Republic of the Philippines

CONGRESS OF THE PHILIPPINES

Metro Manila
Sixteenth Congress
First Regular Session
Begun and held in Metro Manila, on Monday, the twenty-second day of July, two thousand
thirteen.
REPUBLIC ACT NO. 10642
AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF
BRAND NEW MOTOR VEHICLES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
Section 1. Short Title. This Act shall be known as the "Philippine Lemon Law".
Section 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 business and trade
practices which are deceptive, unfair or otherwise inimical to consumers and the public interest.
The State recognizes that a motor vehicle is a major consumer purchase or investment. Hence,
the rights of consumers should be clearly defined, including the means for redress for violations
thereof.
Section 3. Definition of Terms. As used in this Act:
(a) Brand new motor vehicle refers to a vehicle constructed entirely from new parts and
covered by a manufacturers express warranty at the time of purchase that it has never
been sold or registered with the Department of Transportation and Communications
(DOTC) or an appropriate agency or authority, and has never been operated on any
highway of the Philippines, or in any foreign state or country;
(b) Collateral charges refer to the fees paid to the Land Transportation Office (LTO) for
the registration of a brand new motor vehicle and other incidental expenses such as, but
not limited to, the cost of insurance pertaining to the vehicle, chattel mortgage fees and
interest expenses if applicable;
(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 offsetting from this value for reasonable allowance for its use;

(d) Consumer refers to any person, natural or juridical, who purchases a brand new motor
vehicle either by cash or credit from an authorized distributor, dealer or retailer in the
Philippines;
(e) Dealer or retailer refers to any person, natural or juridical, authorized by the
manufacturer or distributor to sell brand new motor vehicles directly to the retail buyers
and the public;
(f) Distributor refers to any person, natural or juridical, authorized by the manufacturer to
sell brand new motor vehicles to duly authorized dealers or retailers;
(g) Implementing agency refers to the Department of Trade and Industry (DTI),
reorganized under Title X, Book IV of Executive Order No. 292, series of 1987,
otherwise known as the "Administrative Code of 1987";
(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 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 nonconformity, as
defined in paragraph (k) herein, to the standards and specifications of the manufacturer,
authorized distributor, authorized dealer or retailer, and pursue any right as provided for
under this Act;
(i) Manufacturer refers to any person, natural or juridical, engaged in the business of
manufacturing or assembling motor vehicles;
(j) 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, pick-ups, vans, sports utility vehicles (SUVs) and Asian Utility Vehicles
(AUVs) but excluding 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;
(k) Nonconformity 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 distributors standards or specifications, which cannot be repaired, but
excluding conditions resulting from noncompliance 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;

(l) 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; and
(n) Warranty rights period refers to the period provided for under the contract of sale
when the manufacturer would guarantee the materials used, the workmanship and the
roadworthiness of a brand new motor vehicle for ordinary use or reasonable intended
purposes.
Section 4. Coverage. This Act shall cover brand new motor vehicles purchased in the
Philippines reported by a consumer to be in nonconformity with the vehicles manufacturer or
distributors standards or specifications within twelve (12) months from the date of .original
delivery to the consumer, or up to twenty thousand (20,000) kilometers of operation after such
delivery, whichever comes first. The following causes of nonconformity shall be excluded:
(a) Noncompliance by the consumer of the obligations under the warranty;
(b) Modifications not authorized by the manufacturer, distributor, authorized dealer or
retailer;
(c) Abuse or neglect of the brand new motor vehicle; and
(d) Damage to the vehicle due to accident or force majeure.
Section 5. Repair Attempts. At any time within the Lemon Law rights period, and after at least
four (4) separate repair attempts by the same manufacturer, distributor, authorized dealer or
retailer for the same complaint, and the nonconformity issue remains unresolved, the consumer
may invoke his or her rights under this Act.
The repair may include replacement of parts components, or assemblies.
Section 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 consumers intention 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 and form of such notice to constitute a valid and legal notice to the
manufacturer, distributor, authorized dealer or retailer. It shall also clearly state the responsibility
of the consumer under this section.

