AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
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AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
Republic Act No. 10642
July 15, 2014
Case Overview and Summary
Summary of Republic Act No. 10642 (Philippine Lemon Law)Declaration of Policy (Section 2):
- Promote full protection of consumer rights in the sale of motor vehicles against deceptive, unfair, or inimical business practices.
- Recognize motor vehicles as a major consumer purchase/investment, and define consumer rights and means for redress.
Definitions (Section 3):
- Brand new motor vehicle: Constructed from new parts, covered by manufacturer's warranty, never sold/registered/operated before.
- Collateral charges: Fees for registration, insurance, chattel mortgage, etc.
- Comparable motor vehicle: Identical or reasonably equivalent vehicle for replacement, subject to availability and reasonable allowance for use.
- Consumer: Any person who purchases a brand new motor vehicle.
- Dealer/retailer: Authorized by manufacturer/distributor to sell brand new motor vehicles directly to consumers.
- Distributor: Authorized by manufacturer to sell brand new motor vehicles to dealers/retailers.
- Lemon Law rights period: 12 months or 20,000 km after delivery, whichever comes first.
- Manufacturer: Engaged in manufacturing or assembling motor vehicles.
- Motor vehicle: Self-propelled, four-wheeled road vehicle designed to carry passengers, excluding certain types of vehicles.
- Nonconformity: Defect or condition that substantially impairs use, value, or safety, and cannot be repaired, excluding consumer non-compliance, unauthorized modifications, abuse/neglect, and accidents/force majeure.
- Purchase price: Invoice price or amount received by dealer/retailer for the vehicle.
- Warranty: Written assurance by manufacturer, including terms and conditions.
- Warranty rights period: Period provided in the contract when manufacturer guarantees materials, workmanship, and roadworthiness.
Coverage and Exclusions (Section 4):
- Covers brand new motor vehicles reported by consumer to be in nonconformity within the Lemon Law rights period.
- Excludes nonconformity caused by consumer non-compliance, unauthorized modifications, abuse/neglect, and accidents/force majeure.
Repair Attempts (Section 5):
- Consumer may invoke Lemon Law rights if nonconformity remains unresolved after at least four separate repair attempts by the same manufacturer/distributor/dealer/retailer.
Notice of Availment (Section 6):
- Consumer must notify manufacturer/distributor/dealer/retailer in writing of the unresolved complaint and intention to invoke Lemon Law rights within the Lemon Law rights period.
- Warranty booklet must clearly state the manner and form of such notice.
Availment of Lemon Law Rights (Section 7):
- Consumer brings vehicle for final repair attempt after filing notice of availment.
- If nonconformity remains unresolved, consumer may file complaint with DTI.
- Repair deemed successful if vehicle not returned within 30 days for the same complaint.
- Consumer provided with daily transportation allowance or service vehicle during repair and availment period.
Dispute Resolution Mechanisms (Section 8):
- DTI has exclusive jurisdiction over disputes arising from this Act.
- Mediation: Negotiation, conciliation, and mediation between parties, with DTI establishing validity of complaint. Settlement within 10 working days.
- Arbitration: Voluntary arbitration proceedings if mediation fails.
- Adjudication: DTI rules in favor of consumer (replacement or repurchase) or manufacturer/distributor/dealer/retailer, with appeal process. Adjudication within 20 working days.
Reasonable Allowance for Use (Section 9):
- Defined as 20% per annum deduction from purchase price, or the product of distance traveled in km and purchase price divided by 100,000 km, whichever is lower.
Disclosure on Resale (Section 10):
- Manufacturer/distributor/dealer/retailer must disclose in writing to next purchaser that the vehicle was returned, the nature of nonconformity, and the condition at the time of transfer.
Penalty (Section 11):
- Minimum of PHP 100,000 damages for violation of disclosure requirement, without prejudice to other civil or criminal liabilities.
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AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
Republic Act No. 10642
•July 15, 2014
Republic of the PhilippinesCONGRESS OF THE PHILIPPINESMetro Manila
Sixteenth CongressFirst 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...
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