G.R. No. 76788 January 22, 1990 Juanita Salas
G.R. No. 76788 January 22, 1990 Juanita Salas
76788 January 22, 1990 WHEREFORE, and in view of all the foregoing, A perusal of the evidence shows that the amount of
judgment is hereby rendered ordering the defendant P58,138.20 stated in the promissory note is the
JUANITA SALAS, petitioner, to pay the plaintiff the sum of P28,414.40 with amount assumed by the plaintiff in financing the
vs. interest thereon at the rate of 14% from October 2, purchase of defendant's motor vehicle from the
HON. COURT OF APPEALS and FIRST FINANCE 1980 until the said sum is fully paid; and the further Violago Motor Sales Corp., the monthly
& LEASING CORPORATION, respondents. amount of P1,000.00 as attorney's fees. amortization of winch is Pl,614.95 for 36 months.
Considering that the defendant was able to pay twice
Arsenio C. Villalon, Jr. for petitioner. The counterclaim of defendant is dismissed. (as admitted by the plaintiff, defendant's account
Labaguis, Loyola, Angara & Associates for private
became delinquent only beginning May, 1980) or in
respondent. With costs against defendant. 1
the total sum of P3,229.90, she is therefore liable to
Both petitioner and private respondent appealed the pay the remaining balance of P54,908.30 at l4% per
FERNAN, C.J.: aforesaid decision to the Court of Appeals. annum from October 2, 1980 until full payment.
Assailed in this petition for review on certiorari is Imputing fraud, bad faith and misrepresentation WHEREFORE, considering the foregoing, the
the decision of the Court of Appeals in C.A.-G.R. against VMS for having delivered a different vehicle appealed decision is hereby modified ordering the
CV No. 00757 entitled "Filinvest Finance & Leasing to petitioner, the latter prayed for a reversal of the defendant to pay the plaintiff the sum of P54,908.30
Corporation v. Salas", which modified the decision trial court's decision so that she may be absolved at 14% per annum from October 2, 1980 until full
of the Regional Trial Court of San Fernando, from the obligation under the contract. payment. The decision is AFFIRMED in all other
Pampanga in Civil Case No. 5915, a collection suit respects. With costs to defendant. 2
between the same parties. On October 27, 1986, the Court of Appeals rendered
its assailed decision, the pertinent portion of which is Petitioner's motion for reconsideration was denied;
Records disclose that on February 6, 1980, Juanita quoted hereunder: hence, the present recourse.
Salas (hereinafter referred to as petitioner) bought a
The allegations, statements, or admissions contained In the petition before us, petitioner assigns twelve
motor vehicle from the Violago Motor Sales
in a pleading are conclusive as against the pleader. A (12) errors which focus on the alleged fraud, bad
Corporation (VMS for brevity) for P58,138.20 as
party cannot subsequently take a position faith and misrepresentation of Violago Motor Sales
evidenced by a promissory note. This note was
contradictory of, or inconsistent with his pleadings Corporation in the conduct of its business and which
subsequently endorsed to Filinvest Finance &
(Cunanan vs. Amparo, 80 Phil. 227). Admissions fraud, bad faith and misrepresentation supposedly
Leasing Corporation (hereinafter referred to as
made by the parties in the pleadings, or in the course released petitioner from any liability to private
private respondent) which financed the purchase.
of the trial or other proceedings, do not require proof respondent who should instead proceed against
Petitioner defaulted in her installments beginning and cannot be contradicted unless previously shown VMS. 3
May 21, 1980 allegedly due to a discrepancy in the to have been made through palpable mistake (Sec. 2,
Petitioner argues that in the light of the provision of
engine and chassis numbers of the vehicle delivered Rule 129, Revised Rules of Court; Sta. Ana vs.
the law on sales by description 4 which she alleges is applicable
to her and those indicated in the sales invoice, Maliwat, L-23023, Aug. 31, 1968, 24 SCRA 1018). here, no contract ever existed between her and VMS and therefore none had
certificate of registration and deed of chattel been assigned in favor of private respondent.
mortgage, which fact she discovered when the When an action or defense is founded upon a written
vehicle figured in an accident on 9 May 1980. instrument, copied in or attached to the
She contends that it is not necessary, as opined by
corresponding pleading as provided in the preceding
the appellate court, to implead VMS as a party to the
This failure to pay prompted private respondent to section, the genuineness and due execution of the
case before it can be made to answer for damages
initiate Civil Case No. 5915 for a sum of money instrument shall be deemed admitted unless the
because VMS was earlier sued by her for "breach of
against petitioner before the Regional Trial Court of adverse party, under oath, specifically denied them,
contract with damages" before the Regional Trial
San Fernando, Pampanga. and sets forth what he claims to be the facts (Sec. 8,
Court of Olongapo City, Branch LXXII, docketed as
Rule 8, Revised Rules of Court; Hibbered vs. Rohde
In its decision dated September 10, 1982, the trial Civil Case No. 2916-0. She cites as authority the
and McMillian, 32 Phil. 476).
