Tuesday, September 16, 2014

Minimum wage and separation pay for pieceworkers; Pulp & Paper Inc vs NLRC : 116593 : September 24, 1997 : J. Panganiban : Third Division

See - Pulp & Paper Inc vs NLRC : 116593 : September 24, 1997 : J. Panganiban : Third Division



"x x x.
First Issue:  Computation of Minimum Wage
Petitioner argues that private respondent was a piece-rate worker and not a time-worker.  Since private respondent’s employment as “(p)acker/(w)rapper” in 1975 until her separation on June 29, 1991, “(h)er salary depended upon the number of ‘reams of bond paper’ she packed per day.”  Petitioner contends that private respondent’s work “depended upon the number and availability of purchase orders from customers.”  Petitioner adds that, oftentimes, “packers/wrappers only work three to four hours a day.”  Thus, her separation pay “must be based on her latest actual compensation per piece or on the minimum wage per piece as determined by Article 101 of the Labor Code, whichever is higher, and not on the daily minimum wage applicable to time-workers.”[11]
Compensation  of Pieceworkers
In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission.  To ensure the payment of fair and reasonable wage rates, Article 101[12] of the Labor Code provides that “the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work.”  The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers’ and employers’ organizations.  In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply.  This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A -- the prevailing wage order at the time of dismissal of private respondent, viz.:[13]
“SEC. 8.  Workers Paid by Results.  --  a)  All workers paid by results including those who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than the applicable minimum wage rates prescribed under the Order for the normal working hours which shall not exceed eight (8) hours work a day, or a proportion thereof for work of less than the normal working hours.
The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps:
1)  Amount of increase in AMW x 100 = % increase
Previous AMW
2)  Existing rate/piece x % increase = increase in rate/piece;
3)  Existing rate/piece + increase in rate/piece = adjusted rate/piece.
b) The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the Labor Code, as amended and its implementing regulations.” (Underscoring supplied.)
On November 29, 1991, private respondent was orally informed of the termination of her employment.  Wage Order No. NCR-02, in effect at the time, set the minimum daily wage for non-agricultural workers like private respondent at P118.00.[14] This was the rate used by the labor arbiter in computing the separation pay of private respondent.  We cannot find any abuse of discretion, let alone grave abuse, in the order of the labor arbiter which was later affirmed by the NLRC.
Moreover, since petitioner employed piece-rate workers, it should have inquired from the secretary of labor about their prescribed specific wage rates.  In any event, there being no such prescribed rates, petitioner, after consultation with its workers, should have submitted for the labor secretary’s approval time and motion studies as basis for the wage rates of its employees.  This responsibility of the employer is clear under Section 8, Rule VII, Book III of the Omnibus Rules Implementing the Labor Code:
“Section 8.  Payment by result.  (a)   On petition of any interested party, or upon its initiative, the Department of Labor shall use all available devices, including the use of time and motion studies and consultations with representatives of employers’ and workers’ organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule.
(b)      The basis for the establishment of rates for piece, output or contract work shall be the performance of an ordinary worker of minimum skill or ability.
(c)      An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped workers employed therein.
(d)      Where the output rates established by the employer do not conform with the standards prescribed herein, or with the rates prescribed by the Department of Labor in an appropriate order, the employees shall be entitled to the difference between the amount to which they are entitled to receive under such prescribed standards or rates and that actually paid them by employer.”
In the present case, petitioner as the employer unquestionably failed to discharge the foregoing responsibility.  Petitioner did not submit to the secretary of labor a proposed wage rate -- based on time and motion studies and reached after consultation with the representatives from both workers’ and employers’ organization -- which would have applied to its piece-rate workers.  Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural workers prevailing at the time of private respondent’s dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards.  Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers.  In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondent’s separation pay.  In fact, it acted and ruled correctly and legally in the premises.
It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent.  The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight.  Aside from its bare assertion, petitioner presented no clear proof that private respondent’s regular working day was less than eight hours.  Thus, the labor arbiter correctly used the full amount of P118.00 per day in computing private respondent’s separation pay. We agree with the following computation:[15]
“Considering therefore that complainant had been laid-off for more than six (6) months now, we strongly feel that it is already reasonable for the respondent to pay the complainant her separation pay of one month for every year of service, a fraction of six (6) months to be considered as one whole year.  Separation pay should be computed based on her minimum salary as will be determined hereunder.
Separation pay 1 month = 16 years
P118.00 x 26 x 16 years = P49,088.00”
The amount “P118.00” represents the applicable daily minimum wage per Wage Order Nos. NCR-02 and NCR-02-A; “26”, the number of working days in a month after excluding the four Sundays which are deemed rest days; “16”, the total number of years spent by private respondent in the employ of petitioner.

