DIAZMEAN KYLA G.

SOTELO
2020

Salas v. CA and First Finance and leasing Corp.

Topic: Distinctions between negotiable and non-negotiable instrument
Instrument: PN (58,138.20 pesos)
Maker: Juanita Salas
Payee: Violago Motor Sales Corp.
Vialogo Motor Sales Corp. --- Filinvest Finance & Leasing Corp.
Facts:
 On Feb. 6, 1980, Juanita Salas bought a motor vehicle from Violago Motor Sales Corp.
for 58,138.20 pesos as evidenced by a PN. This PN was subsequently indorsed to
Filinvest Finance & Leasing Corp. which financed the purchase.
 Salas defaulted in her installments from May 1980 due to a discrepancy in the engine and
chassis numbers of the vehicle delivered as indicated in the sales invoice, certificate of
registration and deed of chattel mortgage she discovered when the motor vehicle figured
in an accident on that month.
 Such default in payment prompted FILINVEST to initiate a civil case against petitioner
in RTC San Fernando, Pampanga.
 RTC: ordered defendant to pay the sum of 28,414 with interest thereon at the rate of 14%
from Oct. 2, 1980 and additional 1,000 for atty’s fees.
 Salas prayed for the reversal of the decision on the ground of fraud, bad faith and
misrepresentation against VMS so that she may be absolved of such obligation.
 CA: modified RTC’s decision – ordering Salas to pay 54,908.30 at 14% per annum from
Oct. 2, 1980.
 Salas’ petition for review focuses on the following errors: failure to consider alleged
fraud, bad faith and misrepresentation of VMS.
 Salas argues that by virtue of these, she must be released of liability and payment should
have been proceeded against VMS; no contract existed between her and VMS and
therefore, none had been assigned in favor of FILINVEST.
 FILINVEST argues that these issues have already been raised and passed upon by the
lower court and that breach of contract cannot be invoked as the same is still pending
determination in CA (separate case).
Issue: Whether the PN in question is a negotiable instrument which will bar completely all the
available defenses of Salas against FILINVEST.
Ruling:
 The entirety of the instrument complies with Sec. 1 of the NIL and is therefore, a
negotiable instrument which was negotiated by indorsement and payable to the order of
FILINVEST.
 FILINVEST appears to be a holder in due course, having taken the instrument under the
requisites provided in Sec. 52 of NIL.
 DIAZMEAN KYLA G. SOTELO
2020
 Respondent corporation holds the instrument free from any defect in the title and free
from defenses available to prior parties among themselves; and may enforce payment of
the instrument for the full amount thereof.
 The matter of deception and misrepresentation cannot be passed upon in the case as VMS
was never impleaded as a party; must be settled in the breach of contract case.
 SC: affirmed CA’s decision = ordering Salas to pay 54,908.30 at 14% per annum from
Oct. 2, 1980.