Facts:

The case involves Mazda Quezon Avenue as the petitioner and Alexander Caruncho as the respondent. The events leading to the case began on January 12, 2011, when Caruncho purchased a brand-new 2011 Mazda 6 sedan from Mazda. Shortly after the purchase, Caruncho noticed a strange knocking and rattling sound emanating from the vehicle's hood. He promptly brought the car back to Mazda, requesting a full refund. However, Mazda's General Manager refused the refund and instead promised to fix the issue. After conducting road tests, Mazda's technicians identified a defective rack and pinion mechanism and assured Caruncho that it would be replaced during the vehicle's first 1,000-kilometer check-up. Despite this assurance, the knocking and rattling sound persisted, leading to multiple replacements of the defective part over the vehicle's three-year warranty period. On February 19, 2014, after a test drive confirmed the ongoing issue, Caruncho requested a full refund...

Facts:

Purchase of the Vehicle:

• On January 12, 2011, Alexander Caruncho (respondent) purchased a brand-new 2011 Mazda 6 sedan from Mazda Quezon Avenue (petitioner). The vehicle was covered by a three-year warranty.

Discovery of Defects:

• A week after the purchase, Caruncho noticed a knocking and rattling sound from under the vehicle's hood. He immediately brought the vehicle to Mazda and requested a refund, which was denied. Mazda instead assured him that the issue would be resolved.

Attempts to Resolve the Issue:

• Mazda's technicians identified the rack and pinion mechanism as defective. Despite five replacements of the defective part during the warranty period, the issue persisted. On February 19, 2014, Mazda's service manager confirmed that the problem remained unresolved.

Filing of Complaint:

• Caruncho demanded a full refund and compensation for consequential damages. On July 31, 2014, he filed a complaint with the Department of Trade and Industry (DTI), alleging a violation of the Consumer Act (Republic Act No. 7394).

DTI Adjudication:

• The DTI Adjudication Officer found Mazda liable for violating the Consumer Act and ordered Mazda to either replace the vehicle or reimburse the purchase price, less the three-year beneficial use of the car. Mazda was also fined Php25,000 and an additional Php1,000 for every day of delay in compliance.

Appeal to the Court of Appeals:

• Mazda appealed to the DTI Appeals Committee, which affirmed the Adjudication Officer's decision. Mazda then filed a Petition for Certiorari with the Court of Appeals, arguing that the defect was not a factory defect and that Caruncho's claim had prescribed. The Court of Appeals dismissed the petition, prompting Mazda to file this Petition for Review with the Supreme Court.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Liability for Product Imperfection:

   • Under Article 100 of the Consumer Act, suppliers are liable for product imperfections that render the product unfit for its intended use. The defect in the rack and pinion mechanism, which affected the vehicle's roadworthiness, constituted a product imperfection. Mazda's repeated attempts to fix the issue without success entitled Caruncho to a full refund under the law.

2. Prescription of Action:

   • Article 169 of the Consumer Act provides that the two-year prescriptive period for filing claims begins from the time the consumer transaction was consummated or, in the case of hidden defects, from the date of discovery. However, when a warranty period is agreed upon, the prescriptive period begins to run only after the warranty expires. Since Caruncho filed his complaint within two years of the warranty's expiration, his claim was timely.

3. Consumer Protection:

   • The Court emphasized that the Consumer Act is designed to protect consumers from defective products and unfair practices. Allowing Mazda to escape liability by claiming that the defect was not a factory defect would undermine the purpose of the law. The remedies provided under the Consumer Act, including full reimbursement, are deemed written into contracts without the need for express reference.

Conclusion:

The Supreme Court upheld the lower courts' rulings, finding Mazda liable for violating the Consumer Act and affirming Caruncho's right to a full refund. The Court also clarified that the prescriptive period for filing claims under the Consumer Act begins after the warranty period expires, ensuring that consumers are not unfairly penalized for relying on warranties to resolve defects.