Second Issue:  Computation of Separation Pay
Petitioner questions not only the basis for computing private respondent’s monthly wage; it also contends that private respondent’s separation pay should not have been computed at one month’s pay for every year of service.  Because private respondent should be considered retrenched, the separation pay should be “one month’s pay or at least one/half (1/2) month pay for every year of service, whichever is higher, and not one (1) month’s pay for every year of service as public respondent had ruled.”[16]
Petitioner misapprehended the ground relied upon by public respondent for awarding separation pay.  In this case, public respondent held that private respondent was constructively dismissed, pursuant to Article 286 of the Labor Code which reads:
“ART. 286.  When employment not deemed   terminated.  --  The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment.  In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later that one (1) month from his resumption of operations of his employer or from his relief from the military or civic duty.”
Petitioner failed to discern that public respondent, in finding that the services of private respondent were terminated, merely adopted by analogy the rule on constructive dismissal.  Since private respondent was not reemployed within six (6) months from the “suspension” of her employment, she is deemed to have been constructively dismissed.[17] Otherwise, private respondent will remain in a perpetual “floating status.”  Because petitioner had not shown by competent evidence any just cause for the dismissal of private respondent, she is entitled to reinstatement[18] or, if this is not feasible, to separation pay equivalent to one (1) month salary for every year of service.  Private respondent, however, neither asked for reinstatement[19] nor appealed from the labor arbiter’s finding that she was not illegally dismissed; she merely prayed for the grant of her  monetary claims.  Thus, we sustain the award of separation pay made by public respondent,[20] for employees constructively dismissed are entitled to separation pay.  Because she did not ask for more, we cannot give her more.  We repeat: she appealed neither the decision of the labor arbiter nor that of the NLRC.  Hence, she is not entitled to any affirmative relief.
Furthermore, we cannot sustain petitioner’s claim that private respondent was retrenched.  For retrenchment to be considered a ground for termination, the employer must serve a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof.[21] Petitioner did not comply with this requirement. 
Third Issue:  Determination of Salary Differential
In light of the foregoing discussion, we must also dismiss petitioner’s challenge to the computation of salary differential.  As earlier observed, private respondent is entitled to the minimum wage prevailing at the time of the termination of her employment.  The same rate of minimum wage, P118.00, should be used in computing her salary differential resulting from petitioner’s underpayment of her wages.  Thus, the labor arbiter correctly deducted private respondent’s actually received wage of P60 a day from the prescribed daily minimum wage of P118.00, and multiplied the difference by 26 working days, and subsequently by 16 years, equivalent to her length of service with petitioner.  Thus, the amount of P31,149.56 as salary differential.[22]
Petitioner argues that “the work of the private respondent is seasonal, being dependent upon the availability of job-orders” and not “twenty-six (26) days a month.”[23] Further, petitioner contends that private respondent herself admitted she was “a piece worker whose work [was] seasonal.”[24]
Contrary to the assertion of petitioner, neither the assailed Decision nor the pleadings of private respondent show that private respondent’s work was seasonal.  More important, petitioner utterly failed to substantiate its allegation that private respondent’s work was seasonal.  We observe that the labor arbiter based the computation of the salary differential on a 26-day month on the presumption that private respondent’s work was continuous.  In view of the failure of petitioner to support its claim, we must sustain the correctness of this computation.
x x x."

Labor cases; FAQs - NLRC Proceedings.

See - Department of Labor and Employment - Pages





"x x x.

FAQs - NLRC Proceedings


NLRC Proceedings: What is an appeal in compulsory arbitration?

When an aggrieved party is not satisfied with the decision, order or award of the Labor Arbiter, POEA Administrator or DOLE Regional Director or his duly authorized hearing officer, the decision, award or order may be elevated to the Commission Proper upon grounds provided by law.


