House Bill No. 443 or The Used Car Lemon Act

Republic Act 10642 or the Lemon Law Philippines was enacted in 2014 to protect consumers or new car buyers from defective or unrepairable vehicles. Under this lemon law, brand new vehicles purchased in the Philippines (within twelve months or up to 20,000 kilometers, whichever comes first) that fail to conform to manufacturer standards may be repaired or returned to the seller for a full refund, pending adjudication by the Department of Trade and Industry (DTI).

The Philippine Used Car Lemon Act

And now, Congressman Strike B. Revilla of the second district of Cavite wants to include used car buyers in the Lemon Law. House Bill No. 443 or the Used Car Lemon Act 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.” This newest lower house bill follows Senate Bill 2356 by Senator Koko Pimentel III to amend particular guidelines in the Philippine Lemon Law (RA 10642).

Currently, used cars in the Philippines have no warranties and are sold on an “as-is” basis. But if congress pushes House Bill No.443 into law, all second-hand cars sold by private sellers or dealerships should come with a written warranty to cover the total cost of parts and labor necessary to repair defects or faults of the used vehicle.

Furthermore, used car sellers or dealerships may seek the services of a third-party garage or repair shop to repair the vehicle, or the seller has the option of fixing the car themselves. Upon returning the car after repairs, the seller must explain the repairs made, the parts replaced, and the work performed in correcting the damage.

Used Car Warranty

However, if the seller or dealer is unable to repair or fix the fault after three attempts, or if the used vehicle is out of service for more than ten business days after returning the car to the seller, the buyer can return the vehicle and is eligible for a full refund. House Bill No. 443 also includes an extended warranty for all used car purchases.

• Used cars with less than 64,500 km on the odometer must come with a 90-day or 6,053 km warranty, whichever comes first.
• Used vehicles with mileages between 64,500 km to 128,746 km must come with a 60-day or 4,023 km warranty, whichever comes first.
• Used cars with 128,747 km to 201,167 km on the odometer must come with a 30-day or 2,012 km warranty, whichever comes first.

In case the vehicle’s mileage is unknown or undetermined at the time of sale, the warranty will depend on the car's age. Used vehicles that are three years old or less must have a 90-day or 6,035 km warranty. On the other hand, used cars that are more than three years old but less than six years old must have a 60-day or 4,023 km warranty. Finally, used cars that are six years or older must come with a 30-day or 2,012 km warranty.

House Bill No.443 will cover used car dealers and private owners. If passed, the Department of Trade and Industry (DTI) will implement the law, and violators will have to pay between ₱50,000 to ₱100,000 in damages to affected consumers. The bill also includes a stipulation that private sellers should disclose the vehicle history to the buyer, including collision reports, previous repairs, and other problems with the car.

Whether House Bill no. 443 is good or bad is up for debate. While the bill aims to protect the rights of used car buyers, how will this new and possibly incoming law affect the bottom line of used car dealers and private sellers?