court held, thus: decision therein where the court originally ordered
petitioner to pay the remaining balance of the motor
vehicle installments in the amount of P31,644.30 Corp., 6 this Court had the occasion to clearly distinguish between a (P58,138.20) Philippine currency, which amount
negotiable and a non-negotiable instrument.
representing the difference between the agreed includes interest at 14% per annum based on the
consideration of P49,000.00 as shown in the sales diminishing balance, the said principal sum, to be
invoice and petitioner's initial downpayment of Among others, the instrument in order to be payable, without need of notice or demand, in
P17,855.70 allegedly evidenced by a receipt. Said considered negotiable must contain the so-called installments of the amounts following and at the
decision was however reversed later on, with the "words of negotiability — i.e., must be payable to dates hereinafter set forth, to wit: P1,614.95 monthly
same court ordering defendant VMS instead to "order" or "bearer"". Under Section 8 of the for "36" months due and payable on the 21st day of
return to petitioner the sum of P17,855.70. Negotiable Instruments Law, there are only two each month starting March 21, 1980 thru and
Parenthetically, said decision is still pending ways by which an instrument may be made payable inclusive of February 21, 1983. P_________
consideration by the First Civil Case Division of the to order. There must always be a specified person monthly for ______ months due and payable on the
Court of Appeals, upon an appeal by VMS, docketed named in the instrument and the bill or note is to be ______ day of each month starting _____198__ thru
as AC-G.R. No. 02922. 5 paid to the person designated in the instrument or to and inclusive of _____, 198________ provided that
any person to whom he has indorsed and delivered interest at 14% per annum shall be added on each
Private respondent in its comment, prays for the the same. Without the words "or order or "to the unpaid installment from maturity hereof until fully
dismissal of the petition and counters that the issues order of", the instrument is payable only to the paid.
raised and the allegations adduced therein are a mere person designated therein and is therefore non-
rehash of those presented and already passed upon in negotiable. Any subsequent purchaser thereof will xxx xxx xxx
the court below, and that the judgment in the "breach not enjoy the advantages of being a holder of a
of contract" suit cannot be invoked as an authority as negotiable instrument, but will merely "step into the Maker; Co-Maker:
the same is still pending determination in the shoes" of the person designated in the instrument
(SIGNED) JUANITA SALAS _________________
appellate court. and will thus be open to all defenses available
against the latter. Such being the situation in the Address:
We see no cogent reason to disturb the challenged above-cited case, it was held that therein private
decision. respondent is not a holder in due course but a mere ____________________ ____________________
assignee against whom all defenses available to the
The pivotal issue in this case is whether the WITNESSES
assignor may be raised. 7
promissory note in question is a negotiable
instrument which will bar completely all the In the case at bar, however, the situation is different. SIGNED: ILLEGIBLE SIGNED: ILLEGIBLE
available defenses of the petitioner against private Indubitably, the basis of private respondent's claim TAN # TAN #
respondent. against petitioner is a promissory note which bears
all the earmarks of negotiability. PAY TO THE ORDER OF
Petitioner's liability on the promissory note, the due FILINVEST FINANCE AND LEASING
execution and genuineness of which she never The pertinent portion of the note reads: CORPORATION
denied under oath is, under the foregoing factual
milieu, as inevitable as it is clearly established. PROMISSORY NOTE VIOLAGO MOTOR SALES CORPORATION
(MONTHLY) BY: (SIGNED) GENEVEVA V. BALTAZAR
The records reveal that involved herein is not a Cash Manager 8
simple case of assignment of credit as petitioner P58,138.20
would have it appear, where the assignee merely San Fernando, Pampanga, Philippines A careful study of the questioned promissory note
steps into the shoes of, is open to all defenses Feb. 11, 1980 shows that it is a negotiable instrument, having
available against and can enforce payment only to complied with the requisites under the law as
the same extent as, the assignor-vendor. For value received, I/We jointly and severally, follows: [a] it is in writing and signed by the maker
promise to pay Violago Motor Sales Corporation or Juanita Salas; [b] it contains an unconditional
Recently, in the case of Consolidated Plywood order, at its office in San Fernando, Pampanga, the promise to pay the amount of P58,138.20; [c] it is
Industries Inc. v. IFC Leasing and Acceptance sum of FIFTY EIGHT THOUSAND ONE payable at a fixed or determinable future time which
HUNDRED THIRTY EIGHT & 201/100 ONLY is "P1,614.95 monthly for 36 months due and
payable on the 21 st day of each month starting We can only extend our sympathies to the defendant Montinola withaddress at Lucena, Quezon. After the
March 21, 1980 thru and inclusive of Feb. 21, 1983;" (herein petitioner) in this unfortunate incident. postal teller had made out money ordersnumbered
[d] it is payable to Violago Motor Sales Corporation, Indeed, there is nothing We can do as far as the 124685, 124687-124695, Montinola offered to pay
or order and as such, [e] the drawee is named or Violago Motor Sales Corporation is concerned since for them with a private checks were not generally
indicated with certainty. 9 it is not a party in this case. To even discuss the issue accepted in payment of money orders, the teller
as to whether or not the Violago Motor Sales advised him to see the Chief of the Money Order
It was negotiated by indorsement in writing on the Corporation is liable in the transaction in question Division, but instead of doing so, Montinola
instrument itself payable to the Order of Filinvest would amount, to denial of due process, hence, managed to leave building with his own check and
Finance and Leasing Corporation 10 and it is an indorsement improper and unconstitutional. She should have the ten(10) money orders without the knowledge of
of the entire instrument. 11
impleaded Violago Motor Sales.14 the teller.