NLRC Proceedings: When to submit position papers/ memorandum

If, during the conferences, the parties fail to agree upon an amicable settlement, either in whole or in part, the Labor Arbiter shall issue an order directing the parties to simultaneously file their respective verified position papers, with the supporting documents and affidavits within fifteen (15) calendar days from the date of the last conference, with proof of having furnished each other with the copies thereof.
The verified position papers shall cover only those claims and causes of action raised in the complaint excluding those that may have been amicably settled.
The Labor Arbiter determines the necessity of a hearing
As soon as the parties have submitted their position papers/memorandum, the Labor Arbiter shall, motu propio, determine whether there is a need for a formal trial or hearing. The Labor Arbiter may, at his discretion, ask clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant documentary evidence from any party or witness.


NLRC Proceedings: How many copies of the appeal must be submitted and where does one file an appeal?

The appeal, in five (5) legibly typewritten copies, may be filed with the respective Regional Arbitration Branch, the DOLE Regional Office or the POEA, where the case was heard and decided.


NLRC Proceedings: When will the Labor Arbiter render decision?

The Arbiter shall render his decision within thirty (30) calendar days, without extension, after the submission of the case by the parties for resolution, even in the absence of stenographic notes, provided however that cases involving Overseas Filipino Workers shall be decided within ninety (90) calendar days after the filing of the complaint which shall be deemed perfected upon acquisition by the labor arbiter of jurisdiction over the respondent/s. (Sec. 5, Rule 5, NLRC Rules as Amended)


NLRC Proceedings: May the Labor Arbiter conciliate disputes?

Yes. At any stage of the proceedings in all cases, the Arbiter shall exert all efforts and take positive steps toward resolving the dispute through conciliation.


NLRC Proceedings: Conference

The Labor Arbiter shall summon the parties to a conference within two days from receipt of an assigned case.The purpose of the conference is either to:
  • amicably settle the dispute;
  • determine the real parties in interest;
  • define and simplify the issues of the case;
  • enter into admissions and/or stipulations of facts; and
  • thresh out preliminary matters. (Sec. 2, Rule 5, NLRC Rules as Amended)


NLRC Proceedings: When is a hearing necessary or not?

If there is a need for a hearing, the Labor Arbiter shall issue an order setting the date or dates for said hearing which shall be terminated within ninety (90) days from initial hearing. However, if he finds no necessity for further hearing after the parties have submitted their position papers and supporting documents, he shall issue an Order to that effect and inform the parties. The Arbiter shall render his decision in the case within ninety (90) days.


NLRC Proceedings: What is the period of appeal?

Within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter or of the POEA Administrator. In case of a decision of the Regional Director or his duly authorized hearing officer, the appeal may be filed within five (5) calendar days from receipt of such decisions, awards or orders.


NLRC Proceedings: What are certified labor disputes?

Certified labor disputes are cases certified to the Commission for compulsory arbitration by the Secretary of Labor and Employment if in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest. (Sec. 2, Rule 9, NLRC Rules as Amended)
What are the effects of certification?
Upon certification, the intended or impending strike or lockout is automatically prohibited even if there is a motion for reconsideration of the certification order in the Office of the Secretary.
If a work stoppage has already taken place at the time of the Certification, all striking or locked-out employees are to immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms existing before the strike or lockout. (Sec. 5, Rule 9, NLRC Rules as Amended)
When will the Commission resolve a certified case?
The Commission, sitting in the appropriate Division shall decide or resolve the certified dispute within thirty (30) calendar days from the date of submission of the dispute for resolution. (Sec. 4, Rule 9, NLRC Rules as Amended)


NLRC Proceedings: Number of conferences allowed

The number of conferences shall not exceed three (3) settings and shall be terminated within thirty (30) calendar days from the date of the first conference.
No motion for postponement shall be entertained. Non-appearance of the complainant/s during the scheduled hearings for mediation/conciliation conference shall be a ground for the dismissal of the case without prejudice.
In case of non-appearance of the respondent/s during the first conference, a second conference shall proceed. Non-appearance of the respondent/s during the second conference shall immediately terminate the mandatory conciliation/mediation conference. The complainant/s shall thereupon be allowed to file his position paper as well as submit evidence in support of his cause or causes of action after which, the labor arbiter shall render his decision on the basis of the evidence on record. (Sec. 2, Rule 5, NLRC Rules as Amended)


NLRC Proceedings: What are the other requisites for the perfection of an appeal?

