G.R. No. 163654 - BPI Express Card Corp. vs. Armovit

Petitioner BPI Express Credit Card Corporation (BPI Express Credit) issued a pre-approved BPI Express Credit Card to respondent Ma. Antonia R. Armovit in 1989 with a credit limit of ₱20,000, expiring in March 1993.
Armovit was a depositor of Bank of the Philippine Islands (BPI) at the Cubao Branch.

On November 21, 1992, Armovit attempted to use her credit card at Mario’s Restaurant in Pasig to settle a lunch bill but was informed by the waiter that the card was cancelled and would not be honored.
Armovit learned from BPI Express Credit that her credit card had been suspended or cancelled due to alleged failure to pay outstanding obligations. She denied any default.
She sent a letter on February 3, 1993, demanding ₱2,000,000 compensation for the shame, embarrassment, and humiliation caused.

BPI Express Credit claimed it sent a telegraphic notice on March 19, 1992, requesting payment of arrears for three months with suspension of the card effective March 31, 1992 due to non-payment.
It asserted Armovit was notified of the suspension and was warned not to use the card to avoid embarrassment.
Although Armovit settled the outstanding obligation by April 1992, she allegedly failed to submit the required application form to reactivate the credit card privileges.
A subsequent telegraphic apology was sent on March 12, 1993, indicating the erroneous inclusion of her card in a caution list, but BPI claimed this apology was intended for another client.

Armovit filed suit for damages before the Regional Trial Court (RTC), arguing she was a cardholder in good standing with no unpaid bills at the time.
BPI Express Credit raised lack of cause of action and defended the suspension based on non-payment and failure to submit documents.

The RTC, in a judgment dated April 22, 1996, ruled in favor of Armovit.
It found that the terms and conditions governing the credit card were furnished only after the suspension, so she could not be blamed for failure to comply.
The RTC held that payment in April 1992 justified lifting the suspension and there was no clear showing that submission of an application form was a reactivation requirement.
BPI Express Credit was found negligent and in bad faith and ordered to pay Armovit ₱100,000 moral damages, ₱10,000 exemplary damages, attorney’s fees, and costs.

The CA, in a decision promulgated on February 26, 2004, affirmed the RTC ruling.
The CA found that since Armovit never signed the application form during issuance or renewal, she could not be bound or notified of terms therein.
It held the submission of an application form was not clearly stated as a condition for reactivation in BPI’s April 8, 1992 letter.
The telegraphic apology confirmed BPI’s negligence in handling Armovit’s account.
The CA denied increasing damages, noting that awards were to alleviate anxiety and embarrassment, not for enrichment.
BPI’s motion for reconsideration was denied on May 14, 2004.

BPI Express Credit filed a petition seeking reversal of the CA decision, challenging the award of moral and exemplary damages.
The Court issued the questioned decision on October 08, 2014.

Whether the Court of Appeals erred in sustaining the award of moral and exemplary damages in favor of Ma. Antonia R. Armovit for the suspension of her credit card privileges.