9 - LEMON LAW Flashcards
What is the short title of Republic Act No. 10642?
The “Philippine Lemon Law”.
When and where was the Sixteenth Congress First Regular Session held?
It was held in Metro Manila on July 22, 2013.
What is the primary policy declared by the State in Section 2?
To promote full protection to consumer rights in the sale of motor vehicles against deceptive and unfair business practices.
Define “brand new motor vehicle” as per Section 3.
A vehicle made entirely from new parts, covered by a manufacturer’s warranty, never sold, registered, or operated.
What are “collateral charges”?
Fees for registration and incidental expenses such as insurance, chattel mortgage fees, etc.
How is a “comparable motor vehicle” defined?
A motor vehicle identical or reasonably equivalent in specifications and values, subject to availability and allowances for use.
Who qualifies as a “consumer”?
Any person or entity purchasing a brand new motor vehicle for cash or credit from authorized sellers in the Philippines.
What category does “dealer or retailer” fall under?
Any authorized person or entity selling brand new motor vehicles directly to consumers.
What is the role of a “distributor”?
Authorized by the manufacturer to sell brand new motor vehicles to dealers and retailers.
What does the “implementing agency” refer to?
The Department of Trade and Industry (DTI) as reorganized under the Administrative Code of 1987.
What is defined as the “Lemon Law rights period”?
The period ending twelve (12) months from the date of delivery or twenty thousand (20,000) kilometers of operation, whichever comes first.
What constitutes a “motor vehicle” under the law?
Any self-propelled, four-wheeled road vehicle designed to carry passengers, excluding various specified vehicles such as motorcycles and heavy equipment.
Define “nonconformity” as per the Act.
Any defect that substantially impairs the use, value, or safety of the motor vehicle, excluding issues due to consumer negligence or unauthorized modifications.
What does “purchase price” refer to?
The invoice price received by the dealer or retailer for the motor vehicle sale.
What is the meaning of “warranty”?
A written assurance from the manufacturer covering materials, workmanship, and roadworthiness of the vehicle.
How is the “warranty rights period” defined?
The period provided under the sale contract when the manufacturer guarantees the vehicle’s quality for normal use.
What vehicles are covered under the Philippine Lemon Law?
Brand new motor vehicles purchased in the Philippines that show nonconformity within the Lemon Law rights period.
What causes of nonconformity are excluded?
Noncompliance by the consumer, unauthorized modifications, abuse, neglect, and damage due to accidents or force majeure.
What is required of the manufacturer after repair attempts within the Lemon Law rights period?
If unresolved after four separate repair attempts, the consumer may invoke their rights under the law.
What must a consumer do before pursuing remedies under the Lemon Law?
Write to the manufacturer or dealer to notify of the unresolved complaint and intention to invoke rights.
What happens once the notice of availment is filed?
The consumer must bring the vehicle back for a final attempt at satisfactory repair.
What must the manufacturer do upon receipt of the vehicle and notice of nonconformity?
Attend to the complaints, repair the vehicle to conform to standards, and ensure consumer satisfaction.
If repairs are unsuccessful after how many days does the repair count as successful?
If the vehicle is not returned for repair within thirty (30) days.
What compensation does the consumer receive while the vehicle is under repair?
A reasonable daily transportation allowance equivalent to an air-conditioned taxi fare.
Who has the exclusive jurisdiction over disputes arising from the provisions of the Lemon Law?
The Department of Trade and Industry (DTI).
What are the dispute resolution mechanisms provided in Section 8?
Mediation, Arbitration, and Adjudication.
What principles must mediation follow?
Principles of negotiation, conciliation, and mediation for amicable settlements.
Within how many days must mediation disputes be settled by DTI?
Not later than ten (10) working days from the complaint filing.
What follows if mediation fails?
Both parties may voluntarily decide to enter into arbitration.
If adjudication is needed, how long can the proceedings take?
No longer than twenty (20) working days.
If nonconformity is found during adjudication, what are the remedies available to the consumer?
Replacement with a comparable vehicle or a return with refund of the purchase price plus collateral charges.