  • The appeal should be under oath.
  • Proof of payment of appeal fee.
  • Proof of posting of a cash or surety bond.
  • Must be accompanied by a memorandum of appeal which shall state the grounds relied upon and the supporting arguments.
  • A statement of the date when the appellant received the appealed decision or award.
  • Proof of service on the other party of such appeal.


NLRC Proceedings: How much is the appeal fee?

An appeal fee of one hundred and ten (P110.00) pesos must be paid by the appellant to the Regional Arbitration Branch, DOLE Regional Office or the POEA.


NLRC Proceedings: When is a bond required in an appeal?

In case the decision of the Labor Arbiter, POEA Administrator and DOLE Regional Director or his duly authorized hearing officer involves monetary award.


NLRC Proceedings: Can an appeal for decisions involving monetary award be perfected without posting a bond?

An appeal by the employer shall be perfected only upon posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award.


NLRC Proceedings: What is the period to resolve the appeal?

The appeal from the decision, order or reward of the Labor Arbiter and POEA Administrator shall be resolved by the Commission within 20 calendar days from receipt of the answer of the appellee or upon the filing of the last pleading or memorandum.
In case of an appeal from the decision of the DOLE Regional Director or his duly authorized hearing officer, it shall be resolved within 10 calendar days.
x x x."

Monday, September 15, 2014

Republic Act No. 10641 | Official Gazette of the Republic of the Philippines

See - Republic Act No. 10641 | Official Gazette of the Republic of the Philippines





