Acol v. Philippine Commercial Credit Card
REITERATIONFacts
The Antecedents: Petitioner Manuel Acol applied for and was issued a Bankard credit card. On April 18, 1987, he discovered the loss of his card. He reported the loss verbally on April 19 and April 20, 1987, and submitted a written notice on April 20, 1987, which respondent received on April 22, 1987. Despite these notices, the card was used to make purchases totaling P76,067.28 on April 19 and 20, 1987. Respondent billed petitioner for these charges. Procedural History: Petitioner refused to pay for the charges incurred after April 19, 1987. Respondent initially agreed to reverse the billings pending investigation but later insisted on collection, citing provision no. 1 of the credit card's Terms and Conditions, which stated that the holder's responsibility continues until a reasonable time after receipt of written notice and actual inclusion in the Cancellation Bulletin. Respondent filed a collection suit. The Regional Trial Court (RTC) dismissed the case. The Court of Appeals (CA) reversed the RTC, holding petitioner liable. Petitioner appealed to the Supreme Court. The Petition: Petitioner assails the CA decision, arguing that the stipulation in the credit card agreement making him liable for unauthorized charges after he had given prompt notice of loss is contrary to public policy.
Issue(s)
Whether the stipulation in the credit card agreement, making the cardholder liable for unauthorized charges until the credit card company includes the lost card in its cancellation bulletin, is valid and binding. Whether such a stipulation is contrary to public policy.
Ruling
The petition is granted. The assailed decision of the Court of Appeals is reversed, and the decision of the Regional Trial Court dismissing the complaint is reinstated.
Ratio Decidendi
On whether the stipulation is valid and binding: The Supreme Court held that the contested provision in the credit card agreement is repugnant to public policy. The Court reiterated its ruling in Ermitaño v. Court of Appeals, which struck down a similar stipulation. The stipulation in the present case, like in Ermitaño, required two conditions for the cardholder to be relieved of responsibility: (1) receipt of written notice of loss by the issuer, and (2) notification to the issuer's accredited establishments. The Court found this unfair and unjust, as it placed the cardholder at the mercy of the credit card company, which could delay notification indefinitely. On whether such a stipulation is contrary to public policy: The phrase "after a reasonable time" in the assailed provision gave the issuer an opportunity to profit from unauthorized charges despite prompt notice from the cardholder. Article 1306 of the Civil Code prohibits stipulations contrary to public policy, and the assailed provision falls under this prohibition. Therefore, the stipulation is void and not binding on the petitioner.
Main Doctrine
A stipulation in a credit card agreement that makes the cardholder liable for unauthorized charges until the credit card company includes the lost card in its cancellation bulletin, even after the cardholder has provided prompt written notice of loss, is contrary to public policy and therefore void.