G.R. No. 120639 - BPI Express Card Corp. vs. Court of Appeals

Case Summary (G.R. No. 120639)

Key Dates

– February 1988–February 1989: Initial complimentary membership, P3,000 credit limit
– February 1989–February 1990: Membership renewal, limit increased to P5,000
– October 27, 1989: Statement of account issued (P8,987.84 unpaid)
– November 23, 1989: BECC receives postdated P15,000 check
– November 28, 1989: BECC mails suspension notice
– December 8, 1989: Card dishonored at Café Adriatico (P735.32)
– December 12 & 16, 1989; March 12 & April 5, 1990: Correspondence between parties
– May 7, 1990: Complaint filed in RTC Makati, Civil Case No. 90-1174
– September 25, 1998: Supreme Court decision

Applicable Law

– 1987 Philippine Constitution (decision post-1990)
– Civil Code Article 19 (duty to act in good faith)
– Terms and Conditions of BECC Credit Card Contract
– Rules on Evidence (presumption of receipt of letters)

Facts: Issuance and Terms of the Credit Card

Marasigan was a complimentary BECC member with a P3,000 limit, renewed at P5,000. Monthly billings were due by the 27th, with a 20-day payment window or, in any event, 30 days from billing. Defaults beyond 30 days allowed automatic suspension; 60 days led to cancellation. Interest at 3% per month and additional penalties were stipulated.

Facts: Defaults and Payment Practices

Despite frequent over-limit use and paying by check, BECC accepted Marasigan’s conduct without objection until the October 1989 statement (P8,987.84) went unpaid due to his absence in Quezon province.

Facts: Demand and Postdated Check Arrangement

After BECC’s collection calls, Marasigan issued a postdated Far East Bank check for P15,000, accepted by Tess Lorenzo on November 23, 1989. BECC’s head of collections, Maniquiz, was informed one week later and requested cash replacement to tally the account.

Facts: Suspension Notice and Dishonor at Café Adriatico

BECC mailed a suspension notice on November 28, 1989, warning of permanent cancellation if payment was not made within five days. Marasigan did not receive it before December 8, 1989, when his card was dishonored at Café Adriatico. A guest paid the P735.32 charge.

Procedural History: Trial Court Ruling

The RTC found BECC abused its right under Article 19, concluding Marasigan was assured his card remained effective upon issuance of the P15,000 check. It awarded P100,000 moral damages, P50,000 exemplary damages, and P20,000 attorney’s fees, while ordering Marasigan to settle P14,439.41.

Procedural History: Court of Appeals Decision

On appeal, the CA affirmed the RTC’s findings but modified the awards to P50,000 moral damages, P25,000 exemplary damages, and P10,000 attorney’s fees.

Issues on Petition

I. Whether BECC had the contractual right to suspend Marasigan’s card.
II. Whether BECC was liable for damages arising from the dishonor.

Analysis: Right to Suspend Under Contract Terms

BECC’s agreement clearly provided for automatic suspension 30 days after non-payment. Marasigan admitted failing to pay within 30 days of the September and October 1989 statements. Suspension as of October 28, 1989, was contractually permitted.

Analysis: Arrangement and Compliance

Although BECC employees negotiated acceptance of a P15,000 check, the arrangement required immediate settlement of the P8,987.84 balance. Marasigan’s issuance of a postdated December 15 check did not effectuate immediate payment.

Analysis: Effect of Postdated Check as Payment

Under Philippine law, a check is a mere substitute for money, not payment itself, and postdated checks are not considered cash. Marasigan’s postdated check thus failed to discharge his obligation and could not prevent suspension.

Analysis: Abuse of Rights and Award of Damages

To establish abuse under Article 19, one must prove (1) a legal right exercised, (2) in bad faith, (3) solely to injure another. Good faith is presumed; the burden to prove bad faith