[REPUBLIC ACT NO. 10641]
AN ACT ALLOWING THE FULL ENTRY OF FOREIGN BANKS IN THE PHILIPPINES, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7721
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 2 of Republic Act No. 7721 is hereby amended to read as follows:
“SEC. 2. Modes of Entry. – The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any one of the following” modes of entry: (i) by acquiring, purchasing or owning up to one hundred percent (100%) of the voting stock of an existing bank; (ii) by investing in up to one hundred percent (100%) of the voting stockof a new banking subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full banking authority.”
SEC. 2. Section 3 of Republic Act No. 7721 is hereby amended to read as follows:
“SEC. 3. Guidelines for Approval. – In approving entry applications of foreign banks, the Monetary Board shall: (i) ensure geographic representation and complementation; (ii) consider strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank; (iii) study the demonstrated capacity, global reputation for financial innovations and stability in a competitive environment of the applicant; (iv) see to it that reciprocity rights are enjoyed by Philippine banks in the applicant’s country; and (v) consider willingness to fully share their technology.
“Only established, reputable and financially sound foreign banks shall be allowed entry in accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and publicly-listed in its country of origin, unless the foreign bank applicant is owned and controlled by the government of its country of origin.
“In the exercise of this authority, the Monetary Board shall adopt such measures as may be necessary to ensure that the control of at least sixty percent(60%) of the resources or assets of the entire banking system is held by domestic banks which are majority-owned by Filipinos.”
SEC. 3. Section 4 of Republic Act No. 7721 is hereby amended to read as follows:
“SEC. 4. Capital Requirements. – (i) For Locally Incorporated Subsidiaries – The minimum capital required for locally incorporated subsidiaries of foreign banks shall be equal to that prescribed by the Monetary Board for domestic banks of the same category.
“(ii) For Foreign Bank Branches - Foreign banks that shall be authorized to establish branches pursuant to Section 2(hi) of this Act shah permanently assign capital of an amount not less than the minimum capital required for domestic banks of the same category. The permanently assigned capital shall be inwardly remitted and converted into Philippine currency.
“The foreign bank branch may open up to five (5) sub-branches as may be approved by the Monetary Board. Locally incorporated subsidiaries of foreign banks pursuant to Section 2(h) of this Act shall have the same branching privileges as domestic banks of the same category.”
SEC. 4. Section 6 of Republic Act No. 7721 is hereby repealed.
SEC. 5. Section 8 of Republic Act No. 7721 is hereby amended to read as follows:
“SEC. 8. Equal Treatment. – Foreign banks authorized to operate under Section 2 of this Act, shall perform the same functions, enjoy the same privileges, and be subject to the same limitations imposed upon a Philippine bank of the same category. The single borrower’s limit of a foreign bank branch shall be aligned with that of a domestic bank.
“The foreign banks shall guarantee the observance of the rights of their employees under the Constitution.
“Any right, privilege or incentive granted to foreign banks or their subsidiaries or affiliates under this Act, shall be equally enjoyed by and extended under the same conditions to Philippine banks.”
SEC. 6. A new provision in Section 9 is hereby inserted in the same Act, in lieu of the original provisions of Section 9 repealed by Section 11 of Republic Act No. 10000. Section 9 shall now read as follows:
“SEC. 9. Participation in Foreclosure Proceedings.—Foreign banks which are authorized to do banking business in the Philippines through any of the modes of entry under Section 2 hereof shall be allowed to bid and take part in foreclosure sales of real property mortgaged to them, as well as to avail of enforcement and other proceedings, and accordingly take possession of the mortgaged property, for a period not exceeding five (5) years from actual possession: Provided,That in no event shall title to the property be transferred to such foreign bank. In case said bank is the winning bidder, it shall, during the said five (5)-year period, transfer its rights to a qualified Philippine national, without prejudice to a borrower’s rights under applicable laws. Should the bank fail to transfer such property within the five (5)-year period, it shall be penalized one half (1/2) of one percent (1%) per annum of the price at which the property was foreclosed until it is able to transfer the property to a qualified Philippine national.”
SEC. 7. Transitory Provisions. –Foreign banks which are already authorized to do banking business in the Philippines through any of the modes of entry under Section 2 hereof may apply to change their original mode of entry.
Foreign banks operating through branches in the Philippines upon the effectivity of this Act shall retain their original privilege upon entry to establish a limited number of sub-branches. However, the previous restriction on the locations of such additional branches is hereby lifted.
The existing Philippine branches of foreign banks shall comply within one (1) year from the effectivity of this Act with the minimum capital requirements as prescribed under Section 4(ii) of this Act, unless otherwise extended by the Monetary Board.
SEC. 8. Section 12 of Republic Act No. 7721 is hereby amended to read as follows:
“SEC. 12. Applicability of Other Banking Laws. – The provisions of Republic Act No. 7653, otherwise known as the New Central Bank Act and the provisions of Republic Act No. 8791, otherwise known as The General Banking Law of 2000′, insofar as they are applicable and not in conflict with any provision of this Act, shall apply to banks authorized pursuant to this Act.”
SEC. 9. Section 13 of Republic Act No. 7721 is hereby amended to read as follows:
“SEC. 13. Rule-Making Powers of the Monetary Board of the Bangko Sentral ng Pilipinas and Compliance Reports. – The Monetary Board is hereby authorized to issue such rules and regulations as may be needed to implement “the provisions of this Act. On or before May 30 of each year, the Monetary Board shall file a written report to Congress and its respective Banks Committees, on the developments in the implementation of this Act. The implementing rules and regulations of this Act shall be published in at least two (2) newspapers of general circulation.”
SEC. 10. Repealing Clause. – All laws, decrees, executive orders, proclamations, rules and regulations and other issuances or parts thereof insofar as they are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
SEC. 11. Effectivity. – This Act shall take effect fifteen (15) days after its publication in theOfficial Gazette or in at least two (2) national newspapers of general circulation.
Approved,
(Sgd.) FELICIANO BELMONTE JR.Speaker of the House
of Representatives
(Sgd.) FRANKLIN M. DRILONPresident of the Senate
This Act which is a consolidation of Senate Bill No. 2159 and House Bill No. 3984 was finally passed by the Senate and the House of Representatives on June 11, 2014 and June 10, 2014, respectively.
(Sgd.) MARILYN B. BARUA-YAPSecretary General
House of Representatives
(Sgd.) OSCAR G. YABESSecretary of the Senate
Approved: JUL 15 2014
(Sgd.) BENIGNO S. AQUINO III
President of the Philippines

Republic Act No. 10642 | Official Gazette of the Republic of the Philippines

See  -  Republic Act No. 10642 | Official Gazette of the Republic of the Philippines





