G.R. No. 232688 , April 26, 2021
MAZDA QUEZON AVENUE, PETITIONER, VS. ALEXANDER CARUNCHO, RESPONDENT.

FACTS

On January 12, 2011, respondent Alexander Caruncho purchased a brand-new 2011 Mazda 6 sedan from petitioner Mazda Quezon Avenue. A week after purchase, Caruncho noticed a knocking and rattling sound from under the hood. He immediately brought the vehicle to Mazda and requested a refund, which was refused. Mazda’s technicians identified a defective rack and pinion mechanism and assured Caruncho it would be fixed, even suggesting a replacement after the first 1,000-kilometer check-up. Despite this, the problem persisted. During the vehicle’s three-year warranty period, Mazda replaced the defective part five times, but the knocking and rattling sound remained. On February 19, 2014, Mazda’s personnel confirmed the unresolved issue. Consequently, Caruncho demanded a full refund and compensation for damages. On July 31, 2014, he filed a complaint against Mazda before the Department of Trade and Industry (DTI).
Mazda, in its defense, argued that Caruncho had used the vehicle for three years and accumulated 30,000 kilometers, and that the sound did not constitute a factory defect warranting unit replacement, but only obligated them to service the vehicle under the warranty terms. The DTI Adjudication Officer found Mazda liable for violating the Consumer Act, ordering either replacement of the unit or reimbursement of the purchase price (less three years of beneficial use), plus administrative fines. The DTI Appeals Committee affirmed this decision. Mazda filed a Petition for Certiorari with the Court of Appeals, which was dismissed. Mazda then elevated the case to the Supreme Court via a Petition for Review.

ISSUE

Whether the Court of Appeals erred in not finding grave abuse of discretion on the part of the DTI Appeals Committee when it held petitioner Mazda Quezon Avenue liable for violating the Consumer Act for selling a defective vehicle.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court held that the defect constituted a “product imperfection” under Article 100 of the Consumer Act ( Republic Act No. 7394 ), as it rendered the vehicle unfit or inadequate for its intended purpose. The repeated failure to correct the defect within the warranty period entitled the consumer to the remedies under the law, including reimbursement of the purchase price. The Court further ruled that the two-year prescriptive period for actions under the Consumer Act (Article 169) began to run only from the expiration of the agreed warranty period. Since the warranty was for three years and the complaint was filed within that period (on July 31, 2014), the action had not prescribed. Petitioner’s compliance with its own warranty provisions for repair and service did not absolve it of its liability under the mandatory provisions of the Consumer Act.