It is often said that a newly purchased car begins to depreciate the moment you drive it off the dealership lot. As a result, deciding to make this purchase is a significant emotional and financial commitment, requiring careful planning and budgeting.

How devastating then it must feel when a buyer learns that the brand-new motor vehicle suffers from an inherent defect, which would necessitate extensive and time-consuming repairs.

As we contemplate this unfortunate possibility, it is reassuring to know that the Supreme Court has clarified that there is no exclusive remedy for buyers of defective brand-new vehicles. I am referring to the decision in Department of Trade and Industry v. Toyota Balintawak Inc. and Toyota Motor Phils. Corp. (G.R. 254978-79, 11 October 2023).

This case discussed the rights and remedies that are available under two key laws: (1) the Philippine Lemon Law (Republic Act 10642), and (2) the Consumer Act of the Philippines (RA 7349).

The Philippine Lemon Law was passed to promote full protection of 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.

This law covers brand-new motor vehicles purchased in the Philippines reported by a consumer to be in nonconformity with the vehicle’s manufacturer or distributor’s standards or specifications within 12 months from the date of original delivery to the consumer, or up to 20,000 kilometers of operation after such delivery, whichever comes first (Section 4 of RA 10642).

At any time within the Lemon Law rights period, and after at least four separate repair attempts by the same manufacturer, distributor, authorized dealer, or retailer for the same complaint, and the nonconformity issue remains unresolved, the consumer may invoke his or her rights under this law (Section 5 of RA 10642).

The consumer may then proceed to give notice that he or she intends to invoke his or her rights within the Lemon Law rights period, in accordance with the manner and form provided in the warranty booklet (Section 6 of RA 10642).

Next, upon receipt of the motor vehicle and notice of nonconformity, there shall be one final attempt to address the complaint. It is at this point, when the nonconformity issue remains unresolved, that the consumer may file a complaint before the Department of Trade and Industry (Section 7 of RA 10642).

On the other hand, the Consumer Act of the Philippines is a more general law primarily enacted to broadly protect consumers against hazards to health and safety, and against deceptive, unfair and unconscionable sales acts and practices.

The Consumer Act of the Philippines states that suppliers of durable and non-durable consumer products are jointly liable for imperfections in quality that render the products unfit or inadequate for consumption for which they are designed or which decrease their value, and for those resulting from inconsistency with the information provided on the container, packaging, label or publicity messages/advertisement, with due regard to the variations resulting from their nature, the consumer being able to demand replacement of the imperfect parts (Article 100 of RA 7349).

If the imperfection is not corrected within 30 days, the consumer may alternatively demand at his option:

a) the replacement of the product by another of the same kind, in a perfect state of use;

b) the immediate reimbursement of the amount paid, with monetary updating, without prejudice to any losses and damages; or

c) a proportionate price reduction (Article 100 of RA 7349).

As clarified by the Supreme Court, the remedies under the Philippine Lemon Law and the Consumer Act of the Philippines are alternative remedies granted to the consumer, who is free to choose to enforce his or her rights under both laws, or any other law which may be applicable, under the circumstances.

This is a welcome development on the part of the Supreme Court, as it gives clarity and peace of mind to buyers of brand-new motor vehicles that their rights are protected under the law.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.