[REPUBLIC ACT NO. 10642]
AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Short Title. – This Act shall be known as the “Philippine Lemon Law”.
SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State to promote full protection to 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.
The State recognizes that a motor vehicle is a major consumer purchase or investment. Hence, the rights of consumers should be clearly defined, including the means for redress for violations thereof.
SEC. 3. Definition of Terms. – As used in this Act:
(a) Brand new motor vehicle refers to a vehicle constructed entirely from new parts and covered by a manufacturer’s express warranty at the time of purchase that it has never been sold or registered with the Department of Transportation and Communications (DOTC) or an appropriate agency or authority, and has never been operated on any highway of the Philippines, or in any foreign state or country;
(b) Collateral charges refer to the fees paid’ to the Land Transportation Office (LTO) for the registration of a brand new motor vehicle and other incidental expenses such as, but not limited to, the cost of insurance pertaining to the vehicle, chattel mortgage fees and interest expenses if applicable;
(c) Comparable motor vehicle refers to a motor vehicle that is identical or reasonably equivalent to the motor vehicle to be replaced, in terms of specifications and values, subject to availability, as the motor vehicle existed at the time of purchase: Provided, That there shall be an offsetting from this value for reasonable allowance for its use;
(d) Consumer refers to any person, natural or juridical, who purchases a brand new motor vehicle either by cash or credit from an authorized distributor, dealer or retailer in the Philippines;
(e) Dealer or retailer refers to any person, natural or juridical, authorized by the manufacturer or distributor to sell brand new motor vehicles directly to the retail buyers and the public;
(f) Distributor refers to any person, natural or juridical, authorized by the manufacturer to sell brand new motor vehicles to duly authorized dealers or retailers;
(g) Implementing agency refers to the Department of Trade and Industry (DTI), reorganized under Title X, Book IV of Executive Order No. 292, series of 1987, otherwise known as the “Administrative Code of 1987″;
(h) Lemon Law rights period refers to the period ending twelve (12) months after the date of the original delivery of a brand new motor vehicle to a consumer or the first twenty thousand (20,000) kilometers of operation after such delivery, whichever comes first. This shall be the period during which the consumer can report any nonconformity, as defined in paragraph (k) herein, to the standards and specifications of the manufacturer, authorized distributor, authorized dealer or retailer, and pursue any right as provided for under this Act;
(i) Manufacturer refers to any person, natural or juridical, engaged in the business of manufacturing or assembling motor vehicles;
(j) Motor vehicle refers to any self-propelled, four (4) wheeled road vehicle designed to carry passengers including, but not limited to, sedans, coupes, station wagons, convertibles, pick-ups, vans, sports utility vehicles (SUVs) and Asian Utility Vehicles (AUVs) but excluding motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley cars, street sweepers, sprinklers, lawn mowers and heavy equipment such as, but not limited to, bulldozers, payloaders, graders, forklifts, amphibian trucks, cranes, and vehicles which run only on rails or tracks, and tractors, trailers and traction engines of all kinds used exclusively for agricultural purposes. Trailers having any number of wheels, when propelled or intended by attachment to a motor vehicle, shall be classified as separate motor vehicle with no power rating;
(k) Nonconformity refers to any defect or condition that substantially impairs the use, value or safety of a brand new motor vehicle which prevents it from conforming to the manufacturer’s or distributor’s standards or specifications, which cannot be repaired, but excluding conditions resulting from noncompliance by the consumer of his or her obligations under the warranty, modifications not authorized by the manufacturer or distributor, abuse or neglect, and damage due to accident or force majeure;
(l) Purchase price refers to the invoice price or the amount of money which the dealer or retailer actually received for the brand new motor vehicle, in consideration of the sale of such brand new motor vehicle;
(m) Warranty refers to the written assurance, so labeled, of the manufacturer of a brand new motor vehicle including any term or condition precedent to the enforcement of obligations under the warranty; and
(n) Warranty rights period refers to the period provided for under the contract of sale when the manufacturer would guarantee the materials used, the workmanship and the roadworthiness of a brand new motor vehicle for ordinary use or reasonable intended purposes.
SEC. 4. Coverage. – This Act shall cover 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 twelve (12) months from the date of .original delivery to the consumer, or up to twenty thousand (20,000) kilometers of operation after such delivery, whichever comes first. The following causes of nonconformity shall be excluded:
(a) Noncompliance by the consumer of the obligations under the warranty;
