House Bill No. 443 could become the Used Car Lemon Act

A few weeks ago, we found Senate Bill No. 2356 filed by Senator Koko Pimentel III which seeks to make several important changes to the seven-year-old Lemon Law.

The Senate Bill aims to protect consumers from faulty vehicles by reducing the number of repair attempts dealers have and giving consumers 60 days to evaluate a final repair attempt. 

But what about those that buy only second-hand cars? Unfortunately, there is no similar law protecting consumers purchasing used cars from shady car dealers or private individuals. But Congressman Strike B. Revilla of the 2nd District of Cavite wants to change that with House Bill No.443 or the Used Car Lemon Act. The bill aims to protect the rights of consumers in the sale of second-hand motor vehicles that have defects or safety issues that could cause harm to individuals.

If passed into law in its current form, no used motor vehicle will be sold by a private second-hand dealer to consumers unless accompanied by a written warranty covering the full cost of both parts/labors that will be necessary to repair the defects that impair the use of the said vehicle.

Defects that only affect the appearance of a vehicle will not be part of that. Instead, the defects will only cover malfunctions or any combination of damages that serve a key purpose in a vehicle's operation.

To fix a defect covered by the written warranty, a dealer may repair it themselves or by arranging and making a prompt repair with another party. Once a dealer returns the used car after repairs, they must explain the repairs made, the work performed in correcting the damage, as well as the parts replaced in performing the repair.

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But should a dealer or individual fail to repair a defect within three attempts, or if the used vehicle is out of service for more than 10 business days after the consumer has returned it to the dealer for repair of the same, the dealer must accept the return of the vehicle from the consumer and refund the full price paid. Meanwhile, the consumer will have the option of retaining the use of any vehicle returned until the dealer has tendered a full refund.

Aside from ensuring that buyers will get a written warranty in buying used vehicles, H.B. 443 also wants to provide customers an extended duration of a used car's warranty. Any vehicle with less than 64,500 km will be required to have a 90-day warranty or 6,035 km, whichever comes first. Meanwhile, used cars that have between 64,500 km to 128,746 km on their mileage must have a 60-day warranty or 4,023 km. For a used car to have mileage between 128,747 km and 201,167 km, it should have a 30-day warranty or 2,012 km.

If a vehicle's true mileage is unknown at the time of sale, the warranty period is determined according to the age of the vehicle. Vehicles that are 3-years old or less are required to have a warranty of 90 days or 6,035 km. Cars that are more than 3-years old but less than 6-years old must have a 60-day warranty or 4,023 km. Last but not least, vehicles that are more than 6-years old will only need a 30-day warranty or 2,012 km.

Any dealer found in violation of the said House Bill will have to pay between PHP 50,000 to PHP 100,000 as damages to consumers affected. The agency that will implement this law (should it be passed) will be the Department of Trade & Industry (DTI); the same agency that implements the Philippine Lemon Law.

With the proposed Used Car Lemon Act aimed at protecting used car buyers from dealers that sell used cars with defects, it will be pretty interesting to see how dealers and individuals will come up with a written warranty for their consumers.

But HB 443 isn't just about used car dealers; there are also rules for private sellers (e.g. the first owner). There is another part of the bill that covers the sale by private owners to another private individual and stipulates that the owner (seller) must disclose the history of the vehicle (e.g. repairs, problems, and collisions.) to the buyer. 

Do you think HB 443 will help protect used car buyers? Chime in your comments below.