13th CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES ) 
FIRST REGULAR SESSION 
) 
SENATE 
___ 
_. 
Introduced by SENATOR AQUlLlO Q. PIMENTEL, JR. ___ 
~ _ _ _ _ -  
EXPLANATORY NOTE 
After a residential house and lot, the purchase of a motor vehicle is the 
biggest financial investment of the Filipino consumer. 
Assuming that he saves his entire yearly salary to purchase a motor 
vehicle, a minimum wage earner will have to wait for at least ten years before he 
can even afford to buy a second hand bantam vehicle. 
Yet, the Filipino consumer usually gets much less than his foreign 
counterpart in terms of quality and value for his peso. It is a sad reality that motor 
vehicles sold in the Philippines are much more expensive than similar models 
sold abroad. Local vehicle manufacturers try to squeeze every drop of profit and 
advantage in selling the Filipino old model vehicles when the newer versions are 
already available in other countries. And, while car dealers abroad compete with 
each other by offering big discounts and extensive vehicle warranties, this is 
more of the exception than the rule in the country. 
Moreover, many consumers find out too late that the motor vehicles they 
bought do not live up to the quality they were made to believe in. These are the 
so-called "lemon" cars." Not only do these poor quality vehicles short-change 
consumers, they also endanger the lives and limbs of passengers. 
Congress must therefore correct this anomalous situation by passing 
legislation that would protect the Filipino consumer by making sure that car 
manufacturers issue and comply with their warranties. 
This bill is, therefore, filed to provide for minimum warranties that car 
manufacturers must comply with. The bill requires manufacturers to disclose 
warranties prior to the purchase of a motor vehicle. It also provides remedies for 
purchasers of motor vehicles who victimize consumers with false or fraudulent 
warranties. 
The passage of this bill is earnestly requested 


13th CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
FIRST REGULAR SESSION 
SENATE 
1812 
S.B.No. __ 
~~ 
htroduced by Senator Aquilino Q. Pimente!, Jr. 
AN ACT 
TO ENFORCE WARRANTIES ON THE SALE, OF MOTOR VEHICLES, AND 
IMPOSING PENALTIES FOR VIOLATION THEREOF 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
Section 1. Declaration of Poljcy. It is declared the policy of the state to 
promote full protection to. the rights of consumers in the sale of motor vehicles 
against trade practices which are inimical to the public interest. The State 
recognizes that a motor vehicle is a major consumer purchase. As such, the 
consumer must be accorded adequate protection to ensure that he does not 
place himself at the bad end of a bargain. 
Section 2. Definitions of terms. (a) "Consumer" shall mean the purchaser, 
other than for purposes of resale, of a motor vehicle used in substantial part for 
personal, family, or household purposes, and any person to whom the motor 
vehicle is transferred for the same purposes during the duration of any warranty 
applicable to such motdr vehicle, and any other person entitled by the terms of 
such warranty to enforce the obligations of the warranty. 
(b) "Manufacturer" shall mean 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, 
(c) "Manufacturer's express warranty" shall mean the written warranty, so 
labeled, of the manufacturer of a new automobile, including any terms or 
conditions precedent to the enforcement of obligations under that warranty. 


[d). Motor vehicle" shall mean only passenger cars, pick-up or panel -, 
trucks, motorcycles, and demonstrators or lease purchase vehicles with which 
warranty was issued. 
(e) Motor vehicle dealer', shall mean any person other than a 
manufacturer which sells motor vehicles to the public. 
. (9 "Lemon Law Rights Period" shall mean the period ending eighteen 
months after the date of original delivery to the consumer of a new motor vehicle. 
This shall be the period during which the consumer can report any nonconformity 
to the manufacturer and pursue any rights provided in this Act. 
(g)." Lien" shall mean a security interest in a motor vehicle. 
(h) "Lienholder" shall mean a person, partnership, association, corporation 
or entity with a security interest in a motor vehicle pursuant to a lien. 
(i) "Collateral charges" shall mean sales-related charges including but not 
limited to sales tax, license fees, finance charges and interest, transportation 
charges, dealer preparation charges or any other charges for service contracts, 
undercoating, rust proofing or installed options, not recoverable from a third 
party. 
(j). 'Comparable motor vehicle" shall mean a motor vehicle that is identical 
or reasonably equivalent to the motor vehicle to be replaced, 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. 
(k) "Nonconformity" shall mean a failure to conform to a warranty, a defect 
or a condition, including those that do not affect the driveability of the vehicle, 
which significantly impairs the use, market value, or safety of a motor vehicle. 
(I) "Notify" or "notification" shall mean that the manufacturer shall be 
deemed to have been notified if a written complaint of the defect or defects has 
been mailed to it or it has responded to the consumer in writing regarding a 
complaint, or a factory representative has either inspected the vehicle or met with 
the consumer or an authorized dealer regarding the nonconformity. 
(m) "Serious safety defect" shall mean a life-threatening malfunction or 
nonconformity that impedes the consumer's ability to control or operate the new 
motor vehicle for ordinary use or reasonable intended purposes or creates a risk 
of fire or explosion. 