(b) Modifications not authorized by the manufacturer, distributor, authorized dealer or retailer;
(c) Abuse or neglect of the brand new motor vehicle; and
(d) Damage to the vehicle due to accident or force majeure.
SEC. 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.
SEC. 6. Notice of Availment of Lemon Law Rights. – Before availing of any remedy under this Act and subject to compliance with the provisions of Section 5 hereof, the consumer shall, in writing, notify the manufacturer, distributor, authorized dealer or retailer of the unresolved complaint, and the consumer’s intention to invoke his or her rights under this Act within the Lemon Law rights period.
The warranty booklet issued by the manufacturer, distributor, authorized dealer or retailer shall clearly state the manner and form of such notice to constitute a valid and legal notice to the manufacturer, distributor, authorized dealer or retailer. It shall also clearly state the responsibility of the consumer under this section.
SEC. 7. Availment of Lemon Law Rights. – Subsequent to filing the notice of availment referred to in the preceding section, the consumer shall bring the vehicle to the manufacturer, distributor, authorized dealer or retailer from where the vehicle was purchased for a final attempt to address the complaint of the consumer to his or her satisfaction.
It shall be the duty of the manufacturer, distributor, authorized dealer or retailer, upon receipt of the motor vehicle and the notice of nonconformity required under Section 6 hereof, to attend to the complaints of the consumer including, as may be necessary, making the repairs and undertaking such actions to make the vehicle conform to the standards or specifications of the manufacturer, distributor, authorized dealer or retailer for such vehicle.
In case the nonconformity issue remains unresolved despite the manufacturer, distributor, authorized dealer or retailer’s efforts to repair the vehicle, pursuant to the consumer’s availment of his or her Lemon Law rights, the consumer may file a complaint before the DTI as provided for under this Act: Provided, however, That if the vehicle is not returned for repair, based on the same complaint, within thirty (30) calendar days from the date of notice of release of the motor vehicle to the consumer following this repair attempt within the Lemon Law rights period, the repair is deemedsuccessful: Provided, finally, That, in the event that the nonconformity issue still exists or persists after the thirty (30)-day period but still within the Lemon Law rights period, the consumer may be allowed to avail of the same remedies under Sections 5 and 6 hereof.
To compensate for the non-usage of the vehicle while under repair and during the period of availment of the Lemon Law rights, the consumer shall be provided a reasonable daily transportation allowance, an amount which covers the transportation of the consumer from his or her residence to his or her regular workplace or destination and vice versa, equivalent to air-conditioned taxi fare, as evidenced by official receipt, or in such amount to be agreed upon by the parties, or a service vehicle at the option of the manufacturer, distributor, authorized dealer or retailer. Any disagreement on this matter shall be resolved by the DTI.
Nothing herein shall be construed to limit or impair the rights and remedies of a consumer under any other law.
SEC. 8. Remedies for Dispute Resolution. – The DTI shall exercise exclusive and original jurisdiction over disputes arising from the provisions of this Act. All disputes arising from the provisions of this Act shall be settled by the DTI in accordance with the following dispute resolution mechanisms:
(a) Mediation
(1) The principles of negotiation, conciliation and mediation towards amicable settlement between the manufacturer, distributor, authorized dealer or retailer and the consumer shall be strictly observed;
(2) In the course of its dispute resolution efforts, the DTI shall endeavor to independently establish the validity of the consumer’s outstanding complaint. The DTI shall likewise retain the services of other government agencies or qualified independent private entities in the ascertainment of the validity of the consumer’s complaint. Any cost incurred in establishing the validity of the consumer’s complaint shall be bornejointly by the consumer and the manufacturer, distributor, authorized dealer or retailer;
(3) The complaint shall be deemed valid if it is independently established that the motor vehicle does not conform to the standards or specifications set by the manufacturer, distributor, authorized dealer or retailer;
(4) Upon failure of the negotiation or mediation between the manufacturer, distributor, authorized, dealer or retailer and the consumer, the parties shall execute a certificate attesting to such failure; and
(5) At any time during the dispute resolution period, the manufacturer, distributor, authorized dealer or retailer and the consumer shall be encouraged to settle amicably. All disputes that have been submitted for mediation shall be settled not later than ten (10) working days from the date of filing of the complaint with the DTI.
(b) Arbitration
In the event there is a failure to settle the complaint during the mediation proceedings, both parties may voluntarily decide to undertake arbitration proceedings.
(c) Adjudication
