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RCBC vs.

Court of Appeals
G.R. No. 133107, March 25, 1999
305 SCRA 449
Private respondent Atty. Felipe Lustre purchased a car from Toyota Shaw, Inc. for which
he made a down payment, the balance of which is to be paid in 24 equal monthly installments.
He then issued 24 postdated checks in the amount due for every month. To secure the balance,
private respondent executed a promissory note and a contract of Chattle Mortgage over the
vehicle in favor of Toyota Shaw. The contract of Chattle Mortgage provided for an acceleration
clause stating that if there be default on the part of the mortgagor to pay any of the installments,
the whole amount remaining shall become due.
Toyota Shaw then assigned all its rights and interest in the Chattle Mortgage to petitioner
Rizal Commercial Banking Corporation (RCBC). The problem arose when one check was not
signed by the private respondent. On the theory that the respondent defaulted in his payments,
petitioner demanded the payment of the debt including liquidated damages. Atty. Lustre refused,
prompting RCBC to file an action for replevin and damages before the Regional Trial Court of
Pasay City.
After trial, the RTC rendered a decision in favor of the private respondent, and held that
he was not in default. The Court of Appeals affirmed the decision of the lower court.
Whether or not private respondent should be held in default.
Article 1170 of the Civil Code states that those who in the performance of their
obligation are guilty of delay are liable for damages. The delay in the performance must be
malicious or negligent. There was no imputation, much less evidence, that private respondent
acted with malice or negligence in failing to sign the check. The Supreme Court agreed with the
Court of Appeals that such omission was mere inadvertence on the part of private respondent.