SC: ‘Lemon’ car buyers can seek refund, other remedies
Buyers of “lemon” or brand new motor vehicles with factory defects are not prevented by the Philippine Lemon Law from pursuing other legal remedies, such as requesting a refund or a replacement unit, according to the Supreme Court.
The high court has clarified that while the Lemon Law, or Republic Act (RA) No. 10642, allows a manufacturer, distributor, or dealer at least four attempts to repair a newly bought vehicle, it is not the exclusive remedy for such cases, as buyers may invoke other laws more favorable to them.
For instance, they are free to cite RA 7394, or the Consumer Act, which entitles buyers to request either a replacement unit or an immediate refund if a defect isn’t corrected within 30 days, the high court said in a recent ruling.
In the decision on G.R. Nos. 254978-79 dated Oct. 11, 2023, but made public on Wednesday, the high court’s Second Division took the opportunity to clarify the issue, although it ultimately denied a petition filed by the Department of Trade and Industry (DTI) on behalf of a lemon car buyer.
The DTI had challenged the 2020 decision and resolution of the Court of Appeals, which voided its decision ordering Toyota Balintawak Inc. and Toyota Motor Phils. Corp. to either replace the vehicle purchased by Marilou Tan or reimburse the amounts she paid.
Jerky movement
The case dates back to May 2016 when Tan bought a defective Fortuner worth P1.48 million.
When Tan’s husband, George, drove the vehicle home after it was released, they noticed a “jerky movement” whenever they changed gears in the transmission, court records showed.
After a mechanical inspection, he was informed here was a need to replace the transmission assembly and/or reprogram the engine control unit (ECU) free of charge. But Tan demanded that the vehicle be replaced or the money she paid be refunded. Toyota declined to do so, arguing that under the Lemon Law, it was allowed four repair attempts before being obligated to replace the vehicle.
This prompted Tan to file a complaint before the DTI in July 2016, alleging, among other things, that Toyota committed “unfair business practice” by delivering a vehicle with a defective transmission. She claimed the delivery of the defective product also violated her rights as a consumer.
While the proceedings were ongoing, Tan voluntarily brought the vehicle to Toyota for ECU reprogramming, which ultimately fixed the shift shock issue.
The DTI later sided with Tan, ordering Toyota to either replace the vehicle or reimburse the amount paid, prompting the car maker to take its case to the appellate court, which ruled in its favor.
The appellate court found that the Consumer Act and Lemon Law were in conflict because the former gives the supplier 30 days to correct the defect, while the latter allows the manufacturer, distributor, or dealer four separate repair attempts.
Moot and academic
In affirming the appellate court decision, the Supreme Court, in a decision penned by Associate Justice Antonio Kho Jr., said the petition lacked merit because the DTI was not the proper party, and the issue was moot and academic as the vehicle had already been repaired.
The high tribunal noted, however, found merit in clarifying the issue.
It said the confusion arose from the last paragraph of Section 7 of RA 10642, which states, “[n]othing herein shall be construed to limit or impair the rights and remedies of a consumer under any other law.”
But a plain reading of the provision indicated “there is nothing that prevents a consumer from availing of the remedies under RA 7394 or any other law for that matter even if the subject of the complaint is a brand new vehicle,” the court said.
“As such, the Court agrees with the position taken by the DTI Secretary, wherein RA 10642 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,” it added.
