Philippine

Lemon Law
REPUBLIC ACT NO. 10642
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declaration of policy
Full protection to the rights of consumers in
the sale of motor vehicles against deceptive
and unfair practices

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why?
motor vehicles are
large/major investments.

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definition of terms

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motor vehicle manufacturer purchase price
Brand new vs Comparable distributor and collateral
Brand new: constructed
dealer or retailer charges
entirely from new parts and consumer Collateral charges: Paid to
covered by warranty, never
LTO to register and other
been sold or registered with
Manufacturer makes incidental expenses such as
DTC, never operated on a
➔ Sells to distributors insurance
highway
➔ Sells to dealers and
retailers Purchase price: invoice price
Comparable: Identical or
➔ Sells to consumers
reasonably equivalent to that
being replaced; there can be
an adjustment for reasonable
allowance of use.

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warranty, lemon Law rights
warranty rights, period:
and
nonconformity 20,000 KM or 1 year whichever
comes first

Warranty: written assurance

against nonconformity within
a certain period

Nonconformity: defect or
condition that substantially
impairs use, value or safety;;
prevents from adhering to
standards of manufacturer

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 4
coverage
brand new vehicles reported to be with
nonconformity w/in 20,000 km or 1 year

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exceptions:
noncompliance by the consumer of the obligations
under the warranty
modifications not authorized by the manufacturer,
distributor, authorized dealer or retailer
abuse or neglect of the brand new motor vehicle
damage to the vehicle due to accident or force
majeure

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lemon law rights

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 5
repair attempts

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4 repair attempts
to fix nonconformity

complaint to avail of rights

if still unsolved
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 6&7
availment of rights and
notice

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after 4 repair
attempts:

consumer should notify in writing the manufacturer.

(manner of notice should adhere to the booklet given by the manufacturer)

After notice, manufacturer is required to try to repair

one more time and attend to the complaints of the
consumer.

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if nonconformity
persists:
consumer may file a complaint with DTI
- within 30 days of release: if motor vehicle is not
returned for repair, it is considered fixed already.
- provided that, vehicle must still be within 1 year or
20,000 KM whichever comes first: then consumer
can avail of section 5 again (4 repairs).

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To compensate for the non-usage of the
vehicle while under repair, consumer shall
be provided with reasonable daily
transportation allowance:
⊙ Transportation of the consumer from residence to workplace
and vice versa, equivalent to air-conditioned taxi fare, as
evidenced by official receipt, 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.

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remedies for dispute
resolution

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dispute resolution
mechanisms
Settled by DTI

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 1 mediation
Aims to settle dispute bet. seller and consumer amicably. It is
encouraged at any time during the dispute resolution period, but not
later than 10 working days from date of filing of complaint with DTI.

DTI shall: Establish validity of consumer’s complaint.

Retain the services of related government or private

entities in ascertaining validity of complaint.

Any cost incurred to be borne jointly by the consumer and seller.

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2 If mediation failed:
The parties:
● shall execute a certificate attesting to such failure

● may voluntarily decide to undertake arbitration.

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3 adjudication
If arbitration is not undertaken. It shall not exceed 20 working days.

DTI shall: Administer adjudication proceedings.

Rely on the qualified independent findings as to

conformity to established standards
and specifications.

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In case of non-conformity: it shall In case of NO non-conformity: it
rule in favor of the consumer. shall rule in favor of the seller.

Direct consumer to reimburse

Direct seller to grant either of the
following remedies:
seller the costs of validating the
1. Replacement or, complaints.
2. Repurchase - to accept and pay
the purchase price plus the
collateral charges.

In both remedies, the reasonable

allowance for use shall be deducted
in determining the value of the
vehicle.

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appeals
Disposes the case within 15 days from receipt of the appeal.

Filing a Memorandum of Appeal with the Secretary of the DTI, with:

1. Notice of Appeal to the Adjudication Officer,
2. Copy duly furnished the adverse party on any of the ff. grounds:
a. Grave abuse of discretion;
b. Decision in excess of authority of the Adjudication Officer;
c. Decision not supported by evidence, or serious error in fact
finding.
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DTI Secretary shall decide on the appeal within 30 days from receipt.

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determination of reasonable
allowance for use.
Lower of:
20% per annum deduction from purchase price, or
Distance (km) * Purchase price / 100,000 km
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 10
disclosure for resale

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that the motor vehicle was returned
to the seller.

nature of the non-conformity

condition of the vehicle at time of

transfer
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thank you

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