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What the upcoming Philippine Lemon Law could look like

What the upcoming Philippine Lemon Law could look like image

Text: Vince Pornelos / Photos: | posted December 13, 2013 16:54

The matrix of proposed measures on the Lemon Law

For years consumers have clamored for a law to protect their rights when buying a brand new car, particularly against cars deemed to be 'lemons'.

Well, the law seems to be getting closer to fruition, as during a meeting this past Tuesday, 10 December 2013, the Philippine House of Representatives held a hearing on the proposed measures for the Lemon Law.

In actuality, there are a total of 8 House Bills that have been put on the floor of Congress, namely HB 4841 (Lemon Law of 2011), HB 197 (Lemon Law of 2013), HB 244 (Lemon Law of 2013), HB 303 (Lemon Law of 2013), HB 2248 (Lemon Law of 2013), HB 2864 (Lemon Law of 2008) and HB 3199 (Lemon Law of 2013) which are all called 'An act strengthening consumer protection in the purchase of brand new motor vehicles and for other purposes', as well as House Bill 1885 (Lemon Law of 2013) which is officially called 'An act providing for motor vehicle warranty enforcement and for other purposes'.

We were able to obtain the matrix that members of the House Committee on Trade and Industry referred to when comparing the provisions of the House Bills. This is the same matrix that our congressmen will use to consolidate the 8 bills into one comprehensive bill, which will then proceed to the different stages until it becomes a Republic Act.

The 29 page document was scanned for your own perusal on the gallery to the right (Apologies for the quality of the scans, the copy we received wasn't that clear to begin with -ed).

In many ways, the two major bills are House Bill 1885 and House Bill 4841, as the other remaining bills share plenty of comminalities with the latter.

The bills starts off on the State declaring that they want to promote consumer rights with regards to the 'sale motor vehicles against sales and trade practices which are deceptive, unfair and otherwise inimical to the consumers and the public interest'. Further, the 'State recognizes that a motor vehicle is a major consumer purchase or investment. The consumer rights should thus be clearly defined'.

The bills goes on to define the terms under the law, but the important part is that the bills generally refer to the Lemon Law Rights Period to be 12 months from the date of purchase or 20,000 kilometers, whichever comes first.

Another key element is the term Nonconformity, wherein the vehicle purchased does not meet the standards or specifications that the manufacturer/distributor/dealer intended and, more specifically, somehow can't be repaired or brought to spec by the manufacturer/distributor/dealer. This applies only to brand new vehicles that have been maintained within the warranty standards, vehicles that do not have unauthorized modifications, abuse, neglect, accidents and force majeure.

During the Lemon Law Rights Period, the vehicle must have undergone at least 4 separate attempts to fix the same problem or complaint, by the same dealer/manufacturer. When that fails, the owner of the vehicle can invoke and avail of his/her Lemon Law Rights in writing.

From that point, generally, the bills state that it's the duty of the manufacturer/distributor/dealer to attend to the vehicle and make repairs or actions to get it to conform to how the vehicle is supposed to perform. If the customer is still not satisfied, the matter is elevated to the Department of Trade and Industry, the implementing agency. Also, while the vehicle is being repaired or being undertaken by the manufacturer/distributor/dealer, the latter will have to provide taxi fare or a suitable service vehicle to use everyday until it's complete.

As the implementing agency, the DTI will also serve as mediator/arbiter, exercising 'exclusive and original jurisdiction'. In the event of a dispute, the DTI will independently establish the validity of the claim, a service that will be at the expense of both the consumer and the manufacturer.

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In arbitration mode, the DTI has the power to rule in favor of either the consumer or the manufacturer/distributor/dealer, depending on whether the independent verification of the claim proves it to be true (lemon) or false (not a lemon).

If the DTI rules in favor of the consumer, the manufacturer/distributor/dealer can be directed to either replace the vehicle with a similar/comparable model or accept the return of the vehicle for a full refund of the purchase price and other charges. It doesn't state what would happen if the vehicle was under a financing plan. It does say that if the consumer wants to buy a more expensive vehicle -presumably from the same brand- the consumer pays the extra cost. No free upgrades.

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However, if the DTI rules in favor of the manufacturer/distributor/dealer, the consumer will be directed to reimburse the latter. The costs to be reimbursed will be the charges related to validating (or debunking?) the complaints. This measure in the Lemon Law appears to be directed at preventing bogus or fraudulent claims.

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Another key provision is with regards to any vehicle that was returned to the manufacturer by a consumer after a nonconformity was verified by the DTI. If the manufacturer/distributor/dealer wishes to re-sell the vehicle three conditions must be fulfilled: it must be made clear (in writing) to the next buyer that the vehicle was returned, what the nature of the nonconformity was, and the condition of the vehicle upon transfer to the dealer. Failure to do so by the dealer can lead to a minimum fine of PhP 100,000. Once the vehicle is re-sold while following the three conditions above, the Lemon Law no longer applies to that vehicle; no double jeopardy, so to speak.

There are many more provisions of the said bills, and we encourage that you peruse them on the gallery to the right because, well, they're going to be your rights too.