(n) "Significant impairment" shall mean to render the new motor vehicle 
unfit, unreliable or unsafe for ordinary use or reasonable intended purposes. 
(0) "Warranty" shall mean any implied warranty or any written warrant of 
the manufacturer, or any affirmations of fact or promise made by the 
manufacturer in connection with the sale of a motor vehicle that become part of 
the basis of the bargain. The term "warranty" pertains to the obligations of the 
manufacturer in relation to materials, workmanship, and fitness of a motor vehicle 
for ordinary use or reasonable intended purposes throughout the duration of the 
lemon law rights period as defined in this section. 
Section 3. Conformity to warranties. If a new motor vehicle does not 
conform to all warranties, and the consumer reports the nonconformity to the 
manufacturer, its agents, or its authorized dealer during the manufacturer's 
warranty period, the manufacturer, its agent or its authorized dealer shall make 
such repairs as are necessary to make the vehicle conform to such warranties, 
notwithstanding the fact that such repairs are made after the expiration of the 
such manufacturer's warranty period. 
Section 4. Nonconformity of motor vehicles. If the manufacturer, its 
agents or authorized dealers do not put the motor vehicle to order in conformity 
with any applicable warranty by repairing or correcting any defect or condition, 
including those that do not affect the driving efficiency of the vehicle, which 
significantly impairs the use, market value, or safety of the motor vehicle to the 
consumer after a reasonable number of attempts during the lemon law rights 
period, the manufacturer shall: 
1 .) Replace the motor vehicle with a comparable motor vehicle or 
2.) Accept return of the motor vehicle 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 a reasonable allowance for the consumer's use of the vehicle up 
to the date of the first notice of nonconformity that is given to the 
manufacturer, its agents or authorized dealer. The consumer shall 


have the unconditional right to choose a refund rather than a replacement 
vehicle and to drive the motor vehicle until he receives either a 
replacement or refund. The subtraction of a reasonable allowance for use 
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. 
Section 5. Presumption of nonconformity. It shall be presumed that a 
reasonable number of attempts have been undertaken to put a motor vehicle in 
conformity with any warranty and that the motor vehicle is significantly impaired 
if, during the period of eighteen months following the date of delivery of the motor 
vehicle to the consumer either: 
1.) The same nonconformity has been subject to repair three or more 
times by the manufacturer, its agents or its authorized dealers and the 
same nonconformity continues to exist; 
2.) The nonconformity is a serious safety defect and has been subject to 
repair one or more times by the manufacturer, its agent or its 
authorized dealer and the same nonconformity continues to exists; or 
3.) The motor vehicle is out of service due to repair for a cumulative total 
of thirty calendar days, unless such repairs could not be. performed 
because of conditions beyond the control of the manufacturer, its 
agents or authorized dealers, including war, invasion, strike, fire, flood 
or other natural disasters. 
Section 6. Lemon Law Rights Period Extension. The lemon law rights 
period shall be extended if the manufacturer has been notified but the 
nonconformity has not been effectively repaired by the manufacturer, or its agent, 
by the expiration of the lemon Jaw rights period. 


