C. G. Dizon Construction Inc. v. Teodoro Bañas

Summary

This case involved the enforcement of commercial financing instruments where C.G. Dizon Construction endorsed a P390,000.00 promissory note to Asia Pacific Finance Corporation with chattel mortgage security on bulldozers. When defendants defaulted after paying P130,000.00, Asia Pacific sued for collection. Defendants claimed the transaction violated banking laws as a disguised usurious loan and that surrendering bulldozers extinguished their debt. The Supreme Court affirmed liability, ruling the transaction was a legitimate purchase of receivables within an investment company's authority, not prohibited lending from public deposits. The Court rejected the unsubstantiated claim of debt extinguishment through bulldozer surrender, but reduced attorney's fees from 25% to 15% under Civil Code Article 1229, recognizing defendants' good faith partial compliance despite business difficulties. The case establishes important precedent on investment company authority and commercial financing arrangements.