Equitable Banking Corporation v.

Calderon
2004 Dec 14 G. R. No. 156168
Facts: Jose Calderon, a prominent businessman, applied and was issued an
Equitable International Visa card which can be used for both peso and dollar
transactions within and outside the Philippines. In its dollar transactions, respondent
is required to maintain a dollar account with a minimum deposit of $3, 000.00, the
balance shall serve as a credit limit. In one of his trips to Hongkong, together with a
friend, he went to a Gucci Department Store where he tried to purchase several
Gucci items (which amounted to HK$4,030.00 or equivalent to US$523.00) using his
Visa card. The saleslady informed him in front of his friend and other shoppers that
the transaction failed because his Visa card was blacklisted. Upon his return to the
Philippines, Calderon filed a complaint for damages claiming he suffered much
torment and embarrassment on account of EBC’s wrongful act of
blacklisting/suspending his Visa card while at the Gucci Store in Hongkong. The trial
court ruled in favor of Calderon. On appeal, the CA affirmed the ruling of the lower
court but reducing the moral damages awarded by the latter and justified that EBC
was negligent in not informing Calderon that his credit card was already suspended
even before he left for Hongkong, ratiocinating that petitioner’s right to
automatically suspend a cardholder’s privileges without notice should not have
been indiscriminately used in the case of respondent because the latter has already
paid his past obligations and has an existing dollar deposit in an amount more than
the required minimum for credit card at the time he made his purchases in
Hongkong.
Issue:
Whether Court of Appeals erred in holding that the respondent is entitled to
moral damages notwithstanding its finding that petitioner’s actions have not been
attended with any malice or bad faith.
Held: Yes. In law, moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury. However, to be entitled to the award thereof, it is not
enough that one merely suffered sleepless nights, mental anguish or serious anxiety
as a result of the actuations of the other party.
Conditions to be met in order that moral damages may be recovered:
1) Evidence of besmirched reputation, or physical, mental or psychological suffering
sustained by the claimant;
2) A culpable act or omission factually established;
3) Proof that the wrongful act or omission of the defendant is the proximate cause of
the damages sustained by the claimant; and
4) That the case is predicated on any of the instances expressed or envisioned by
Articles 2219 and 2220 of the Civil Code. (Philippine Telegraph & Telephone
Corporation vs. Court of Appeals)
Particularly, in culpa contractual or breach of contract, moral damages are
recoverable only if the defendant has acted fraudulently or in bad faith, or is
found guilty of gross negligence amounting to bad faith, or in wanton
disregard of his contractual obligations. Verily, the breach must be wanton,
reckless, malicious or in bad faith, oppressive or abusive.
In the present case, the CA ruled, and rightly so, that no malice or bad faith
attended petitioner’s dishonor of respondent’s credit card. For, as found no less by
the same court, petitioner was justified in doing so under the provisions of its Credit
Card Agreement with respondent, paragraph 3 of which states:
xxx the CARDHOLDER agrees not to exceed his/her approved credit
limit, otherwise, all charges incurred including charges incurred through the
use of the extension CARD/S, if any in excess of credit limit shall become due
and demandable and the credit privileges shall be automatically suspended
without notice to the CARDHOLDER in accordance with Section 11 hereof.
 We are thus at a loss to understand why, despite its very own finding of
absence of bad faith or malice on the part of the petitioner, the CA nonetheless
adjudged it liable for moral damages to respondent.
Calderon’s card privileges for dollar transactions were suspended because of
his past due and demandable obligations. He made a deposit of US$14,000.00 in his
dollar account but did not bother to request the petitioner for the reinstatement of
his credit card privileges for dollar transactions, thus the same remained under
suspension. On account of this, and with the express provision on automatic
suspension without notice under paragraph 3 of the parties’ Credit Card Agreement,
there is simply no basis for holding petitioner negligent for not notifying respondent
of the suspended status of his credit card privileges. And, certainly, respondent
could not have justifiably assumed that petitioner must have reinstated his card by
reason alone of his having deposited US$14,000.00 a day before he left for
Hongkong. As issuer of the card, petitioner has the option to decide whether to
reinstate or altogether terminate a credit card previously suspended on
considerations which the petitioner deemed proper, not the least of which are the
cardholder’s payment record, capacity to pay and compliance with any additional
requirements imposed by it.
Even on the aspect of negligence, therefore, petitioner could not have been
properly adjudged liable for moral damages.
Unquestionably, respondent suffered damages as a result of the dishonor of
his card. There is, however, a material distinction between damages and injury. To
quote from the decision in BPI Express Card Corporation vs. Court of Appeals:
Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which
results from the injury; and damages are the recompense or compensation awarded
for the damage suffered. Thus, there can be damage without injury in those
instances in which the loss or harm was not the result of a violation of a legal duty.
In such cases the consequences must be borne by the injured person alone, the law
affords no remedy for damages resulting from an act which does not amount to a
legal injury or wrong. These situations are often called damnum absque injuria.
In other words, in order that a plaintiff may maintain an action for the injuries
of which he complains, he must establish that such injuries resulted from a breach
of duty which the defendant owed to the plaintiff- a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. The underlying basis for
the award of tort damages is the premise that an individual was injured in
contemplation of law. Thus, there must first be a breach of some duty and the
imposition of liability for that breach before damages may be awarded; and the
breach of such duty should be the proximate cause of the injury.
In the situation in which respondent finds himself, his is a case of damnum
absque injuria.
On a final note, x x x “moral damages are in the category of an award
designed to compensate the claim for actual injury suffered and not to impose a
penalty on the wrongdoer.”

