Facts:

• Petitioners: Henry L. Koa and Virginia Koa.
• Respondents: Honorable Court of Appeals and BA Finance Corporation.
• On April 20, 1977, the Koa spouses secured a credit of P26,422.20 from People’s Car, Inc. for a Volkswagen Trakbayan de Luxe.
• The credit was backed by a promissory note with a 14% interest on unpaid installments, payable in monthly installments of P733.95 for 36 months, starting July 1, 1977.
• A penalty of P10.00 was imposed for each month of unpaid installments.
• The Koa spouses executed a chattel mortgage on the vehicle for compliance.
• On May 27, 1977, People’s Car, Inc. assigned the promissory note and chattel mortgage to BA Finance Corporation.
• The Koa spouses paid P14,679.00, leaving an unpaid balance of P12,236.98, plus interest and penalties.
• BA Finance Corporation filed a complaint for "Replevin with Damages" due to over six months of non-payment.
• The Koa spouses filed an Answer and a Third-Party Complaint against People’s Car, Inc.
• The Regional Trial Court ruled in favor of BA Finance Corporation, ordering payment of the unpaid balance and dismissing the third-party complaint.
• The Koa spouses appealed to the Court of Appeals, which affirmed the trial court's decision.
• Their motion for reconsideration was denied, leading to a petition for review on certiorari.

Issue:

• (Unlock)

Ruling:

• The Supreme Court found merit in the Koa spouses' argument that BA Finance Corporation was bound by the warranty obligations of People’s Car, Inc.
• The Court ruled that the Koa spouses should be exonerated from paying the balance due to the principle against unjust enrichment....(Unlock)

Ratio:

• The Supreme Court emphasized that when a seller assigns a credit to another party, the assignee inherits both the rights and obligations of the seller.
• BA Finance Corporation, as the assignee, was bound by the same terms as the original agreement with People’s Car, Inc.
• The Court cited...continue reading