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Salas V CA

The case discusses a promissory note signed by Juanita Salas to purchase a vehicle. Salas defaulted on payments claiming issues with the vehicle details. The court ruled the promissory note was a negotiable instrument, and was transferred to Filinvest Finance who was a holder in due course, so Salas defenses against the original seller did not apply to Filinvest.

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Karen Ryl Lozada Brito
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33 views

Salas V CA

The case discusses a promissory note signed by Juanita Salas to purchase a vehicle. Salas defaulted on payments claiming issues with the vehicle details. The court ruled the promissory note was a negotiable instrument, and was transferred to Filinvest Finance who was a holder in due course, so Salas defenses against the original seller did not apply to Filinvest.

Uploaded by

Karen Ryl Lozada Brito
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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JUANITA SALAS v CA and FILINVEST

FACTS: Records disclose that on February 6, 1980, Juanita Salas (hereinafter referred to as petitioner)
bought a motor vehicle from the Violago Motor Sales Corporation (VMS for brevity) for P58,138.20 as
evidenced by a promissory note.

Petitioner defaulted in her installments beginning May 21, 1980 allegedly due to a discrepancy in the
engine and chassis numbers of the vehicle delivered to her and those indicated in the sales invoice,
certificate of registration and deed of chattel mortgage, which fact she discovered when the vehicle
figured in an accident on 9 May 1980.

In its decision dated September 10, 1982, the trial court held, thus:

"WHEREFORE, and in view of all the foregoing, judgment is hereby rendered ordering the defendant to
pay the plaintiff the sum of P28,414.40 with interest thereon at the rate of 14% from October 2, 1980
until the said sum is fully paid; and the further amount of P1,000.00 as attorney's fees.

Both parties appealed to the CA

Salas, imputing fraud to the VMS, prayed for the reversal of the lower court’s decision and be absolved
of her obligation.

However, the CA affirmed the decision with modification.

Thus, the case was elevated to the Supreme Court.

Salas argues that in light of the provision on sales by description, no contract whatsoever existed
between her and VMS and therefore none had been assigned in favour of private respondent. On the
other hand, private respondent prays for the dismissal of the petition and counters that the issues raised
and the allegations adduced therein are a mere rehash of those presented and already passed upon in
the court below.

ISSUE: W/N the promissory note is a negotiable instrument which will bar completely all the available
defences of the petitioner against the respondent.

RULING:

Yes, A careful study of the questioned promissory note shows that it is a negotiable instrument, having
complied with the requisites under the law as follows:

[a] it is in writing and signed by the maker Juanita Salas;

[b] it contains an unconditional promise to pay the amount of P58,138.20;

[c] it is payable at a fixed or determinable future time which is "P1,614.95 monthly for 36
months due and payable on the 21st day of each month starting March 21, 1980 thru and
inclusive of Feb. 21, 1983;"

[d] it is payable to Violago Motor Sales Corporation, or order and as such,

[e] the drawee is named or indicated with certainty.


It was negotiated by indorsement in writing on the instrument itself payable to the Order of Filinvest
Finance and Leasing Corporation and it is an indorsement of the entire instrument.

Under the circumstances, there appears to be no question that Filinvest is a holder in due course, having
taken the instrument under the following conditions:

[a] it is complete and regular upon its face;

[b] it became the holder thereof before it was overdue, and without notice that it had previously
been dishonored;

[c] it took the same in good faith and for value; and

[d] when it was negotiated to Filinvest, the latter had no notice of any infirmity in the
instrument or defect in the title of VMS Corporation.

Accordingly, respondent corporation holds the instrument free from any defect of title of prior parties,
and free from defenses available to prior parties among themselves and may enforce payment of the
instrument for the full amount thereof. This being so, petitioner cannot set up against respondent the
defense of nullity of the contract of sale between her and VMS.

Disposition: In view of the foregoing, the assailed decision is hereby affirmed. With costs against
petitioner.

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