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Consolidated Plywood Industries Vs

Consolidated Plywood Industries Vs

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Published by: David Lawrenz Samonte on Jul 09, 2012
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11/14/2014

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CONSOLIDATED PLYWOOD INDUSTRIES VS. IFC LEASING & ACCEPTANCE CORP.149 SCRA 448 (1987)Facts:Consolidated Plywood Industries Inc. (CPII) is a corporation engaged in the logging business. Ithad for its program of logging activities the opening of additional roads, and simultaneous loggingoperations along the route of said roads. With this, it requires two more units of tractors to attain its
objective. Atlantic Gulf and Pacific Company of Manila’s sister company, Industrial Products Marketing
(IPM), offered to sell to CPII 2 "Used" Allis Crawler Tractors. IPM assured CPII that the "Used" AllisCrawler Tractors which were offered are fit for the job, and gave the corresponding warranty of 90 daysperformance of the machines and availability of parts. The president and vice president of CPII, agreedto purchase on installment said 2 units of "Used" Allis Crawler Tractors
relying on IPM’s guarantee. They
paid a down payment of 210,000.00. After issuance of the sales invoice, the deed of sale with chattelmortgage with promissory note was executed. Simultaneously with the execution of the deed of salewith chattel mortgage with promissory note, IPM, by means of a deed of assignment, assigned its rightsand interest in the chattel mortgage in favor of IFC Leasing and Acceptance Corporation. Immediately
thereafter, IPM delivered said 2 units of "Used “tractors to CPII's jobsite as agreed
upon. Eventually, oneof the tractors broke down, 9 days subsequent to the incident; the other tractor also broke down. IPMsent mechanics to fix the tractors but was unable to do so as the units were not serviceable. Due to this,the road building and simultaneous logging operations were delayed. The Vice President of CPII advisedIPM that the payments of the installments as listed in the promissory note would likewise be delayeduntil IPM completely fulfills its obligation under its warranty. Since the tractors were no longerserviceable, the President asked IPM to pull out the units and have them reconditioned, and thereafterto offer them for sale. The proceeds were to be given to IFC Leasing and the excess, if any, to be dividedbetween IPM and CPII which offered to bear 1/2 of their conditioning cost. No response to this letterwas received by CPII and despite several follow-up calls; IPM did nothing with regard to the request,until the complaint in the case was filed by IFC Leasing against CPII. The trial court rendered judgment,ordering CPII, et al. to pay jointly and severally in their official and personal capacities the principal sumof P1, 093,798.71 with accrued interest. CPII et al.'s motion for reconsideration was denied by theIntermediate Appellate Court Hence, this case.Issue:Whether the promissory note in question is a negotiable instrument?Held:The pertinent portion of the note provides that ""FORVALUE RECEIVED, I/we jointly andseverally promise to pay to the INDUSTRIAL PRODUCTS MARKETING, the sum of ONEMILLION NINETYTHREE THOUSAND SEVEN HUNDRED EIGHTYNINE PESOS & 71/100 only (P1,093,789.71), PhilippineCurrency, the said principal sum, to be payable in 24 monthly installments starting July 15, 1978 andevery 15th of the month thereafter until fully paid." Considering that paragraph (d), Section 1 of the

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