Legal remedies when a brand-new car is defective

By Atty. Eduardo T. Reyes III

When a brand-new motor vehicle breaks down because of defective parts, what are the available remedies to the consumer?

There is Article 100 of RA 7394 or the Consumer Act of the Philippines which states that if there is a defect in the product making it unfit or inadequate for consumption (or use), the consumer can demand replacement of the imperfect part/s. If the imperfection is not corrected within 30 days, “X x x 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;

(c) a proportionate price reduction.

The parties may agree to reduce or increase the term specified in the immediately preceding paragraph; but such shall not be less than seven (7) nor more than one hundred and eighty (180) days.”

This implies that the consumer can avail of “immediate reimbursement of the amount paid” after a single attempt by the supplier at repairing the car sold once the 30-day period lapses.

Then there is also Section 5 of RA 10642 otherwise known as the “Lemon Law.” It provides that:

“Section 5. Repair Attempts. – At any time within the Lemon Law rights period, and after at least four (4) 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 Act. The repair may include replacement of parts, components, or assemblies.”

Obviously, while under the Consumer Act, there is no need for at least four (4) separate attempts to repair the vehicle but only a period of thirty (30) days is given to resolve the concern, under the Lemon Law, there is a need for at least four (4) separate attempts to repair the vehicle.

Stated more pointedly, in cases of functionality issues involving brand-new cars, is it the Consumer Act or the Lemon Law that will apply?

In Department of Trade and Industry v. Toyota Balintawak, Inc. and Toyota Motor Phils. Corp., G.R. Nos. 254978-79, which was promulgated on October 11, 2023 but was uploaded on the Supreme Court website only on September 25, 2024, it was held that both remedies are “alternative” remedies which allows for the consumer to choose which is more preferable to him or her, thus:

“Applying the foregoing rule to the case at bar, a plain reading of the last paragraph of Section 7 will show that 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. 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.”

Indeed, the travails of one who has purchased a brand-new car in all excitement to drive it without issues only to be stymied by recurring functionality concerns, is unenviable.

It pays to know the legal remedies available to address the issues.

(The author is the senior partner of ET Reyes III & Associates– a law firm based in Iloilo City. He is a litigation attorney, a law professor, MCLE lecturer, bar reviewer and a book author. His website is etriiilaw.com).