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The Supreme Court has overturned a decision by the Court of Appeal in a credit card case.

MANILA, Philippines – The Supreme Court (SC) has overturned a verdict by the Paranaque court ordering a bank to pay damages to an individual credit card holder who accused the bank of improperly handling his account, causing him shame when his card was denied at a restaurant.

The high court reversed the Court of Appeals’ decision in the case filed by Rex G. Rico against the Union Bank of the Philippines, 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 in a 16-page decision written by Associate Justice Ramon Paul Hernando and uploaded online on June 2.

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

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

The past due amount stemmed from a 2005 transaction in which he used a credit card to purchase airline tickets, which he then attempted to cancel from Tiger Airways after informing the airline that he no longer wanted to pursue his travel to Singapore due to a lack of available seats when he tried to change his return flight to Manila.

Rico asked that the bank reimburse the money, saying that he had canceled the transaction, despite the fact that the airline declined to cancel the tickets since they were non-refundable. Rico did not pay the bank the money equal to the airline tickets debited to his account as a result of this. The bank, on the other hand, urged him to coordinate the cancellation of the tickets with the airline so that the refund request could be processed more quickly.

The bank claimed it included the PHP30,376 airline transaction because, while the airline transaction was contested, it had not yet been resolved when the SOA (statement of account) was produced on October 16, 2005, and Rico only paid a fraction of the required minimum payment at the time. As a result, on November 20, 2005, when Rico used his credit card at a restaurant with friends, it was declined since his account was already past due for failure to pay the minimum amount required.

The RTC ruled in 2010 for Rico, awarded PHP500,000 in moral damages, that once the account holder filed a complaint, the bank should bill goods included or excluded on the SOA with the utmost care and effort.

The CA reduced the damages owing to PHP60,000 in 2013 after finding that the RTC’s judgments were excessive, forcing Rico and the bank to appeal to the SC.

The SC ruled that Rico’s “own behavior, i.e. his resolve to cancel his flight…was the proximate cause of his uncomfortable and humiliating experience” and that the damages award was “unjustified.” While the cardholder may have been embarrassed, the court went on to say that the bank “cannot be regarded extremely negligent in charging the sum of plane tickets against the credit card account prior to the ultimate settlement of the billing dispute.”

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