GR 141761; (July, 2006) (Digest)
G.R. No. 141761 ; July 28, 2006
BANKARD, INC., petitioner, vs. DR. ANTONIO NOVAK FELICIANO, respondent.
FACTS
Respondent Dr. Antonio Novak Feliciano, a long-standing cardholder of petitioner Bankard, Inc., experienced the dishonor of his PCIBank Mastercard in Toronto, Canada, on June 19, 1995, while settling a breakfast bill. Despite immediate verification attempts, his card was again dishonored and confiscated the following day at a department store, causing him public embarrassment. He filed a complaint for breach of contract and damages, alleging that the suspension of his card privileges without prior notice led to humiliation and the loss of potential charitable donations from his Canadian colleagues.
Petitioner defended its actions by citing a fraud alert from Indonesia concerning the extension card issued to respondent’s wife. Upon receiving the alert, its fraud analyst attempted to contact the Felicianos but, failing to reach them directly and based on information from a household helper that they were not abroad, concluded the transaction was counterfeit. Petitioner then blocked both cards and sent a written notice requiring an affidavit of disclaimer, to which the Felicianos did not respond.
ISSUE
Whether petitioner Bankard, Inc. was negligent in suspending respondent’s credit card privileges, thereby justifying an award for moral damages.
RULING
Yes, the Supreme Court affirmed the finding of negligence against petitioner but reduced the moral damages. The Court held that while banks must exercise diligence to protect against fraud, such measures must be reasonable and not arbitrarily infringe upon a cardholder’s rights. Petitioner’s reliance on a single, unverified fraud alert and its failure to make a more thorough effort to directly contact the cardholder before suspension constituted a lack of due diligence. The immediate blocking of the card based on inconclusive information breached the contractual obligation of good faith.
The dishonor and public confiscation of respondent’s card directly caused him social humiliation, wounded feelings, and besmirched reputation, warranting moral damages under Article 2217 of the Civil Code. However, the Court deemed the appellate court’s award of P800,000.00 excessive, reducing it to P500,000.00 to make it commensurate with the injury suffered. The award of attorney’s fees was sustained as respondent was compelled to litigate. The petition was denied with modification.