the consumer following this repair attempt within the Lemon Law rights period, the 
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repair is deemed successful: Provided, finally, That, in the event the consumer still 
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remains unsatisfied after the thirty (30) days period but still within the Lemon Law rights 
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period, the consumer may be allowed to avail of the same remedies under Sections 5 
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and 6 hereof. 
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To compensate for the non-usage of the vehicle while under repair and during 
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the period of availment of the Lemon Law rights, the consumer shall be provided a 
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reasonable daily transportation allowance, an amount which covers the transportation of 
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the consumer from his or her residence to his or her regular workplace and vice versa, 
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equivalent to air-conditioned taxi fare or in such amount to be agreed upon by the 
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parties, or a service vehicle at the option of the manufacturer, distributor, authorized 
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dealer or retailer. Any disagreement on this matter shall be resolved by the 
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implementing agency provided for under this Act. 
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Nothing herein shall be construed to limit or impair the rights and remedies of a 
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consumer under any other law. 
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SEC. 8. Remedies for Dispute Resolution. - The DTf shall exercise exclusive 
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and original jurisdiction over disputes arising from the provisions of this Act. All disputes 
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arising from the provisions of this Act shall be settled by the DTf in accordance with the 
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following dispute resolution mechanisms: 
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(A) 
Mediation 
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(1 ) 
(2) 
The principles of negotiation, conciliation and mediation towards amicable 
settlement between the manufacturer or distributor and the consumer shall 
be strictly observed; 
In the course of its dispute resolution efforts, the DTI shall endeavor to 
independently establish the validity of the consumer's outstanding 
complaint. The DTf 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; 
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(8) 
(3) 
The complaint shall be deemed valid if it is independently established that 
the vehicle does not conform to the standards or specifications set by the 
manufacturer; 
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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 
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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 OTI. 
Arbitration 
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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 OTi. The OTI 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 OTI, it shall rule in 
favor of the consumer and direct the dealer-manufacturer to grant either of 
the following remedies to the consumer: 
(i) 
Replace the motor vehicle with a similar or comparable motor 
vehicle in terms of specifications and values, subject to availability; 
or 
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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 value and specifications from the same dealer-manufacturer, the 
consumer shall pay the difference in cost. 
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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 vehicle is not found by the DTI, it shall rule 
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in favor of the dealer-manufacturer and direct the consumer to reimburse 
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the dealer-manufacturer the costs incurred by the laller in validating the 
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consumer's complaints. 
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SEC. 9. Determination of Reasonable Allowance for Use. -
For purposes of 
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this Act, "reasonable allowance for use" shall mean twenty percent (20%) per annum 
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deduction from the purchase price, or the product of the distance traveled in kilometers 
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and the purchase price divided by one hundred thousand (100,000), whichever is 
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higher. 
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SEC. 10. Disclosure on Resale. - Should the returned vehicle be made available 
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for resale, the manufacturer or distributor shall, prior to sale, lease or transfer, disclose 
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to the dealer in writing that: 
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(a) 
The motor vehicle was returned to the manufacturer, distributor, factory or 
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brench; 
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(b) 
The natqre of the non-conformity which caused the return; and 
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(c) 
The condition of the motor vehicle at the time of the transfer to the dealer. 
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It shall be the responsibility of the dealer to make the same disclosure in writing, 
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in turn, to the next purchaser prior to sale. The responsibility of the dealer under this 
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section shall cease upon the sale of the affected motor vehicle 
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to the first purchaser. 
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SEC. 11. Penalty. -
The manufacturer, distributor or dealer adjudged to have 
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violated the provisions requiring disclosure as mentioned in the preceding section shall 
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be liable to pay a minimum amount of One hundred thousand pesos (Php100,OOO.00) 
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as damages to the aggrieved party without prejudice to any civil or criminal liability they 
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and/or the responsible officer may incur under existing laws. 
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SEC. 12. Assistance by Other Agencies. -
The DOTC and other agencies, 
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political subdivisions and local government units, including government-owned and -
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controlled corporations, shall render such assistance as required by the DTI in order to 
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effectively implement the provisions of this Act. 
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SEC. 13. Implementing Rules and Regulations. - The DTI shall promulgate the 
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necessary implementing rules and regulations within ninety (90) days from the effectivity 
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of this Act. 
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SEC. 14. Separability Clause. -
If, for any reason, any part or provision of this 
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Act is declared invalid, such declaration shall not affect the other provisions of this Act. 
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SEC. 15. Repealing Clause. -
All laws, decrees, executive orders, issuances, 
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rules or regulations or parts thereof which are inconsistent with the provisions of this Act 
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are hereby deemed repealed, amended or modified accordingly. 
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SEC. 16. Effectivity. -
This Act shall take effect fifteen (15) days after its 
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publication in the Official Gazette or in two (2) national newspapers of general 
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circulation. 
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Approved, 
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