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WILLIAM C. LOUH v. BANK OF PHILIPPINE ISLANDS

FACTS:

The case involves a dispute between the Spouses Louh and the Bank of the Philippine Islands (BPI) regarding their credit card debt. BPI issued a credit card in William's name, with Irene as the extension card holder. The terms and conditions of the cards stated that finance charges and late payment charges would be imposed on unpaid credit availments. The Spouses Louh made purchases using the credit cards and initially paid regularly based on the Statement of Accounts (SOAs). However, starting October 14, 2009, they failed to fulfill their obligations and owed BPI a total amount of P533,836.27 as of September 14, 2010. Despite written and verbal demands, the Spouses Louh did not pay BPI.

On August 4, 2011, BPI filed a Complaint for Collection of a Sum of Money before the Regional Trial Court (RTC) of Makati City. The Spouses Louh requested an extension to file an Answer but still failed to comply within the prescribed period. BPI then filed a motion to declare the Spouses Louh in default. However, before the RTC ruled on the motion, the Spouses Louh filed an Answer three months after the prescribed period. The RTC eventually declared the Spouses Louh in default, conducted an ex-parte presentation of evidence, and issued a decision ordering them to pay BPI. The RTC reduced the finance charge and late payment charge imposed by BPI but upheld the award of attorney's fees. The Spouses Louh filed a Motion for Reconsideration, which was denied by the RTC.

The Spouses Louh appealed the RTC's decision to the Court of Appeals (CA), but their appeal was likewise denied. The CA affirmed the RTC's judgment, ruling that the Spouses Louh were properly declared in default and that BPI presented ample evidence to prove their indebtedness. The CA also upheld the award of attorney's fees based on the terms governing the use of the credit cards.

The Spouses Louh filed a petition for review before the Supreme Court (SC), arguing that the CA erred in sustaining BPI's complaint. They claimed that their failure to file a timely Answer was due to William's medical condition, and they alleged that BPI failed to prove their indebtedness. The SC affirmed the CA's decision and modified the principal amount and attorney's fees awarded.

ISSUES:

  1. Whether the Court of Appeals erred in sustaining BPI's complaint;

  2. Whether the Spouses Louh are entitled to a relaxation of procedural rules.

RULING:

  1. The Court affirms the decision of the Court of Appeals. The Spouses Louh's claims are untenable. The Court reiterates that procedural rules are tools designed to facilitate the adjudication of cases and should be strictly followed. While there may be instances where the rules can be relaxed, this should be done in proper cases and under justifiable causes and circumstances. In this case, the Spouses Louh failed to file a timely answer and did not provide sufficient justification for their non-compliance. Additionally, the Court finds that BPI presented ample evidence to prove the Spouses Louh's indebtedness.

PRINCIPLES:

  • Procedural rules should be followed to ensure an orderly and speedy administration of justice. However, there may be instances where the rules can be relaxed in proper cases and under justifiable causes and circumstances. The relaxation of rules is not intended to be a bastion for erring litigants to violate the rules with impunity. (Magsino v. De Ocampo)