RIZAL COMMERCIAL February 10 and March 10, 1993)
BANKING CORPORATION, were no longer presented for
PETITIONER, VS. COURT OF
APPEALS AND FELIPE
LUSTRE, RESPONDENTS.
G.R. No. 133107, March 25,
1999
DOCTRINE: Article 1170 of the
Civil Code states that those who in
the performance of their
obligations are guilty of delay are
liable for damages. The delay in
the performance of the obligation,
however, must be either malicious
or negligent.
In 1993, private respondent
Atty. Lustre purchased a Toyota
Corolla from Toyota Shaw for
which he made a down payment of
P164,620.00, the balance of the
purchase price to be paid in 24
equal monthly installments. Private
respondent thus issued 24
postdated checks and to secure the
balance, he executed a promissory
note and a contract of chattel
mortgage over the vehicle in favor
of Toyota Shaw. The contract of
mortgage provided for an
acceleration clause stating that
should the mortgagor default in
the payment of any installment,
the whole amount remaining
unpaid shall become due and that
the mortgagor shall be liable for
25% of the principal due as
liquidated damages. Subsequently,
Toyota Shaw assigned all its rights
and interests in the mortgage to
petitioner RCBC.
All the checks dated April
10, 1991 to January 10, 1993 were
thereafter encashed and debited
by RCBC from private respondent's
account, except for the check
representing the payment for
August 10, 1991, which was
unsigned. Because of this unsigned
check, the last two checks (for
payment in conformity with
petitioner bank’s procedure.
Petitioner then, in a letter dated
January 21, 1993, demanded from
private respondent the payment of
the balance of the debt, including
liquidated damages. The latter
refused, prompting petitioner to
file an action for replevin and
damages. Private respondent
interposed a counterclaim for
damages.
After trial, the RTC
dismissed the complaint for lack of
cause of action and ordered the
plaintiff to pay private respondent
moral and exemplary damages. On
appeal, the CA affirmed the
decision of the RTC. It held that
petitioner bank was remiss in the
performance of its functions for it
could have easily called the private
respondent’s attention to the lack
of signature on the check and sent
the check to, or summoned, the
latter to affix his signature.
Petitioner’s imputation of default
to private respondent rested solely
on the fact that the 5 th check
issued by the latter was recalled
for lack of signature. However, the
check was recalled only after the
amount covered thereby had been
deducted from private
respondent’s account. The default
was therefore not a case of failure
to pay, the check being sufficiently
funded, and which amount was in
fact already debitted from private
respondent’s account by the
petitioner which subsequently re-
credited the amount to the
former’s account for lack of
signature. All these actions RCBC
did on its own without notifying
defendant until sixteen months
later when it wrote its demand
letter.
 Hence, this appeal. justice, give everyone his due,
and observe honesty and good
ISSUE: Is private respondent faith.” behooved the bank to do
considered in delay and liable to so.
petitioner by virtue of their Failing thus, petitioner is
agreement? liable for damages caused to
private respondent. These include
RULING: NO. moral damages for the mental
Article 1170 of the Civil anguish, serious anxiety,
Code states that those who in besmirched reputation,
the performance of their wounded feelings and social
obligations are guilty of delay humiliation suffered by the
are liable for damages. The latter. The trial court found that
delay in the performance of the private respondent was a client
obligation, however, must be who has shared transactions for
either malicious or negligent. over twenty years with a bank. The
Thus, assuming that private shabby treatment given the
respondent was guilty of delay in defendant is unpardonable since
the payment of the value of the he was put to shame and
unsigned check, private embarrassment after the case was
respondent cannot be held liable filed in Court. He is a lawyer in his
for damages. There is no own right, married to another
imputation, much less member of the bar. He sired
evidence, that private children who are all professionals
respondent acted with malice in their chosen field. He is known
or negligence in failing to sign to the community of golfers with
the check. Indeed, we agree with whom he gravitates. Surely, the
the Court of Appeals' finding that filing of the case made defendant
such omission was mere feel so bad and bothered.
"inadvertence" on the part of To deter others from
private respondent. Even when emulating petitioners callous
the checks were delivered to example, we affirm the award of
petitioner, it did not object to the exemplary damages. As exemplary
unsigned check. In view of the lack damages are warranted, so are
of malice or negligence on the part attorney's fees.
of private respondent, petitioner's
blind and mechanical invocation of
paragraph 11 of the contract of
chattel mortgage was
unwarranted.
As pointed out by the trial
court, this whole controversy could
have been avoided if only
petitioner bothered to call up
private respondent and ask him to
sign the check. Good faith not only
in compliance with its contractual
obligations, but also in observance
of the standard in human relations,
for every person "to act with