SALAS V. CA

181 SCRA 296

FACTS:

Petitioner  bought  a  car  from  Viologo  Motor  Sales  Company,  which  was secured  by  a  promissory  note,  which  was  later  on  indorsed  to  Filinvest Finance,  which  financed  the  transaction.    Petitioner  later  on  defaulted  in her  installment  payments,  allegedly  due  to  the  fraud  imputed  by  VMS  in
selling her a different vehicle from what was agreed upon.  This default in payment  prompted  Filinvest  Finance  to  initiate  a  case  against  petitioner.  The  trial  court  decided  in  favor  of  Filinvest,  to  which  the  appellate  court upheld by increasing the amount to be paid.

It is the contention of petitioner that since the agreement between her and the  motor  company  was  inexistent,  none  had  been  assigned  in  favor  of private respondent.  
 

HELD:

Petitioner’s  liability  on  the  promissory  note,  the  due  execution  and genuineness of which she never denied under oath, is under the foregoing factual milieu, as inevitable as it is clearly established.  
 
The records reveal that involved herein is not a simple case of assignment of  credit  as  petitioner  would  have  it  appear,  where  the  assignee  merely steps  into  the  shoes  of,  is  open  to  all  defenses  available  against  and  can enforce payment only to the same extent as, the assignor-vendor.
 
The  instrument  to  be  negotiable  must  contain  the  so-called  words  of negotiability.    There  are  only  2  ways  for  an  instrument  to  be  payable  to order.  There must always be a specified person named in the instrument and the bill or note is to be paid to the person designated in the instrument or  to  any  person  to  whom  he  has  indorsed  and  delivered  the  same.  Without the words “or order” or “to the order of”, the instrument is payable only  to  the  person  designated  therein  and  is  thus  non-negotiable.    Any subsequent  purchaser  thereof  will  not  enjoy  the  advantages  of  being  a
holder  in  due  course  but  will  merely  step  into  the  shoes  of  the  person designated  in  the  instrument  and  will  thus  be  open  to  the  defenses available against the latter.  
 
In  the  case  at  bar,  the  promissory  notes  is  earmarked  with  negotiability and Filinvest is a holder in due course.