Case Digest (G.R. No. 133107)
Facts:
Rizal Commercial Banking Corporation v. Court of Appeals and Felipe Lustre, G.R. No. 133107, March 25, 1999, Supreme Court First Division, Kapunan, J., writing for the Court.On March 10, 1993, private respondent Atty. Felipe Lustre purchased a Toyota Corolla from Toyota Shaw, Inc., paying a down payment of P164,620.00 and executing 24 postdated checks for the balance; the first check was dated April 10, 1991 and the subsequent checks were dated every 10th of the month. To secure the obligation he also executed a promissory note and a contract of chattel mortgage in favor of Toyota Shaw, Inc., whose paragraph 11 contained an acceleration clause and a 25% liquidated damages provision.
On March 14, 1991, Toyota Shaw assigned the chattel mortgage to petitioner Rizal Commercial Banking Corporation (RCBC). RCBC encashed and debited Lustre’s account for the checks dated April 10, 1991 through January 10, 1993, except that the check for August 10, 1991 was unsigned and initially debited but later recalled and re‑credited to Lustre. RCBC’s practice, it said, was that once an account was forwarded to its representative all remaining outstanding checks as of that date would not be presented for payment; accordingly, the last two checks (February 10, 1993 and March 10, 1993) were not presented.
RCBC, treating the unsigned August 10, 1991 check as a default and invoking the acceleration clause, wrote Lustre on January 21, 1993 demanding payment of the entire balance plus liquidated damages. Lustre refused and RCBC filed an action for replevin and damages in the Pasay City Regional Trial Court (Branch 108). Lustre answered and counterclaimed for damages.
The RTC rendered judgment dismissing RCBC’s complaint for lack of cause of action, ordering RCBC to accept payment equivalent to three checks amounting to P44,938.00 without interest, to release/cancel the mortgage upon such payment, and to pay costs; on Lustre’s counterclaim the RTC awarded P200,000.00 moral damages, P100,000.00 exemplary damages, and P50,000.00 attorney’s fees (subject to clerk’s assessment).
RCBC appealed to the Court of Appeals, which affirmed the RTC’s decision but reduced the damage awards (as later noted by the Supreme Court). The CA agreed that the chattel mortgage was a contract of adhesion to be strictly...(Pro-only)
Issues:
- May RCBC, by virtue of the acceleration clause in the chattel mortgage, treat the entire balance as due and demandable because one postdated check (for August 10, 1991) was unsigned and subsequently recalled?
- Is private respondent entitled to moral, exemplary damages and attorney’s fees for RCBC’s conduct, and were the a...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)