Case Summary (G.R. No. 232688)
Key Dates
• Vehicle purchase: January 12, 2011
• Final test drive confirming defect: February 19, 2014
• Administrative complaint filed: July 31, 2014
• DTI Adjudication Officer’s Decision: December 1, 2014
• DTI Appeals Committee Decision: January 8, 2015
• Court of Appeals Decision: April 3, 2017; Resolution denying reconsideration: July 6, 2017
• Supreme Court Decision date omitted per instruction
Applicable Constitutional and Statutory Framework
• 1987 Philippine Constitution, Article XII, Section 15 (State policy on consumer protection)
• Republic Act No. 7394 (Consumer Act of the Philippines, 1992)
• Department of Trade and Industry Administrative Order No. 2, s. 1993 (Implementing Rules)
• New Civil Code of the Philippines, Article 1561 (warranty against hidden defects)
Factual Background
Shortly after purchasing a new 2011 Mazda 6, respondent detected a persistent knocking and rattling sound. Mazda’s general manager refused a refund but assured repairs under its three-year warranty. Technicians identified a defective rack-and-pinion mechanism, which was replaced on five occasions during the warranty period, yet the noise persisted.
Administrative Proceedings
Respondent sought a full refund and damages before the DTI Consumer Assistance and Protection Division. Mazda argued continued vehicle operability, compliance with its Warranty Information and Maintenance Record, and absence of a factory defect.
DTI Decisions
• Adjudication Officer (Dec. 1, 2014): Found Mazda liable under RA 7394, Art. 100; ordered replacement or reimbursement (less depreciation), administrative fines, and daily penalties for delay.
• Appeals Committee (Jan. 8, 2015): Affirmed the Adjudication Officer’s Decision, dismissing Mazda’s appeal.
Court of Appeals Proceedings
Mazda filed a petition for certiorari alleging grave abuse of discretion and prescription of action. The Court of Appeals ruled that the defect was integral to the vehicle’s roadworthiness and that the two-year prescription should run from the end of the three-year warranty. Petition denied; motion for reconsideration denied.
Issues before the Supreme Court
- Whether Mazda was liable under the Consumer Act for an unresolved product imperfection.
- Whether respondent’s action had prescribed under RA 7394, Art. 169.
Liability for Product Imperfection under RA 7394
• Article 100 imposes joint liability on suppliers for defects rendering products unfit for their intended use; if uncorrected within the agreed warranty period, the consumer may demand replacement, reimbursement, or price reduction.
• DAO 2-1993, Rule III, Section 2.1 defines imperfection as rendering a product unfit for its designed purpose.
• The rack-and-pinion defect persisted after five replacements, evidencing a product imperfection affecting roadworthiness.
• Warranty provisions cannot derogate from statutorily mandated remedie
Case Syllabus (G.R. No. 232688)
Facts of the Case
- On January 12, 2011, respondent Alexander Caruncho purchased a brand-new 2011 Mazda 6 sedan from petitioner Mazda Quezon Avenue.
- One week after purchase, Caruncho detected a persistent knocking and rattling sound from under the hood.
- He immediately requested a full refund, but the General Manager refused and guaranteed to fix the defect.
- Technicians identified a defective rack and pinion mechanism and promised replacement after the 1,000-kilometer check-up.
- Despite five successive replacements of the rack and pinion part during the three-year warranty period, the noise persisted.
- On February 19, 2014, a service manager and mechanic confirmed the defect remained. Caruncho then demanded a refund and compensation for consequential damages.
- On July 31, 2014, Caruncho filed a complaint before the DTI Consumer Assistance and Protection Division.
Procedural History
- The DTI Adjudication Officer (ADM. Case No. CRM14-66296, December 1, 2014) found Mazda liable under Republic Act No. 7394 (Consumer Act) and ordered replacement or reimbursement plus fines.
- Mazda appealed to the DTI Appeals Committee (Appeal Case No. 015-02, January 8, 2015), which affirmed the Adjudication Officer’s decision.
- Mazda filed a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 141371), alleging grave abuse of discretion and prescription; the CA dismissed the petition on April 3, 2017, and denied reconsideration on July 6, 2017.
- Mazda elevated the case to the Supreme Court via Petition for Review.
Issues
- Whether the Court of Appeals erred in holding Mazda liable for violation of