The Puerto Rico Court of Appeals recently ruled in favor of Tesla Puerto Rico, LLC, reversing a previous decision by the Department of Consumer Affairs (DACO) that ordered the cancellation of a vehicle sale. This ruling affects Edwin Casanova Cordero, the consumer who filed the complaint, and highlights important issues regarding consumer rights and contract law in Puerto Rico.

The case, Edwin Casanova Cordero v. Banco Popular De Puerto Rico Liberty Mutual Insurance Company Tesla Puerto Rico, LLC, was filed under docket number TA2026AP00149 on August 10, 2026. The court's decision, issued on August 10, 2026, emphasizes the legal standards governing the cancellation of sales contracts and the obligations of both consumers and sellers.

Background

Edwin Casanova Cordero purchased a 2023 Tesla Model Y, which he financed partially through Popular Auto. Cordero filed a complaint with DACO on October 3, 2023, seeking to cancel the sale due to several alleged issues with the vehicle, including malfunctioning features such as the Sentry Mode, cabin overheat protection, and automatic wipers. He argued that these issues constituted a breach of the sales contract.

Tesla responded to the complaint, asserting that the vehicle was functioning as intended and that the concerns raised by Cordero were related to features that did not affect the vehicle's primary use as transportation. Following an inspection by DACO, which found no significant defects, DACO ruled in favor of Cordero on December 4, 2025, ordering Tesla to refund Cordero's down payment and cancel the contract.

The Ruling

The Court of Appeals, led by Judge Díaz Rivera, reviewed DACO's decision and found that the agency had erred in its ruling. The court stated, "the interpretation of the DACO did not represent a reasonable exercise of its administrative discretion." It emphasized that the issues raised by Cordero were related to accessory features of the vehicle that did not impair its overall functionality.

The court concluded that the Sentry Mode and enhanced autopilot features, which Cordero claimed were not functioning properly, were not essential to the vehicle's operation. The court noted that Tesla had acted proactively to address Cordero's concerns and that the vehicle did not present any defects that would warrant cancellation of the sales contract.

Impact

This ruling has significant implications for consumer rights in Puerto Rico, particularly regarding the cancellation of contracts for vehicles and other goods. It clarifies that not all issues with a product, especially those related to non-essential features, can justify the cancellation of a sales contract. Consumers may need to demonstrate that defects affect the primary use of the product to seek cancellation.

The decision also reinforces the principle that administrative agencies like DACO must exercise their discretion reasonably and base their decisions on substantial evidence. This ruling may set a precedent for future cases involving consumer complaints about product defects and the obligations of sellers to address such concerns.

What's Next

While Tesla has won this round, it remains to be seen if Edwin Casanova Cordero will appeal the decision or if there are any related cases pending that could further clarify consumer rights in Puerto Rico. The court's ruling underscores the importance of understanding the legal framework surrounding consumer transactions and the responsibilities of both parties in such agreements.