JUANITA SALAS, Petitioner,
vs.
COURT OF APPEALS and FIRST FINANCE & LEASING
CORPORATION, respondents.
G.R. No. 76788, January 22, 1990
Facts:
Petitioner Salas bought a motor vehicle from the Violago Motor Sales Corporation
(VMSC) evidenced by a promissory note. VMSC subsequently endorsed to Private
Respondent Filinvest Finance & Leasing Corporation which financed the purchase.
Petitioner defaulted in her installments 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.
This failure to pay prompted private respondent to initiate a case for the collection
of a sum of money against petitioner before the Regional Trial Court of Pampanga.
The trial court decided against Salas. Both petitioner and private respondent
appealed the aforesaid decision to the Court of Appeals.
Imputing fraud, bad faith and misrepresentation against VMS for having delivered
a different vehicle to petitioner, the Salas prayed for a reversal of the trial court's
decision so that she may be absolved from the obligation under the contract.
The Court of Appeals rendered its assailed decision. Petitioner's motion for
reconsideration was denied; hence, the present recourse.
Issue:
WON the promissory note in question is a negotiable instrument which will bar
completely all the available defenses of the petitioner against private 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.
In the case at bar, however, the situation is different. Indubitably, the basis of
private respondent's claim against petitioner is a promissory note which bears all
the earmarks of negotiability.
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.
Doctrine:
HOLDER IN DUE COURSE: [COFI] (a) That it is complete and regular upon its
face; (b) That he became the holder of it before it was overdue, and without notice
that it has been previously dishonored, if such was the fact; (c) That he took it in
good faith and for value; (d) That at the time it was negotiated to him, he had no
notice of any infirmity in the instrument or defect in the title of the person
negotiating it.