Section 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 manufacturer,
distributor, authorized dealer or retailer from where 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 manufacturer, distributor, authorized dealer or retailer, upon receipt of
the motor vehicle and the notice of nonconformity 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, distributor, authorized dealer or retailer for such vehicle.
In case the nonconformity issue remains unresolved despite the manufacturer, distributor,
authorized dealer or retailers efforts to repair the vehicle, pursuant to the consumers 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 deemedsuccessful: Provided, finally, That, in the event that the nonconformity issue still
exists or persists after the thirty (30)-day 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 or destination and vice versa, equivalent to airconditioned 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. 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.
Section 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:
(a) Mediation
(1) The principles of negotiation, conciliation and mediation towards amicable
settlement between the manufacturer, distributor, authorized dealer or retailer 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 consumers outstanding complaint. The
DTI shall likewise retain the services of other government agencies or qualified

independent private entities in the ascertainment of the validity of the consumers

complaint. Any cost incurred in establishing the validity of the consumers
complaint shall be bornejointly by the consumer and the manufacturer, distributor,
authorized dealer or retailer;
(3) The complaint shall be deemed valid if it is independently established that the
motor vehicle does not conform to the standards or specifications set by the
manufacturer, distributor, authorized dealer or retailer;
(4) Upon failure of the negotiation or mediation between the manufacturer,
distributor, authorized, dealer or retailer 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, distributor,
authorized dealer or retailer and the consumer shall be encouraged to settle
amicably. All disputes that have been submitted for mediation shall be settled not
later than ten (10) working days from the date of filing of the complaint with the
DTI.
(b) Arbitration
In the event there is a failure to settle the complaint during the mediation proceedings,
both parties may voluntarily decide to undertake arbitration proceedings.
(c) Adjudication
(1) In the event that both parties do not undertake arbitration proceedings, at least
one of the parties may commence adjudication proceedings, administered by the
DTI. The DTI shall rely on the qualified independent findings as to conformity to
standards and specifications established herein. In no case shall adjudication
proceedings exceed twenty (20) working days;
(2) In case a finding of nonconformity is arrived at, the DTI shall rule in favor of
the consumer and direct the manufacturer, distributor, authorized dealer or retailer
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
(ii) Accept the return of the motor 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 manufacturer, distributor, authorized dealer or
retailer, 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
nonconforming motor vehicle; and
(3) In case a nonconformity of the motor vehicle is not found by the DTI, it shall
rule in favor of the manufacturer, distributor, .authorized dealer or retailer, and
direct the consumer to reimburse the manufacturer, distributor, authorized dealer
or retailer the costs incurred by the latter in validating the consumers complaints.
An appeal may be taken from a final judgment or order of the Adjudication
Officer which completely disposes of the case within fifteen (15) days from
receipt thereof.1wphi1 The appeal shall be taken by filing a Memorandum of
Appeal with the Secretary of the DTI, with Notice of Appeal to the Adjudication
Officer, and with a copy duly furnished the adverse party or parties on any of the
following grounds:
(i) Grave abuse of discretion;
(ii) The decision/order is in excess of jurisdiction or authority of the
Adjudication Officer; and
(iii) The decision/order is not supported by the evidence or there is serious
error in the findings of facts.
The Secretary of the DTI shall decide on the appeal within thirty (30) days from receipt thereof.
A party seeking further appeal from the decision of the Secretary of the DTI may file a case for
certiorari to the Court of Appeals under Section 4, Rule 65 of the Revised Rules of Court.
Section 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) kilometers, whichever is lower.
Section 10. Disclosure on Resale. Should the returned motor vehicle be made available for
resale, the manufacturer, distributor, authorized dealer or retailer shall, prior to sale or transfer,
disclose in writing to the next purchaser of the same vehicle the following information:
(a) The motor vehicle was returned to the manufacturer, distributor, authorized dealer or
retailer;
(b) The nature of the nonconformity which caused the return; and
(c) The condition of the motor vehicle at the time of the transfer to the manufacturer,
distributor, authorized dealer or retailer.

The responsibility of the manufacturer, distributor, authorized dealer or retailer under this section
shall cease upon the sale of the affected motor vehicle to the first purchaser.
Section 11. Penalty. The manufacturer, distributor, authorized dealer or retailer 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.
Section 12. Assistance by Other Agencies. The DOTC and other agencies, political
subdivisions, local government units, including government-owned and/or controlled
corporations, shall render such assistance as required by the DTI in order to effectively
implement the provisions of this Act.
Section 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.
Section 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.
Section 15. Repealing Clause. All laws, decrees, executive orders, issuances, rules and
regulations or parts thereof which are inconsistent with the provisions of this Act are hereby
deemed repealed, amended or modified accordingly.
Section 16. Effectivity. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in any newspaper of general circulation.
Approved,

(Sgd.) FELICIANO BELMONTE JR.

Speaker of the House
House of Representatives

(Sgd.) FRANKLIN M. DRILON

President of the Senate

This Act which is a consolidation of Senate Bill No. 2211 and House Bill No. 4082 was finally
passed by the Senate and the House of Representatives on June 11, 2014 and June 10, 2014,
respectively.

(Sgd.) MARILYN B. BARUA-YAP

Secretary General
House of Representatives
Approved: JUL 15 2014

(Sgd.) OSCAR G. YABES

Secretary of the Senate

(Sgd.) BENIGNO S. AQUINO III

President of the Philippines