Section 7. Manufacturer's disclosure. The manufacturer shall clearly and 
conspicuously disclose to the consumer, in the warranty or owner's manual, that 
written notification of the nonconformity to the manufacturer is required before 
the consumer may be eligible for refund or replacement of the vehicle. The 
manufacturer shall include with the warranty or owner's manual the name and 
address to which the consumer shall send such written notification. 
Section 8. Consumer's dufy to notify. Prior to availing himself of the 
provisions of this section. it shall be the responsibility of the consumer, or his 
representative, to notify the manufacturer of the need for the correction or repair 
of the nonconformity, unless the manufacturer has already been notified. If the 
manufacturer or factory representative has not been notified of the conditions set 
forth in Section 5, and any of the conditions set forth in Section 5 already exists, 
the manufacturer shall be given additional opportunity, not lo exceed fifteen days, 
to correct or repair the nonconformity. If notification shall be mailed to an 
authorized dealer, the authorized dealer shall upon receipt, forward such 
notification to the manufacturer. 
Section 9. Remedies. Any consumer who suffers loss by reason of a 
violation of any provision of this Act may bring an action to enforce such 
provision. Any consumer who is successful in such an action or any defendant in 
any frivolous action brought by a consumer shall recover reasonable attorney's 
fees and other costs incurred in bringing such actions. 
Nothing herein shall be construed to limit or impair the rights and remedies 
of a consumer under any other law. 
Section 10. Defenses. The manufacturer or any other person against 
whom an action is brought may deny any liability by raising the following 
affirmative defenses: 
1 .) An alleged nonconformity does not significantly impair the use, market 
value, or safety of the motorvehicle; or 
2.) A nonconformity is the result of abuse, neglect, or unauthorized 
modification or alteration of a motor vehicle by a consumer, 


Section 11. djspute settlement. As an alternative to litigation, the parties 
may agree on a dispute settlement procedure. If a manufacturer provides an 
informal dispute settlement procedure, it shall be the consumer's choice whether 
or not to use it prior to availing himself of his rights under this Act. 
Should the consumer resort to dispute settlement and the decision is for a 
refund or a comparable motor vehicle, the manufacturer shall have forty days 
from its receipt of the consumer's acceptance of the decision or from the date of 
a court order to comply with the terms of the decision. 
Section 12. Triple award. In any action brought by the consumer due to 
the manufacturer's failure to comply with the decision, within the scope of the 
procedure's authority, rendered as a result of a dispute resolution proceeding or 
a court order, the court may triple the value of the award stipulated in the 
decision, plus award other equitable relief the court deems appropriate, including 
additional attorney's fees. 
Section 13. Action to .be brought within a certain time. Any action brought 
under this Act shall be commenced within the lemon law rights period following 
the date of original delivery of the motor vehicle to the consumer; however, any 
consumer whose good faith attempts to settle the dispute have not resulted in the 
satisfactory correction or repair of the nonconformity, replacement of the motor 
vehicle or refund to the consumer of the amount described .in subsection 2 of 
Section 4 of this Act, shall have twelve months from the date of the final action 
taken by the manufacturer in its dispute settlement procedure, or within the 
lemon law rights period, whichever is longer, to file an action in the proper court, 
provided the consumer has rejected the manufacturer's final action. 
Section 14. Transfer of vehides to be disclosed. If a motor vehicle that is 
returned 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. 


Section 15. Disclosure on Re-sale. If the returned vehicle is then made 
available for resale, the manufacturer shall, prior to sale, disclose in writing in a 
clear and conspicuous manner to the dealer that: 
1 .) The motor vehicle was returned to the manufacturer, distributor, factory 
or branch; 
2.) the nature of the defect which resulted in the return; and 
3.) the condition of the motor vehicle at the time of the transfer to the 
dealer. 
It shall be the responsibility of the dealer that receives the disclosure to 
give notice of its contents to any prospective purchaser prior-to sale, and to 
transfer the disclosure, or a copy thereof to the next purchaser. A dealer's 
responsibility under this section shall cease upon the sale of the affected motor 
vehicle to the first purchaser not for resale. 
Section 16. 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 of P100,OOO in damages to the 
aggrieved party, without prejudice to any civil or criminal liability they and/or their 
responsible officers may incur under existing laws. 
Section 17. Repealing Clause. All laws, decrees, rules or regulations or 
parts thereof, which are inconsistent with the provisions of this Act, are hereby 
deemed repealed, amended or modified accordingly. 
Section 18. 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. 
Section 19. Effectively. This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in two national newspapers of general 
circulation. 
Approved,