Bankard, Inc. v. Feliciano

G.R. No. 141761. July 28, 2006

MAIN TOPIC – Credit Card


  • Respondent Feliciano is the holder of PCIBank Mastercard  issued and managed by petitioner Bankard, Inc. An extension of the card  was issued to his wife, Mrs. Feliciano.
  • In 1995, respondent used his PCIBank Mastercard to pay a breakfast bill in Toronto, Canada. The card was, however, dishonored for payment. Respondent’s guest had to pay for the bill. 
  • Respondent immediately called the Bankard Inc., to inquire on the cause of dishonor and was informed that the reason was the nonpayment of his last billing statement. Respondent denied that he failed to pay, and requested the person on the line to verify the correct status of his credit card again. Respondent likewise called his secretary
  • The next day, respondent went to Bauer Fairview Mall and bought several dressing items. Again, the card was dishonored and worse, the manager of the department store confiscated the card in front of his guest and other shoppers.
  • Respondent filed a complaint against petitioner Bankard, Inc. and Mastercard International for breach of contractual rights and damages. He alleged that he is a holder in good standing for more than ten (10) years , and that petitioner and Mastercard International reneged on their agreement by suspending the services of the card without notice to him. As a result of the suspension and confiscation of his card in Toronto, Canada, respondent suffered social humiliation, embarrassment and besmirched reputation.
  • Petitioner claims that it suspended respondent’s card to protect him from fraudulent transactions.


  • Whether or not petitioner is liable to respondent for moral damages and attorney’s fees.


  • YES. Under the foregoing, moral damages may be recovered in culpa contractual where the defendant acted in bad faith or with malice in the breach of the contract. 
  • Considering the widespread use of access devices in commercial and other transactions, petitioner and other issuers of credit cards should not only guard against fraudulent uses of credit cards but should also be protective of genuine uses thereof by the true cardholders. In the case at bar, the duty is much more demanding for the evidence shows that respondent is a credit cardholder for more than ten (10) years in good standing, and has not been shown to have violated any of the provisions of his credit card agreement with petitioner. Considering the attendant circumstances, we find petitioner to have been grossly negligent in suspending respondent’s credit card. To reiterate, moral damages may be awarded in a breach of contract when the defendant acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith.


IN VIEW WHEREOF, the petition is DENIED. The assailed Decision of the Court of Appeals, dated May 31, 1999, granting moral damages and attorney’s fees to respondent, as well as its Resolution dated January 28, 2000 in CA-G.R. CV No. 56734, is AFFIRMED with the sole modification that the amount of moral damages is REDUCED to P500,000.00.