MANILA – The Supreme Court (SC) has reversed a ruling by the Parañaque court ordering a bank to pay damages to an individual credit card holder who accused the bank of negligently handling his account causing him embarrassment when the card was declined when he used it at a restaurant.

In its 16-page decision written by Associate Justice Ramon Paul Hernando and uploaded online on June 2, the high court reversed the Court of Appeals’ decision in the case filed by Rex G. Rico against the Union Bank of the Philippines with the SC setting aside both the RTC’s PHP500,000 award and the CA order for the bank to pay a reduced amount of PHP60,000 in damages and attorney’s fees.

Rico in 2006 filed a complaint for damages before the Paranaque RTC claiming the bank negligently handled his credit card account alleging the bank imposed late payment charges and interests despite having paid his credit card bill and imposing an annual membership fee despite its guarantee there would be no such charges, among other things.

Even if the bank eventually reversed charges and admitted its error, Rico said he suffered embarrassment, social humiliation and mental anguish, serious anxieties, besmirched reputation, and wounded feelings when his card was dishonored at a restaurant where he was with friends for alleged non-payment of overdue accounts.

The past due amount arose from a 2005 transaction involving the use of a credit card to pay for airline tickets which he then sought to cancel from the Tiger Airways after he told the airline that he no longer wanted to pursue his travel to Singapore due to the absence of available seats when he tried to change his return flight to Manila.

Rico had demanded that the bank refund the amount claiming he canceled the same even as the airline refused to grant his demand to cancel the tickets because they were non-refundable. As a result, Rico did not pay the bank for the amount corresponding to the airline tickets charged to his account. The bank, for its part, advised him to coordinate the cancellation of the tickets with the airline so it could facilitate its refund request.

The bank said it still included the transaction with the airline amounting to PHP30,376 because although the said airline transaction was disputed, it had not yet been resolved when the October 16, 2005 SOA (statement of account) was issued where Rico paid only a fraction of the required minimum payment at the time. As a result, when Rico used his credit card at a restaurant with friends it was dishonored on November 20, 2005 because his account was considered already in past due status for failure to pay the minimum amount due.

The RTC, in its 2010 ruling for Rico awarding PHP500,000 in moral damages, said that once a complaint was lodged by the account holder, the bank should act with utmost care and diligence in the billing of items included or excluded on the SOA.

The CA in 2013 modified the damages due to PHP60,000 after it found that the damages imposed by the RTC were excessive prompting both Rico and the bank to take the case to the SC.

Ruling otherwise, the SC said it was Rico’s “own action, i.e. his resolve to cancel his flight…which was the proximate cause of his embarrassing and humiliating experience” and said it finds the award of damages “unjustified”. The court added that while the cardholder may have suffered embarrassment, the bank “cannot be considered grossly negligent in charging the amount of airline tickets against the credit card account prior to the final resolution of the billing dispute. (PNA)