Spouses Ferdinand Aguilar v. Citytrust Finance Corporation

Summary

This consolidated case involved the Aguilar spouses who purchased a car from World Cars for P370,000 under an arrangement where they would pay in full within 90 days, with promissory note and chattel mortgage documents signed only as formality to be cancelled upon full payment. The Aguilars paid the entire amount through checks to World Cars' authorized agent Joselito Perez, but World Cars had secretly assigned the instruments to Citytrust Finance Corporation, which later demanded payment. The Supreme Court ruled that payment to an authorized agent constitutes valid payment to the principal, and since the conditional instruments never became effective due to full payment, World Cars had no rights to assign to Citytrust. The Court applied principles of conditional obligations, simulated contracts, and assignment law, ultimately protecting the Aguilars from double payment while holding World Cars liable to both parties for damages due to its fraudulent conduct and breach of warranty in the receivables financing agreement.