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TOYOTA SHAW, INC., Petitioner, VS. COURT OF APPEALS AND LUNA L. SOSA, Respondents [G.R. No. 116650, May 23, 1995]

FACTS: Luna L. Sosa with son Gilbert went to the Toyota Shaw Boulevard office to purchase a Toyota Lite Ace. Bernardo, a sales representative who assured him that a unit would be ready for pick up on 17 June 1989 signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." that provides P100,000 down payment with no mention of the purchase price. Payment of balance as agreed would be by credit financing through BA Finance. Gilbert, on behalf of his father, signed the financing application. Sosa and Gilbert delivered the down payment and Bernardo accomplished a printed Vehicle Sales Proposal (VSP) in the name and address of Sosa, vehicle model and the payment by installment term by BA Finance but the spaces provided for “Delivery Terms” were not filled-up. On 17 June 1989 the car could not be delivered as BA Finance disapproved the application making the payment of the purchase price balance uncertain. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused and asked for refund of the down payment. Toyota issued a check for the full amount but Sosa thereafter sent demand letters for refund of the down payment plus interest and payment for damages to which Toyota refused to accede. Thus, Sosa filed with RTC a complaint for damages under Articles 19 and 21 of the Civil Code. Toyota alleged that no sale was entered into between it and Sosa.

ISSUE: WON there was a perfected contract of sale.

RULING: There was no perfected contract of sale. The “agreement” shows the absence of a meeting of minds between Toyota and Sosa. Bernardo signed it but Sosa did not. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of Sosa to pay a price certain appears therein. The down payment provision made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP confirmed. However, nothing was mentioned about a definite purchase price and the manner of installment payment which are essential elements of a binding and enforceable agreement to sell personal property. Since BA Finance disapproved the application, there was no sale on installment basis. Consequently, the VSP as a mere proposal created no demandable right in favor of Sosa and like the “agreement” may just be considered parts of the negotiation stage of a contract of sale.

CONSOLIDATED PLYWOOD INDUSTRIES, INC., HENRY WEE, AND RODOLFO T. VERGARA, Petitioners VS. IFC LEASING AND ACCEPTANCE CORPORATION, Respondent [ G.R. No. 72593, April 30, 1987 ]

FACTS: Consolidated Plywood Industries, Inc. needed two tractors for its logging business. AG & P through its sister company Industrial Products Marketing offered to sell two "Used" tractors. IPM inspected the job site and assured that the tractors were fit for the job and gave a 90-day warranty for machine performance and availability of parts. CPII officers Wee and Vergara purchased the tractors on installment and paid the down payment. The deed of sale with chattel mortgage with promissory note and the deed of assignment where IPM assigned its rights and interest in the chattel mortgage in favor of IFC Leasing and Acceptance Corp. were all executed on the same day by and among the parties. Barely 14 days after delivery, the tractors broke down. Mechanics were sent to do repairs but the tractors were no longer serviceable. CPII logging operations were delayed so Vergara advised IPM that the installment payments would likewise be delayed until it fulfills its obligation under its warranty.  IFC then filed a collection suit against petitioners for the recovery of the principal sum plus interest, attorney's fees and costs of suit contending that it was a holder in due course of a negotiable promissory note.

ISSUE: WON IFC is a holder in due course of a negotiable promissory note so as to bar all defenses of CPII against IPM.

HELD: IFC is not a holder in due course of a promissory note but was a mere assignee. The note in question is not a negotiable instrument for lack of the so-called words of negotiability. The seller-assignor IPM is liable for breach of warranty and such liability as a general rule extends to the corporation (IFC) to whom it assigned its rights and interests. Even assuming that the note is negotiable, IFC which actively participated in the sale on installment transaction from its inception cannot be regarded as a holder in due course. Thus, petitioners may raise against the respondent all defenses available to it as against the seller-assignor, IPM.