Case Summary (G.R. No. 76788)
Trial Court Ruling
The Regional Trial Court of San Fernando, Pampanga, in Civil Case No. 5915, denied petitioner’s counterclaims and ordered her to pay P28,414.40 plus 14% interest from October 2, 1980 and P1,000 attorney’s fees.
Court of Appeals Modification
On appeal, the Court of Appeals held that petitioner admitted the amount due by her pleadings and evidence of payments (P3,229.90). It modified the judgment, ordering payment of the remaining balance, P54,908.30, at 14% interest from October 2, 1980, affirming all other aspects of the RTC decision.
Issues on Fraud and Sales by Description
Petitioner assigned errors based on alleged fraud, misrepresentation, and bad faith by VMS. She argued that under Article 1481 (sales by description), the contract was void and that she owed no obligation to Filinvest, which only “stepped into VMS’s shoes.” She also cited a separate pending breach-of-contract suit against VMS in Olongapo City.
Standard of Review and Defenses Against a Negotiable Instrument
The Court examined whether defenses against VMS could be asserted against Filinvest, the assignee of a negotiable promissory note. Under Rule 129 and the Negotiable Instruments Law, admissions of a written instrument attached to a pleading are conclusive unless specifically denied under oath.
Negotiability of the Promissory Note
The promissory note fulfilled the Negotiable Instruments Law requisites: written and signed promise to pay a definite sum; payable at fixed future dates; payable to VMS or order; and containing “to the order of” language. The note was duly endorsed to Filinvest.
Holder in Due Course Criteria
Filinvest acquired the note in good faith, for value, before maturity, without notice of dishonor or defect. As a holder in due course, Filinvest holds the instrument free from prior parties’ defenses and
...continue readingCase Syllabus (G.R. No. 76788)
Facts
- On February 6, 1980, petitioner Juanita Salas purchased a motor vehicle from Violago Motor Sales Corporation (VMS) for ₱58,138.20, evidenced by a promissory note.
- The promissory note was endorsed by VMS to Filinvest Finance & Leasing Corporation, which financed the purchase.
- Petitioner defaulted on installments beginning May 21, 1980, alleging discrepancies in the engine and chassis numbers of the delivered vehicle, discovered after an accident on May 9, 1980.
- Filinvest initiated Civil Case No. 5915 before the Regional Trial Court (RTC) of San Fernando, Pampanga, to collect the unpaid balance.
Trial Court Decision
- Decision dated September 10, 1982, ordered petitioner to pay Filinvest ₱28,414.40 with 14% interest from October 2, 1980 until fully paid.
- Awarded Filinvest ₱1,000.00 as attorney’s fees and imposed costs against petitioner.
- Petitioner’s counterclaim was dismissed.
Appeal to the Court of Appeals
- Both parties appealed RTC Decision in C.A.-G.R. CV No. 00757.
- Petitioner alleged fraud, bad faith, and misrepresentation by VMS to avoid her payment obligation.
- On October 27, 1986, the Court of Appeals modified the RTC judgment:
- Found the original principal of ₱58,138.20 and monthly amortization of ₱1,614.95 for 36 months.
- Credited petitioner’s two payments totaling ₱3,229.90, leaving a balance of ₱54,908.30.
- Ordered petitioner to pay the remaining ₱54,908.30 with 14% interest per annum from October 2, 1980 until full payment.
- Affirmed the RTC decision in all other respects and awarded costs to petitioner (defendant in the collection suit).
Petition for Review on Certiorari
- Petitioner’s mot