Emmanuel B. Aznar vs. Citibank, N.A. (Philippines)

 G.R. No. 164273 March 28, 2007

Facts: Emmanuel B. Aznar (Aznar), is a holder of a Preferred Master Credit Card

(Mastercard) issued by Citibank with a credit limit of P150,000.00. As he and his
wife, Zoraida, planned to take their two grandchildren, Melissa and Richard Beane,
on an Asian tour, Aznar made a total advance deposit of P485,000.00 with Citibank
with the intention of increasing his credit limit to P635,000.00.

Aznar claims that when he presented his Mastercard in some establishments in

Malaysia, Singapore and Indonesia, Ingtan Tour and Travel Agency in Indonesia (to
purchase tickets to Bali) but the was not honoured for the reason that his card was
blacklisted by Citibank. Such dishonor forced him to buy the tickets in cash. He
further claims that his humiliation caused by the denial of his card was aggravated
when Ingtan Agency spoke of swindlers trying to use blacklisted cards.

On August 26, 1994, Aznar filed a complaint for damages against Citibank,
docketed as Civil Case No. CEB-16474 and raffled to RTC Branch 20, Cebu City,
claiming that Citibank fraudulently or with gross negligence blacklisted his
Mastercard which forced him, his wife and grandchildren to abort important tour
destinations and prevented them from buying certain items in their tour. To prove
that Citibank blacklisted his Mastercard, Aznar presented a computer print-out,
denominated as ON-LINE AUTHORIZATIONS FOREIGN ACCOUNT ACTIVITY REPORT,
issued to him by Ingtan Agency (Exh. "G") with the signature of one Victrina Elnado
Nubi (Nubi) which shows that his card in question was "DECL OVERLIMIT" or
declared over the limit.

As a defence, Citibank’s Credit Card Department Head, Dennis Flores,

presented Warning Cancellation Bulletins which contained the list of its cancelled
cards covering the period of Aznar’s trip.

On May 29, 1998, RTC Branch 20, Cebu City, through Judge Ferdinand J.
Marcos, rendered its decision dismissing Aznar’s complaint for lack of merit. The
trial court held that as between the computer print-out presented by Aznar and the
Warning Cancellation Bulletins presented by Citibank, the latter had more weight as
their due execution and authenticity were duly established by Citibank. Aznar filed a
motion for reconsideration this time through Judge Jesus S. De la Peña of Branch 10
of Cebu City, the court issued an Order granting Aznar’s motion. Thus, Citibank filed
an appeal with the CA and its counsel filed an administrative case against Judge De
la Peña for grave misconduct, gross ignorance of the law and incompetence,
claiming among others that said judge rendered his decision without having read
the transcripts. On January 30, 2004, the CA rendered its Decision granting
Citibank’s appeal. Aznar filed a motion for reconsideration which the CA dismissed
in its Resolution dated May 26, 2004. Hence, this petition.

Issue: Whether Aznar is entitled to moral damages for the humiliation he suffered.
Held: No. The invalidity of the terms and conditions being invoked by Citibank,
notwithstanding, the Court still cannot award damages in favor of petitioner.
It is settled that in order that a plaintiff may maintain an action for the injuries of
which he complains, he must establish that such injuries resulted from a breach of
duty which the defendant owed to the plaintiff – a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. The underlying basis for
the award of tort damages is the premise that an individual was injured in
contemplation of law; thus there must first be a breach before damages may be
awarded and the breach of such duty should be the proximate cause of the injury. It
is not enough that one merely suffered sleepless nights, mental anguish or serious
anxiety as a result of the actuations of the other party. It is also required that a
culpable act or omission was factually established, that proof that the wrongful act
or omission of the defendant is shown as the proximate cause of the damage
sustained by the claimant and that the case is predicated on any of the instances
expressed or envisioned by Arts. 2219 and 2220 of the Civil Code.

In culpa contractual or breach of contract, moral damages are recoverable

only if the defendant has acted fraudulently or in bad faith, or is found
guilty of gross negligence amounting to bad faith, or in wanton disregard
of his contractual obligations. The breach must be wanton, reckless,
malicious or in bad faith, oppressive or abusive.

While the Court commiserates with Aznar for whatever undue embarrassment he
suffered when his credit card was dishonored by Ingtan Agency, especially when the
agency’s personnel insinuated that he could be a swindler trying to use blacklisted
cards, the Court cannot grant his present petition as he failed to show by
preponderance of evidence that Citibank breached any obligation that would make
it answerable for said suffering.

As the Court pronounced in BPI Express Card Corporation v. Court of Appeals

We do not dispute the findings of the lower court that private respondent suffered
damages as a result of the cancellation of his credit card. However, there is a
material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and
damages are the recompense or compensation awarded for the damage suffered.
Thus, there can be damage without injury to those instances in which the loss or
harm was not the result of a violation of a legal duty. In such cases, the
consequences must be borne by the injured person alone, the law affords no
remedy for damages resulting from an act which does not amount to a legal injury
or wrong. These situations are often called damnum absque injuria.