G.R. No. 257084 - Toyota Motors Philippines Corp. vs. Aguilar

Esmeralda Aguilar purchased a Toyota Wigo on installment from Toyota Fairview, Inc. (TFI).
Barely two weeks after the vehicle was released to her, it exhibited erratic behavior characterized by:

A malfunctioning steering wheel that became difficult to turn or rotate.
A loud and annoying noise emanating from beneath the brake and accelerator pads.

The vehicle underwent its 1,000-km maintenance check on May 23, 2016, during which Aguilar also had the alarm system installed at TFI’s accessories department.
Following the initial maintenance, the car experienced a series of repairs for the same defect on multiple dates:

For all these repairs, Aguilar alleged that TFI never issued any repair order or service report, thus creating a record-keeping issue.

Owing to the persistent defects and lack of proper documentation, Aguilar filed a complaint with the Department of Trade and Industry (DTI) Adjudication Division for Product and Service Imperfections under the Consumer Act.
The DTI Adjudication Division:

Issued an order on October 24, 2016, noting that Toyota Motors Philippines (TMP) had waived its opportunity to file a position paper by failing to comply with the directive in the Notice of Adjudication.
Rendered its Decision on October 25, 2016, ordering:

The replacement of the subject vehicle by another of the same kind, in a perfect state of use.
The payment of an administrative fine amounting to PhP240,000.00.

Observed that the vehicle’s steering defect constituted a genuine safety concern that persisted despite a series of repairs.
Denied Aguilar’s claim for the refund of the purchase price, allowing only the replacement remedy since the defect was identified within the warranty period.
Ruled that Aguilar could not invoke the rights under the Philippine Lemon Law (R.A. 10642) due to her failure to comply with the written notice requirement.

On February 24, 2018, the DTI Secretary set aside the October 25, 2016 Decision of the Adjudication Division and reaffirmed the remedy orders:

To replace the defective vehicle with another of the same kind, in perfect condition.
To impose a joint and several liability on TMP and TFI by ordering them to pay PhP240,000.00 within fifteen days.

The DTI Secretary found no grave abuse of discretion in the Adjudication Division’s reliance on substantive evidence, despite the absence of TMP’s position paper.
Determined that the defect persisted beyond the 30-day period allowed by law.
Noted that TFI may have acted in bad faith by allowing the installation of an accessory (alarm system) that was not authorized, thereby potentially exacerbating the vehicle’s defect.

Dismissed the consolidated petitions filed by TMP for lack of merit.
Ruled that TMP was not denied its right to due process despite the failure to wait for its position paper, since both parties were given equal opportunity in an amicable settlement proceeding.

The CA extended its deference to the DTI’s specialized findings on the technical issue of product imperfection, affirming that:

TMP and TFI were jointly liable under Article 100(a) of the Consumer Act.
The persistent defect, specifically the steering issue remaining unresolved for more than 30 days, justified the consumer’s option for a replacement.
TFI could not escape liability by claiming it was merely a distributor or dealer rather than the manufacturer.

TMP argued that the DTI Adjudication Division erroneously equated a mediation conference with the filing of a required position paper.
Contended that its position paper was duly filed by registered mail on October 21, 2016, which should be recognized as timely.
Maintained that the DTI should have waited for the position paper before rendering a decision, allowing for the lapse of reasonable time for receipt.
Asserted that the persistent defect in the steering system was not supported by substantial evidence, claiming that repairs had successfully resolved the issue as of September 28, 2016.
Further submitted that the malfunction of the steering system was due to the improper installation of an unauthorized after-market accessory at TFI’s concessionaire, not an inherent quality imperfection in the vehicle.
Insisted that the vehicle was free from quality defects when released to Aguilar on April 23, 2016, with the problems arising solely after the accessory installation.

Whether TMP was denied its right to due process because the DTI Adjudication Division rendered its decision without awaiting its position paper.

Whether TMP and TFI are jointly and severally liable for product and service imperfections under the Consumer Act.