Understanding the Law............. DAMAGE WITHOUT INJURY - (Story regarding credit card suspension.....an important read for all credit card owners and for those who plan to have a credit card) Injury is the legal invasion of a legal right while damage is the loss, hurt or harm which results from injury. There can be damage without injury in those instances where the loss or harm is not the result of a violation of a legal duty. This is illustrated in this case of Carlo. Carlo was a reputable businessman engaged in business activities that requires travelling both here and abroad. He was a seasoned traveler visiting places in the U.S. Europe and Asia at least seven times a year. Sometime in September 1984, he was issued a Visa card by one of the leading commercial banks in the country (EBC) which could be used for both peso and dollar transactions within and outside the Philippines. The card has a credit limit of P20,000.00, while in dollar transactions, he was required to maintain a dollar deposit of $3,000 and the balance of said deposit shall be his credit limit. It also provided for automatic suspension of credit privileges in case he exceeds his credit limit. And in case of suspension, it can be reinstated or altogether terminated upon option of the issuer (EBC). From August to September, 1985, Carlo made credit purchases in Japan and HK amounting to more than $14,000 while having a deposit of $3,689 thus exceeding his credit limit. These purchases were accommodated by EBC on the condition that the amount would be covered in a few days. But Carlo failed to make good on his commitment; he also failed to make a deposit on the due date of his purchase. As a consequence, his card privileges for dollar transactions were suspended. In January 1986 he made a deposit of $14, 501.89 in his dollar account to cover his purchases but it was not sufficient to maintain the required minimum dollar deposit of $3,000 as it only had a balance of $2,704.94 after satisfaction of his outstanding accounts. In April 1986, Carlo went to HK for business and pleasure trip together with some reputable business friends and associates. A day before leaving, he made a deposit of $14,000 in his dollar account but did not bother to request EBC for the reinstatement of his credit card privileges for dollar transactions, thus the same remained suspended. On April 30, 1986, Carlo went to the Gucci Department Store in HK located at the basement of Peninsula Hotel accompanied by his friend Danny. There he purchased several Gucci items costing HK$4,030.00 which was equivalent to US$523.00. Instead of paying the said items in cash he used his Visa card to effect payment thereof on credit. But after presenting his card, the saleslady informed him in the presence of his friend Danny and other shoppers of different nationalities that his card was blacklisted and simply did not honor it even threatening to cut it in several pieces. Deeply embarrassed and humiliated and to avoid further indignities Carlo paid cash for the goods he bought. But upon his return to the Philippines he filed a complaint before the Regional Trial Court(RTC) for damages against EBC claiming that he suffered much torment on account of EBC’s wrongful act of blacklisting/suspending his Visa card while at the Gucci store. After trial and despite EBC’s defense that Carlo’s card was suspended and remained as such because he failed to settle his previous purchases on time and he failed to maintain the required minimum balance, The RTC ruled in favor of Carlo and awarded him actual damages of $150,00, moral damages of P200,000, exemplary damage of P100,000 and P100,000 attorney’s fees. On appeal to the Court of Appeals, (CA), the latter affirmed the RTC decision but only as to the award of moral damages which was reduced to P100,000. The CA justified the award on its assessment that EBC was negligent in not informing Carlo that his credit card was already suspended before he left for HK ratiocinating that its right to automatically suspend had been indiscriminately used against respondent. Was the CA correct? No. In breach of contract, as here, moral damages are recoverable only if the breach is wanton reckless, malicious, or in bad faith, oppressive or abusive. Given the facts of this case with the express provision on automatic suspension under the Credit Card Agreement, there is simply no basis for holding EBC negligent for not notifying Carlo of the suspended status of his card. It may be so that Carlo made a deposit of US$14,000 to his dollar account before he left for HK. But as issuer of the card, EBC has the option to decide whether to reinstate or altogether terminate a credit card previously suspended. Even on the aspect of negligence therefore, EBC could not be held liable for moral damages. Unquestionably Carlo suffered damages as a result of the dishonor of his card. But in order that he can maintain an action for such injuries, he must establish that they resulted from a breach of duty that EBC owed to him which is the proximate cause. In this case, there was no violation of a legal duty by EBC. So Carlo alone must bear the injury he suffered because the law affords no remedy for damages resulting from an act which does not amount to a legal wrong (Equitable Banking Corp. vs. Calderon, G.R. 156168, December 14, 2004).
Posted on: Thu, 06 Jun 2013 03:25:10 +0000
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