What happens if no nonconformity is found through adjudication?
The consumer must reimburse the manufacturer for costs incurred in validating the complaint.
How is “reasonable allowance for use” calculated?
20% per annum deduction from the purchase price or based on kilometers traveled, whichever is lower.
What information must be disclosed if a returned vehicle is resold?
The vehicle’s return, nature of nonconformity, and its condition at the time of return.
What is the penalty for failure to disclose information about a returned vehicle?
A minimum penalty of One hundred thousand pesos (P100,000).
What assistance must other agencies provide for the implementation of this Act?
Legislative assistance to the DTI as required.
What is the time frame for DTI to promulgate implementing rules and regulations?
Within ninety (90) days from the Act’s effectivity.
What happens if any part of this Act is declared invalid?
That declaration does not affect the remaining provisions of the Act (Separability Clause).
What prior laws or orders are repealed by the Philippine Lemon Law?
Any inconsistent laws, decrees, executive orders, or rules are deemed repealed, amended, or modified.
When does the Philippine Lemon Law take effect?
Fifteen (15) days after publication in the Official Gazette or a newspaper of general circulation.
What is the primary purpose of the Philippine Lemon Law?
To promote full protection of the rights of consumers in the sale of motor vehicles against deceptive and unfair business practices that harm consumers and the public interest.
Define a ‘motor vehicle’ as specified in the Lemon Law.
A 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).
What types of vehicles are explicitly excluded from the Lemon Law’s definition of a motor vehicle?
Excluded vehicles are motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley cars, street sweepers, sprinklers, lawn mowers, heavy equipment (e.g., bulldozers, payloaders, graders, forklifts), vehicles that run only on rails or tracks, and agricultural tractors, trailers, and traction engines.
Where must the motor vehicle be purchased to qualify under the Lemon Law?
The motor vehicle must be purchased in the Philippines.
What does ‘nonconformity’ mean in the context of the Lemon Law?
Nonconformity refers to any defect or condition that substantially impairs the use, value, or safety of a brand-new motor vehicle and prevents it from conforming to the manufacturer’s or distributor’s standards or specifications, which cannot be repaired.
What are the specific exclusions to nonconformity?
The following causes of nonconformity are excluded: Noncompliance by the consumer with their warranty obligations; Unauthorized modifications made to the vehicle; Abuse or neglect of the vehicle by the consumer; Damage due to accidents or force majeure.
How long does a consumer have to report nonconformity under the Lemon Law?
The consumer has 12 months from the date of original delivery to report nonconformity or up to 20,000 kilometers of operation, whichever comes first.
What is the minimum number of repair attempts a consumer must make before invoking Lemon Law rights?
A consumer must have made at least 4 separate repair attempts for the same issue by the same manufacturer, distributor, authorized dealer, or retailer.
What rights does a consumer have while their vehicle is being repaired?
The consumer can claim a reasonable daily transport allowance to compensate for the period during which the vehicle is not usable.
How is the daily transport allowance calculated?
The allowance should cover transportation needed for the consumer to commute from their residence to their workplace and vice versa.
What actions can the Department of Trade and Industry take regarding a nonconforming vehicle?
The Department can direct the manufacturer, distributor, dealer, or retailer to: Replace the car with a similar or comparable vehicle based on specifications and values; Accept the return of the motor vehicle and refund the purchase price plus other charges.
Why is it important to document repair attempts under the Lemon Law?
Documentation of repair attempts is essential to establish that the consumer has made the required number of attempts to fix the nonconformity, which is necessary to invoke Lemon Law rights.
Can a consumer still invoke Lemon Law rights if they modify the vehicle?
No, modifications that are not authorized by the manufacturer, distributor, authorized dealer, or retailer can exclude the consumer from invoking Lemon Law rights.
Does the Lemon Law apply to used motor vehicles?
No, the Lemon Law specifically applies to brand new motor vehicles only.
Can a consumer claim transport allowance if the vehicle is repaired within the warranty period?
Yes, as long as the defect is covered under the Lemon Law and the vehicle is rendered unusable during the repair process.
