Case Digest (A.M. No. P-11-2913) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In William C. Louh, Jr. and Irene L. Louh v. Bank of the Philippine Islands, decided on March 8, 2017 under G.R. No. 225562, the Spouses Louh obtained credit cards from BPI—William as principal cardholder and Irene as extension holder—subject to a 3.5% monthly finance charge and a 6% monthly late payment charge. They regularly used the cards but fell into arrears beginning October 14, 2009. By August 15, 2010, their outstanding balance had grown to ₱533,836.27. After receiving written demand letters on August 7, 2010, January 25, 2011, and May 19, 2011, the Spouses Louh still did not pay. BPI filed a collection suit on August 4, 2011 before the Regional Trial Court of Makati City. Although the RTC granted a 15-day extension to file an answer, the Spouses Louh answered only on July 20, 2012—well past the March 4, 2012 deadline—and failed to move to set aside the default order. The RTC declared them in default, received ex parte evidence, and on November 29, 2012 rendered judgment... Case Digest (A.M. No. P-11-2913) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Credit Card Issuance and Default
- The Bank of the Philippine Islands (BPI) issued a primary credit card to William C. Louh, Jr. with Irene L. Louh as extension cardholder; the card agreement provided for 3.5% monthly finance charge and 6% monthly late payment charge on unpaid balances.
- The Spouses Louh made purchases and paid as billed until October 14, 2009, when they first failed to settle their Statement of Account (SOA). By August 15, 2010, their unpaid balance grew to ₱533,836.27, prompting BPI to send demand letters on August 7, 2010; January 25, 2011; and May 19, 2011, all of which went unheeded.
- Proceedings Before the Regional Trial Court (RTC)
- On August 4, 2011, BPI filed a Complaint for Collection of a Sum of Money in Makati RTC. William moved for an extension to file an Answer, granted until March 4, 2012, but no Answer was filed.
- BPI moved to declare the Spouses Louh in default. The couple belatedly filed an Answer on July 20, 2012. On July 24, 2012, the RTC declared them in default, conducted an ex parte presentation of evidence, and on November 29, 2012 rendered judgment ordering them to pay:
- ₱533,836.27 plus 12% annual finance and 12% annual late payment charges from August 7, 2010 until full satisfaction;
- 25% of the amount due as attorney’s fees, plus ₱1,000 per court hearing;
- ₱8,064 filing or docket fees and costs of suit.
- The RTC reduced the contractual 3.5% and 6% monthly charges to 1% each monthly rate as iniquitous, but upheld the 25% attorney’s fees as agreed.
- Court of Appeals (CA) and Supreme Court (SC) Proceedings
- The Spouses Louh’s motion for reconsideration was denied by the RTC on April 8, 2013. They appealed to the CA, which on August 11, 2015 affirmed the RTC Decision in toto and denied reconsideration on May 23, 2016.
- The Spouses Louh petitioned the SC, claiming (a) improper default declaration due to William’s health, (b) insufficient proof of indebtedness, and (c) unconscionable charges. BPI failed to comment.
Issues:
- Whether the Court of Appeals erred in:
- Upholding the default declaration against the Spouses Louh despite their health-related excuse and failure to file a timely Answer;
- Finding that BPI proved by preponderance of evidence the existence and amount of the Spouses Louh’s indebtedness; and
- Upholding the award of contractual finance charges, late payment charges, and attorney’s fees.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)