(1) In the event that both parties do not undertake arbitration proceedings, at least one of the parties may commence adjudication proceedings, administered by the DTI. The DTI shall rely on the qualified independent findings as to conformity to standards and specifications established herein. In no case shall adjudication proceedings exceed twenty (20) working days;
(2) In case a finding of nonconformity is arrived at, the DTI shall rule in favor of the consumer and direct the manufacturer, distributor, authorized dealer or retailer to grant either of the following remedies to the consumer:
(i) Replace the motor vehicle with a similar or comparable motor vehicle in terms of specifications and values, subject to availability; or
(ii) Accept the return of the motor vehicle and pay the consumer the purchase price plus the collateral charges.
In case the consumer decides to purchase another vehicle with a higher value and specifications from the same manufacturer, distributor, authorized dealer or retailer, the consumer shall pay the difference in cost.
In both cases of replacement and repurchase, the reasonable allowance for use, as defined in this Act, shall be deducted in determining the value of the nonconforming motor vehicle; and
(3) In case a nonconformity of the motor vehicle is not found by the DTI, it shall rule in favor of the manufacturer, distributor, .authorized dealer or retailer, and direct the consumer to reimburse the manufacturer, distributor, authorized dealer or retailer the costs incurred by the latter in validating the consumer’s complaints.
An appeal may be taken from a final judgment or order of the Adjudication Officer which completely disposes of the case within fifteen (15) days from receipt thereof. The appeal shall be taken by filing a Memorandum of Appeal with the Secretary of the DTI, with Notice of Appeal to the Adjudication Officer, and with a copy duly furnished the adverse party or parties on any of the following grounds:
(i) Grave abuse of discretion;
(ii) The decision/order is in excess of jurisdiction or authority of the Adjudication Officer; and
(iii) The decision/order is not supported by the evidence or there is serious error in the findings of facts.
The Secretary of the DTI shall decide on the appeal within thirty (30) days from receipt thereof. A party seeking further appeal from the decision of the Secretary of the DTI may file a case for certiorari to the Court of Appeals under Section 4, Rule 65 of the Revised Rules of Court.
SEC. 9. Determination of Reasonable Allowance for Use. – For purposes of this Act, “reasonable allowance for use” shall mean twenty percent (20%) per annum deduction from the purchase price, or the product of the distance traveled in kilometers and the purchase price divided by one hundred thousand (100,000) kilometers, whichever is lower.
SEC. 10. Disclosure on Resale. – Should the returned motor vehicle be made available for resale, the manufacturer, distributor, authorized dealer or retailer shall, prior to sale or transfer, disclose in writing to the next purchaser of the same vehicle the following information:
(a) The motor vehicle was returned to the manufacturer, distributor, authorized dealer or retailer;
(b) The nature of the nonconformity which caused the return; and
(c) The condition of the motor vehicle at the time of the transfer to the manufacturer, distributor, authorized dealer or retailer.
The responsibility of the manufacturer, distributor, authorized dealer or retailer under this section shall cease upon the sale of the affected motor vehicle to the first purchaser.
SEC. 11. Penalty. – The manufacturer, distributor, authorized dealer or retailer adjudged to have violated the provisions requiring disclosure as mentioned in the preceding section shall be liable to pay a minimum amount of One hundred thousand pesos (P100,000.00) as damages to the aggrieved party without prejudice to any civil or criminal liability they and/or the responsible officer may incur under existing laws.
SEC. 12. Assistance by Other Agencies. – The DOTC and other agencies, political subdivisions, local government units, including government-owned and/or controlled corporations, shall render such assistance as required by the DTI in order to effectively implement the provisions of this Act.
SEC. 13. Implementing Rules and Regulations. – The DTI shall promulgate the necessary implementing rules and regulations within, ninety (90) days from the effectivity of this Act.
SEC. 14. Separability Clause. – If, for any reason, any part or provision of this Act is declared invalid, such declaration shall not affect the other provisions of this Act.
SEC. 15. Repealing Clause. – All laws, decrees, executive orders, issuances, rules and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby deemed repealed, amended or modified accordingly.
SEC. 16. Effectivity. – This Act shall take effect fifteen (15) days after its publication in theOfficial Gazette or in any newspaper of .general circulation.
Approved,
(Sgd.) FELICIANO BELMONTE JR.Speaker of the House
of Representatives
(Sgd.) FRANKLIN M. DRILONPresident of the Senate 
This Act which is a consolidation of Senate Bill No. 2211 and House Bill No. 4082 was finally passed by the Senate and the House of Representatives on June 11, 2014 and June 10, 2014, respectively.
(Sgd.) MARILYN B. BARUA-YAPSecretary General
House of Representatives
(Sgd.) OSCAR G. YABESSecretary of the Senate
Approved: JUL 15 2014
(Sgd.) BENIGNO S. AQUINO III
President of the Philippines