CASE DIGEST: Salas v. Hon. Court of Appeals

 

JUANITA SALAS, petitioner, vs. HON. COURT OF APPEALS and FILINVEST FINANCE & LEASING CORPORATION, respondents

G.R. No. 76788                  |              January 22, 1990

FACTS:

On February 6, 1980, Juanita Salas bought a motor vehicle from the Violago Motor Sales Corporation for P58,138.20 as evidenced by a promissory note. This note was subsequently endorsed to Filinvest Finance & Leasing Corporation which financed the purchase.

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.

This failure to pay prompted private respondent to initiate a civil case for sum of money against petitioner. The trial court ordered Salas to pay Filinvest and dismissed her counterclaim.

Both petitioner and private respondent appealed to the Court of Appeals. Imputing fraud, bad faith and misrepresentation against VMS for having delivered a different vehicle to petitioner, the latter prayed for a reversal of the trial court’s decision so that she may be absolved from the obligation under the contract.

The CA affirmed the trial court’s decision and his subsequent MTR was denied. Hence, the present recourse.

Petitioner argues that in the light of the provision of the law on sales by description which she alleges is applicable here, no contract ever existed between her and VMS and therefore none had been assigned in favor of private respondent. She contends that it is not necessary to implead VMS as a party to the case before it can be made to answer for damages because VMS was earlier sued by her for “breach of contract with damages” before the RTC of Olongapo City. She cites as authority the decision therein where the court originally ordered petitioner to pay the remaining balance of the motor vehicle installments in the amount ofP31,644.30 representing the difference between the agreed consideration of P49,000.00 as shown in the sales invoice and petitioner’s initial downpayment of P17,855.70 allegedly evidenced by a receipt.

Private respondent in its comment, 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, and that the judgment in the “breach of contract” suit cannot be invoked as an authority as the same is still pending determination in the appellate court.

ISSUE:

whether the promissory note in question is a negotiable instrument which will bar completely all the available defenses of the petitioner against private respondent.

RULING:

The records reveal that involved herein is not a simple case of assignment of credit as petitioner would have it appear, where the assignee merely steps into the shoes of, is open to all defenses available against and can enforce payment only to the same extent as, the assignor-vendor.

Among others, the instrument in order to be considered negotiable must contain the so-called “words of negotiability—i.e., must be payable to ‘order’ or ‘bearer.’ ” Under Section 8 of the Negotiable Instruments Law, there are only two ways by which an instrument may be made payable to order. There must always be a specified person named in the instrument and the bill or note is to be paid to the person designated in the instrument or to any person to whom he has indorsed and delivered the same. Without the words “or order” or “to the order of”, the instrument is payable only to the person designated therein and is therefore non-negotiable. Any subsequent purchaser thereof will not enjoy the advantages of being a holder of a negotiable instrument, but wil merely “step into the shoes” of the person designated in the instrument and will thus be open to all defenses available against the latter.

In the case at bar, the basis of private respondent’s claim against petitioner is a promissory note which bears all the earmarks of negotiability.

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.