Under the circumstances, there appears to be no IN VIEW OF THE FOREGOING, the assailed On the same date, April 18, 1958, upon discovery of
question that Filinvest is a holder in due course, decision is hereby AFFIRMED. With costs against the disappearance of the unpaid money orders, an
having taken the instrument under the following petitioner. urgent message was sent to all postmasters, and the
conditions: [a] it is complete and regular upon its following day notice was likewise served upon all
face; [b] it became the holder thereof before it was SO ORDERED. banks, instructing them not to pay anyone of the
overdue, and without notice that it had previously money orders aforesaid if presented for payment.
been dishonored; [c] it took the same in good faith Gutierrez, Jr., Feliciano, Bidin and Cortés, JJ.,
The Bank of America received a copy of said notice
and for value; and [d] when it was negotiated to concur.
three days later.
Filinvest, the latter had no notice of any infirmity in
the instrument or defect in the title of VMS On April 23, 1958 one of the above-mentioned
Corporation. 12 G.R. No. L-22405 June 30, 1971 money orders numbered 124688 was received by
appellant as part of its sales receipts. The following
Accordingly, respondent corporation holds the PHILIPPINE EDUCATION CO., INC., plaintiff- day it deposited the same with the Bank of America,
instrument free from any defect of title of prior appellant, and one day thereafter the latter cleared it with the
parties, and free from defenses available to prior vs. Bureau of Posts and received from the latter its face
parties among themselves, and may enforce payment MAURICIO A. SORIANO, ET AL., defendant- value of P200.00.
of the instrument for the full amount thereof. 13 This appellees.
being so, petitioner cannot set up against respondent the defense of nullity of On September 27, 1961, appellee Mauricio A.
the contract of sale between her and VMS.
Marcial Esposo for plaintiff-appellant. Soriano, Chief of the Money Order Division of the
Manila Post Office, acting for and in behalf of his
Even assuming for the sake of argument that there is Office of the Solicitor General Arturo A. Alafriz, co-appellee, Postmaster Enrico Palomar, notified the
an iota of truth in petitioner's allegation that there Assistant Solicitor General Antonio G. Ibarra and Bank of America that money order No. 124688
was in fact deception made upon her in that the Attorney Concepcion Torrijos-Agapinan for attached to his letter had been found to have been
vehicle she purchased was different from that defendants-appellees. irregularly issued and that, in view thereof, the
actually delivered to her, this matter cannot be amount it represented had been deducted from the
passed upon in the case before us, where the VMS DIZON, J.: bank's clearing account. For its part, on August 2 of
was never impleaded as a party. the same year, the Bank of America debited
An appeal from a decision of the Court of First
Instance of Manila dismissing the complaint filed by appellant's account with the same amount and gave it
Whatever issue is raised or claim presented against
the Philippine Education Co., Inc. against Mauricio advice thereof by means of a debit memo.
