SC: Lemon Law not the only remedy for buyers of new but defective cars

MANILA, Philippines — Buyers of defective vehicles can avail of other legal remedies as the Supreme Court (SC) ruled that Republic Act 10642 or the Lemon Law is not an exclusive remedy.

In a 15-page ruling, the SC’s 2nd Division said that aside from the Lemon Law, consumers may also enforce their rights through Republic Act 7394 or the Consumer Act.

The Lemon Law covers brand-new motor vehicles purchased in the Philippines reported by a consumer to be defective within 12 months from the date of original delivery or up to 20,000 kilometers of operation, whichever comes first.

On the other hand, under the Consumer Act, consumers can request either a replacement unit or an immediate refund if a defect cannot be corrected within 30 days.

“There is nothing (under the Lemon Law) that prevents a consumer from availing of the remedies under the Consumer Act or any other law for that matter even if the subject of the complaint is a brand new vehicle,” the high court said.

“As such, the Court agrees with the position taken by the DTI (Department of Trade and Industry) Secretary, wherein 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 (Consumer Act) or any other law,” the high court added.

It pointed out that the two laws have no “irreconcilable conflict” since their provisions are “clear and unambiguous.”

The high court issued the ruling following a petition filed by DTI which went to the Supreme Court after the Court of Appeals ruled that it committed grave abuse of discretion in ruling that Lemon Law is not an exclusive remedy for new car owners.

DTI issued the ruling after Marilou and her husband George’s newly bought vehicle in 2016 had a “jerky movement” whenever there was a change of gear in the transmission.

After a mechanical inspection, the manufacturer informed the couple that the transmission assembly needed to be replaced and/or the Engine Control Unit (ECU) reprogrammed at no extra cost.

The couple refused, instead the vehicle be replaced, or she be refunded.

The car manufacturer, however, refused, arguing that under the Lemon Law, they are allowed to make up to four repair attempts before replacing the vehicle.

The couple filed a complaint with the Department of Trade and Industry (DTI), on the basis of  RA 7394, instead of the Lemon Law.

In a decision issued on October 12, 2016, the DTI-Fair Trade Enforcement Bureau (Arbitration Office) ruled in favor of the couple and ordered either a replacement or refund for the vehicle.

The DTI secretary affirmed the ruling of the Arbitration Office on August 17, 2017, prompting the respondents to elevate the case before the CA, which in turn reversed the DTI’s findings.

It held 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.

But the high court, in case of future disputes said there is no conflict between the two laws.

Concurring with the ruling were Senior Associate Justice Marvic Leonen and Associate Justices Mario Lopez and Jhosep Lopez.