GR 133107; (March, 1999) (Digest)
G.R. No. 133107 . March 25, 1999.
RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. COURT OF APPEALS and FELIPE LUSTRE, respondents.
FACTS
Atty. Felipe Lustre purchased a vehicle, issuing 24 postdated checks to Toyota Shaw, Inc. to cover installment payments. The chattel mortgage contract, later assigned to RCBC, contained an acceleration clause making the entire balance due upon default of any installment. All checks were encashed except one for the August 1991 installment, which was unsigned. RCBC initially debited Lustre’s account for this amount but later recalled and re-credited it. Without notifying Lustre of the unsigned check, RCBC continued to encash all subsequent checks until January 1993. It then declared a default based on the August 1991 check, demanded full payment plus liquidated damages, and filed an action for replevin.
The Regional Trial Court dismissed RCBC’s complaint, ordering it to accept the remaining payments and release the mortgage. It also awarded Lustre moral and exemplary damages and attorney’s fees. The Court of Appeals affirmed, construing the acceleration clause in the contract of adhesion against RCBC and finding no deliberate default.
ISSUE
Whether RCBC validly invoked the acceleration clause to declare Lustre in default and demand full payment.
RULING
No. The Supreme Court affirmed the dismissal of RCBC’s complaint but modified the damages. The acceleration clause, being in a contract of adhesion, must be strictly construed against the drafter, RCBC. Default implies a deliberate or willful failure to pay. Here, the check was sufficiently funded, and the failure was merely due to a missing signature—a formal defect RCBC could have easily rectified by notifying Lustre. By instead silently re-crediting the amount and continuing to collect subsequent installments for sixteen months, RCBC led Lustre to believe the obligation was being fulfilled regularly. Its sudden declaration of default was therefore baseless and in bad faith.
The Court upheld the awards for damages, though reduced, finding RCBC acted in a wanton and oppressive manner. Its failure to make a simple phone call to resolve the minor irregularity constituted gross negligence and an abuse of rights, causing Lustre unwarranted anxiety and litigation. The bank’s actions violated the principles of human relations under Articles 19 and 21 of the Civil Code.