G.R. No. 254978-79 - Department of Trade and Industry vs. Toyota Balintawak, Inc.

On May 17, 2016, Marilou S. Tan purchased a brand new Toyota Fortuner 4x2 2.4.L G DSL A/T-B3 from Toyota Balintawak, Inc. (TBI) for PHP 1,476,000.00.
Upon taking delivery, Marilou's husband George Tan noticed a "jerky movement" or "shift shock" in the vehicle's transmission whenever there was a change of gear.
Marilou immediately informed the sales agent, Mishel Castro, who advised that the defect might disappear with regular use since the vehicle may have been stocked.
Approximately one week later, Marilou attempted to bring the vehicle to TBI for repairs but was refused due to lack of appointment.

On June 13, 2016, George took the vehicle to TBI for service and repair.
TBI's Technical Department diagnosed the transmission defect as caused by the "fast fill duration of the Automatic Transmission Fluid controlled by the Engine Control Unit (ECU) software."
TBI informed they would replace the transmission assembly and/or reprogram the ECU at no cost.
Meetings on June 28 and 29, 2016, resulted in Marilou demanding replacement of the vehicle or reimbursement rather than repair.
TBI cited Republic Act No. 10642 (Philippine Lemon Law) allowing up to four repair attempts before replacement or refund is mandated.
On July 1, 2016, TBI formally refused replacement or refund but offered to replace the transmission or reprogram the ECU by August 31, 2016.

On July 5, 2016, Marilou filed a Letter-Complaint with the Department of Trade and Industry (DTI) alleging unfair business practice and violation of consumer rights under RA 7394 (Consumer Act), demanding replacement or refund.
Marilou asserted the defect existed upon purchase and could not be corrected within 30 days as required under Article 100 of RA 7394.
Respondents (TBI and Toyota Motor Phils. Corp.) argued the application of RA 10642, requiring four repair attempts and written notice before refund or replacement could be claimed.
During the case pendency, on September 9, 2016, the vehicle underwent ECU reprogramming which resolved the shift shock issue and was released back to Marilou.

On October 12, 2016, DTI-Fair Trade Enforcement Bureau ruled in favor of Marilou, applying Article 100 of RA 7394, ordering respondents to replace or reimburse the vehicle and imposing an administrative fine of PHP 240,000.00.
The DTI Secretary affirmed this decision on August 17, 2017, finding respondents liable for the vehicle's defects.

Respondents filed petitions for certiorari with the CA.
On February 28, 2020, the CA nullified the DTI rulings and dismissed Marilou's complaint.
The CA held that RA 10642 applies exclusively to brand new motor vehicles and that Marilou failed to comply with its requirements.
The CA found the DTI's administrative fine improper, as RA 10642 provides no such penalty.

The DTI Secretary filed a petition arguing RA 10642 is an alternative, not exclusive, remedy and that consumers may choose between it and RA 7394.
Respondents argued the CA properly applied the Lemon Law and that the vehicle's repair rendered the case moot.

Whether the Court of Appeals correctly ruled that RA 10642 (Lemon Law) exclusively applies to complaints involving brand-new motor vehicles, thus disallowing application of RA 7394.

Whether the DTI and the DTI Secretary acted with grave abuse of discretion in applying RA 7394 instead of RA 10642 and imposing administrative fines.

Whether the vehicle's repair and subsequent release rendered the controversy moot and academic.