VMS must be resolved in the "breach of contract"
case. A. Soriano, Enrico Palomar and Rafael Contreras. On October 12, 1961 appellant requested the
On April 18, 1958 Enrique Montinola sought to Postmaster General to reconsider the action taken by
Hence, we reach a similar opinion as did respondent
purchase from the Manila Post Office ten (10) his office deducting the sum of P200.00 from the
court when it held:
money orders of P200.00 each payable to E.P. clearing account of the Bank of America, but his
request was denied. So was appellant's subsequent
request that the matter be referred to the Secretary of of America on September 27, 1961, It is to be noted in this connection that some of the
Justice for advice. Thereafter, appellant elevated the deducting from said Bank's clearing restrictions imposed upon money orders by postal
matter to the Secretary of Public Works and account the sum of P200.00 representing laws and regulations are inconsistent with the
Communications, but the latter sustained the actions the amount of postal money order No. character of negotiable instruments. For instance,
taken by the postal officers. 124688, or in the alternative, to indemnify such laws and regulations usually provide for not
the plaintiff in the said sum of P200.00 more than one endorsement; payment of money
In connection with the events set forth above, with interest thereon at the rate of 8-½% orders may be withheld under a variety of
Montinola was charged with theft in the Court of per annum from September 27, 1961 until circumstances (49 C.J. 1153).
First Instance of Manila (Criminal Case No. 43866) fully paid; without any pronouncement as
but after trial he was acquitted on the ground of to cost and attorney's fees. Of particular application to the postal money order in
reasonable doubt. question are the conditions laid down in the letter of
The case was appealed to the Court of First Instance the Director of Posts of October 26, 1948 (Exhibit 3)
On January 8, 1962 appellant filed an action against of Manila where, after the parties had resubmitted the to the Bank of America for the redemption of postal
appellees in the Municipal Court of Manila praying same stipulation of facts, the appealed decision money orders received by it from its depositors.
for judgment as follows: dismissing the complaint, with costs, was rendered. Among others, the condition is imposed that "in
cases of adverse claim, the money order or money
WHEREFORE, plaintiff prays that after The first, second and fifth assignments of error orders involved will be returned to you (the bank)
hearing defendants be ordered: discussed in appellant's brief are related to the other and the, corresponding amount will have to be
and will therefore be discussed jointly. They raise refunded to the Postmaster, Manila, who reserves the
(a) To countermand the notice given to the Bank of
this main issue: that the postal money order in right to deduct the value thereof from any amount
America on September 27, 1961, deducting from the
question is a negotiable instrument; that its nature as due you if such step is deemed necessary." The
said Bank's clearing account the sum of P200.00
such is not in anyway affected by the letter dated conditions thus imposed in order to enable the bank
represented by postal money order No. 124688, or in
October 26, 1948 signed by the Director of Posts and to continue enjoying the facilities theretofore
the alternative indemnify the plaintiff in the same
addressed to all banks with a clearing account with enjoyed by its depositors, were accepted by the Bank
amount with interest at 8-½% per annum from
the Post Office, and that money orders, once issued, of America. The latter is therefore bound by them.
September 27, 1961, which is the rate of interest
create a contractual relationship of debtor and That it is so is clearly referred from the fact that,
being paid by plaintiff on its overdraft account;
creditor, respectively, between the government, on upon receiving advice that the amount represented
(b) To pay to the plaintiff out of their own personal the one hand, and the remitters payees or endorses, by the money order in question had been deducted
funds, jointly and severally, actual and moral on the other. from its clearing account with the Manila Post
damages in the amount of P1,000.00 or in such Office, it did not file any protest against such action.
It is not disputed that our postal statutes were
amount as will be proved and/or determined by this
patterned after statutes in force in the United States. Moreover, not being a party to the understanding
Honorable Court: exemplary damages in the amount
For this reason, ours are generally construed in existing between the postal officers, on the one hand,
of P1,000.00, attorney's fees of P1,000.00, and the
accordance with the construction given in the United and the Bank of America, on the other, appellant has
costs of action.
States to their own postal statutes, in the absence of no right to assail the terms and conditions thereof on
Plaintiff also prays for such other and further relief any special reason justifying a departure from this the ground that the letter setting forth the terms and
as may be deemed just and equitable. policy or practice. The weight of authority in the conditions aforesaid is void because it was not issued
United States is that postal money orders are not by a Department Head in accordance with Sec. 79
On November 17, 1962, after the parties had negotiable instruments (Bolognesi vs. U.S. 189 Fed. (B) of the Revised Administrative Code. In reality,
submitted the stipulation of facts reproduced at pages 395; U.S. vs. Stock Drawers National Bank, 30 Fed. however, said legal provision does not apply to the
12 to 15 of the Record on Appeal, the above-named 912), the reason behind this rule being that, in letter in question because it does not provide for a
court rendered judgment as follows: establishing and operating a postal money order department regulation but merely sets down certain
system, the government is not engaging in conditions upon the privilege granted to the Bank of
WHEREFORE, judgment is hereby commercial transactions but merely exercises a Amrica to accept and pay postal money orders
rendered, ordering the defendants to governmental power for the public benefit. presented for payment at the Manila Post Office.
countermand the notice given to the Bank
Such being the case, it is clear that the Director of
Posts had ample authority to issue it pursuant to Sec.
1190 of the Revised Administrative Code.