Lemon Law not sole remedy for buyers of new but defective vehicles — SC

MANILA, Philippines — Have you bought a defective or "lemon" vehicle? The Supreme Court said that buyers of defective vehicles may enforce their rights under any law available, not just the Lemon Law.

In a 15-page decision, the High Court found that consumers may avail remedies under the Philippine Lemon Law, the Consumer Act, or any other applicable law for their defective brand-new vehicles that they purchased.

“[T]here is nothing that prevents a consumer from availing of the remedies under RA 7394 [Consumer Act] or any other law for that matter even if the subject of the complaint is a brand new vehicle…RA 10642 [Lemon Law] is an alternative remedy granted to the consumer and the consumer is free to choose to enforce his or her rights under RA 7394 or any other law," the court’s decision read.

The decision was penned by Associate Justice Antonio Kho Jr. and was promulgated on Oct. 11, 2023 but was only released on Thursday, September 26. 

RELATED: What the Anti-Lemon Law state

What is a ‘lemon’ vehicle?

A "lemon" vehicle refers to a brand-new vehicle with defects present right from the dealership or showroom.

These cars are purchased from official, authorized dealers in the country.

The rights of buyers against defective cars are protected by Republic Act 10642 or the Lemon Law. 

The Philippine Lemon Law applies to a variety of vehicles, including passenger cars, hatchbacks, crossovers, SUVs and pickup trucks. 

However, it does not extend to motorcycles, buses, delivery trucks, dump trucks, or heavy machinery like bulldozers, forklifts, amphibian vehicles and cranes.

Under the Lemon Law, a consumer may request in writing that the dealer repair the defective unit within a 12-month period, allowing up to four repair attempts. However, the consumer must return the unit within 30 days of the previous repair attempt if the problem persists; otherwise, the repair will be considered successful.

If the dealer fails to fix the issue after four attempts or if the defect persists after multiple repairs, the consumer may issue a notice to avail of Lemon Law rights. Upon mutual agreement, the consumer can return the unit for one final repair attempt.

During the repair process and the Lemon Law rights period, the consumer is entitled to either a reasonable daily transportation allowance, equivalent to an air-conditioned taxi fare, or a service vehicle provided by the dealer. 

Should the dealer still fail to resolve the problem, the consumer may escalate the case to the Department of Trade (DTI) and Industry for further assistance.

The case

The case stemmed from a complaint by a consumer who purchased a vehicle in 2016 at a car dealership in Balintawak, Quezon City. After driving the car home, she and her husband noticed a defect, prompting them to file a complaint with the DTI, invoking the Consumer Act.

The DTI ruled in favor of the consumer, but the car dealer challenged the decision in the Court of Appeals (CA), seeking to have it overturned.

The CA ruled in favor of the car dealer, saying that the Consumer Act and the Lemon Law are conflicting because the first law gives the supplier 30 days to correct the defect, while the second law allows the manufacturer, distributor, or dealer at least four separate repair attempts.

Since the case involved a brand-new vehicle, the appellate court ruled that the Lemon Law, not the Consumer Act, was applicable.

This decision by the Court of Appeals prompted the DTI to file a petition before the Supreme Court without the participation of the petitioner.

Supreme Court decision

Although the Supreme Court recognized that the vehicle had been repaired, resolving the issue, it took the opportunity to address the legal question to guide future cases.

Citing the opinion of the DTI secretary, the Supreme Court ruled that the Lemon Law is not an exclusive remedy, as the Consumer Act has also been recognized by the former. 

“The DTI Secretary opines that while RA 10642 primarily applies in the determination and resolution of consumer complaints with respect to motor vehicles, the law nevertheless recognizes the applicability of RA 7394, or the Consumer Act,” the court’s decision read. 

However, the Court dismissed the petition because the DTI secretary was not the proper party to file the case.

“In sum, the petition is dismissible since the DTI Secretary, through the OSG, was not the proper party to file This petition. Furthermore, the controversy in the present case has already been rendered moot by the repair of the vehicle by the reprogramming of the ECG, thereby getting rid of the shift shock,” the court’s decision read. 

“Nevertheless, since the case is capable of repetition yet evading review and for the guidance of the bench and the bar, the Court deems it proper to state that with respect to brand new vehicles, the consumer may choose between RA 10642, RA 7394, and other remedies available under any other law,” it added.