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G.R. No. 210928, February 14, 2022



Union Bank issued Rico a Union Bank Visa credit card. Rico filed a complaint for damages before the RTC claiming that he suffered embarrassment, social humiliation, mental anguish, serious anxieties, besmirched reputation, and wounded feelings when his card was dishonored at Gourdo's Restaurant. Union Bank asserted that when Rico used his credit card at Gourdo's Restaurant, it was dishonored because his account was already in "past due" status for failure to pay the minimum amount due. Union Bank averred that it should not be held liable for damages since it was Rico who failed to comply with the terms and conditions of the credit card. The RTC ruled in favor of Rico. The CA affirmed the decision of the RTC with modification as to the amount of damages.


Whether Union Bank is liable to pay moral damages allegedly due to the embarrassment and humiliation resulting from the credit card's dishonor.


No. The SC held that a credit card is a form of credit accommodation granted by the credit card company to the card holder for the latter's use in the purchase of goods and services. The contract between the card company and the credit card holder is a simple loan arrangement. The SC cited its ruling in Pantaleon v. American Express International, Inc. that this creditor-debtor relationship arises only after the credit card issuer has approved the cardholder's purchase request. Only when the card company approves the purchase request that the parties enter into a binding loan agreement in line with Article 1319 of the Civil Code. While it is true that with the issuance of the credit card to Rico, Union Bank granted him a credit facility or a pre-approved amount which the card holder may use in his purchase of goods and services, this is not a demandable right which the card holder may hold against the credit card company as if he is entitled to be granted a loan whenever he or she wants to, or that the bank owes him or her money by the mere issuance of a credit card. Hence, Union Bank may or may not approve Rico's purchase requests based on the latter's credit standing, credit card history, and financial capability. Rico cannot demand that Union Bank pay for his purchase in Gourdo's Restaurant using the Visa credit card as if the bank is obliged to do so. The disapproval of the credit card transaction which allegedly caused him embarrassment and humiliation worthy of moral damages cannot be solely attributed to Union Bank when there is no demandable right to begin with.

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