G.R. No.

163654 October 8, 2014

BPI EXPRESS CARD CORPORATION,* Petitioner,

vs.
MA. ANTONIA R. ARMOVIT, Respondent.

Doctrine : In case of breach of contracts, moral damages may be recovered on the ground of bad
faith.It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or
moralobliquity. That design, however, need not always be present because negligence may
occasionally beso gross as to amount to malice or bad faith. Hence, bad faith in the context of Article
2220 of theCivil Code includes gross negligence.

Facts:

Ma. Antonia R. Armovit treated her British friends to lunch at a restaurant.She handed to the waiter her
BPI Express Credit Card to settle the bill but to herastonishment, the waiter returned and informed that
her card had been cancelledupon verification with the BPI Express Credit (BPI). Armovit called BPI and
thelatter told her that her credit card had been summarily cancelled for failure to payher outstanding
obligations. She denied having defaulted on her payments anddemanded for compensation for the
shame and embarrassment she suffered. BPIclaimed that it send Armovit a telegraphic message
requesting her to pay her arrearsfor three consecutive months. As she did not comply with the request,
it temporarilysuspended her credit card with due notice to her. BPI further claimed that Armovitfailed to
submit the required application form in order to reactivate her credit cardprivileges.Later on, Armovit
received a telegraphic message from BPI apologizing forits error of inadvertently including her credit
card in Caution List sent to its affiliatedmerchants. Armovit sued BPI for damages insisting that she had
been a credit cardholder in good standing, and that she did not have any unpaid bills at the time of
theincident. RTC ordered BPI to pay Armovit moral damages of P100,000; exemplary damages and
attorney’s fees each in the amount of P10,000.00 which the Court of

Appeals affirmed. BPI appealed the award of moral and exemplary damages allegingthat it is not
negligent in dealing with Armovit.

ISSUE:

Is Armovit entitled to moral and exemplary damages despite the absence ofbad faith on the part of BPI?

RULING

Yes.

The relationship between the credit card issuer and the credit card holder is a contractual one that is
governed by the terms and conditions found in the card membership agreement. Such terms and
conditions constitute the law between the parties. In case of their breach, moral damages may be
recovered where the defendant is shown to have acted fraudulently or in bad faith. Malice or bad faith
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity. However, a conscious or intentional design need not always be present because negligence
may occasionally be so gross as to amount to malice

We hold that the CA rightly sustained the award of ₱100,000.00 as moral damages. To us, too, that
amount was fair and reasonable under the circumstances. Similarly, the grant of exemplary damages
was warranted under Article 2232 of the New Civil Code because BPI Express Credit acted in a reckless
and oppressive manner. Finally, with Armovit having been forced to litigate in order to protect her rights
and interests, she was entitled to recover attorney's fees and expenses oflitigatio