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Violago v. BA Finance- "Sale of car / sold to somebody
else--there was no considerationdue to non-delivery"Avelino
Violago, the President of Violago Motor (VMSC), offered to sell a
car to his cousinand to the latter's wife. Avelino told them that
the spouses would just have to pay adownpayment of P60K, and that
the balance would be financed by BA Finance. The spousesagreed to
buy the car from VMSC. Subsequently, the spouses and Avelino signed
a
promissory note under which they bound themselves to pay jointly
and severally to theorder of VMSC the amount of P209K in 36 monthly
installments. VMSC issued a salesinvoice in favor of the spouses.
The spouses executed a chattel mortgage over the car infavor of
VMSC as security for the amount. VMSC, through Avelino, endorsed
the promissorynote the BA Finance without recourse. After receiving
the amount of P209K, VMSC executeda deed of assignment of its
rights and interests under the promissory note and chattelmortgage
in favor of BA Finance. It turns out that the same car has already
been sold toanother person (another cousin of Avelino). Despite the
spouses' demand for the car andAvelino's repeated assurances, there
was no delivery of the vehicle. Since VMSC failed todeliver the
car, the spouses did not pay any monthly amortization to BA
Finance. BAFinance then filed a case with the RTC, praying for the
delivery of the vehicle, or thepayment of the amount due plus
penalties and interests. The spouses allege that BAFinance was not
a holder in due course. They say that since they never received the
vehicle
from VMSC, they could set up this defense against BA
Finance.
The law presumes that a holder of a negotiable instrument is a
holder in due course. In thiscase, BA Finance met all of the
requisites of a holder in due course. (1) The PN is completeand
regular; (2) it was duly endorsed by VMSC in favor of BA Finance;
(3) BA Financereceived the PN in good faith and for value; (4) BA
Finance was never informed that thevehicle was previously sold to
another and was not delivered to the spouses. A holder indue course
holds the instrument free from any defect of title of prior
parties. BAFinance may enforce payment of the instrument without
prejudice of the spousesseeking recourse from Avelino.
BPI v. Roxas- "Cashier's check/ vegetable oil / holder for
value"
Roxas was a trader and he delivered vegetable oil to spouses
Cawili. As payment therefor,spouses Cawili issued a personal check
in the amount of P348K. However, when Roxas triedto encash the
check, it was dishonored by the drawee bank. The spouses then
assuredRoxas that they would replace the bounced check with a
cashier's check from BPI. Roxasand Cawili went to BPI Shaw branch.
Upon the instructions of the branch manager of BPI,the bank teller
prepared a BPI cashier's check for the amount of P348K drawn
against theaccount of Cawili, payable to Roxas. The following day,
Roxas returned to BPI Shaw toencash the check but it was
dishonored. He was informed that Cawili's account was closedon that
date. Roxas was told by his lawyer to deposit the said check in his
account atCitytrust, however, the check was dishonored on the
ground "Account Closed." Roxas fileda case with the RTC for
collection of a sum of money against BPI. BPI claims that is
issuedthe check by mistake and in good faith, and that there was
lack of consideration. BPI allegesthat Roxas was not a holder in
due course.
BPI's contention lacks merit. Section 25 of the NIL states that
"Value is any considerationsufficient to support a simple contract.
An antecedent or pre-existing debt constitutesvalue; and is deemed
as such whether the instrument is payable on demand or at a
futuretime." There is no dispute that Roxas received Cawili's
cashier's checks as payment forthe vegetable oil. The fact that it
was Rodrigo who purchased the cashier's check fromBPI will not
affect Roxas's status as holder for value, since the check was
delivered tohim as payment for the vegetable oil he sold to spouses
Cawili.
