Acol v Philippine Commercial Credit Card; G.R. No. 135149; July 25, 2006; Corona, J.

FACTS:

Petitioner Manuel Acol applied for credit card and extension from respondent. Acol reported to respondent that the credit card was missing on April 19, 1987. He inquired if there were other requirements he needed to comply with in connection with the loss. Respondent advised to put it on writing. Petitioner noticed that his credit card was used and reported this to the respondent to which the latter said they will reverse the disputed billings. Respondent released a special cancellation bulletin informing its accredited establishments of the loss of the cards of the enumerated holders, including petitioner's. Respondent reversed its earlier position on the disputed billings and cited a provision in the Terms and Conditions Governing The Issuance and Use of the Bankard" found at the back of the application form saying that petitioner is responsible for all the charges made through the card until the expiration or return of the card or until a reasonable time after receipt by the Card Issuer of written notice of loss of the Card and its actual inclusion in the Cancellation Bulletin.

ISSUE:

Whether or not the provision of the contract is valid.

RULING:

No.

In this case, the stipulation in question is just as repugnant to public policy as that in Ermitaño. As petitioner points out, the effectivity of the cancellation of the lost card rests on an act entirely beyond the control of the cardholder. Worse, the phrase "after a reasonable time" gives the issuer the opportunity to actually profit from unauthorized charges despite receipt of immediate written notice from the cardholder.

Under such a stipulation, petitioner could have theoretically done everything in his power to give respondent the required written notice. But if respondent took a "reasonable" time (which could be indefinite) to include the card in its cancellation bulletin, it could still hold the cardholder liable for whatever unauthorized charges were incurred within that span of time. This would have been truly iniquitous, considering the amount respondent wanted to hold petitioner liable for.

Article 1306 of the Civil Code prohibits contracting parties from establishing stipulations contrary to public policy. The assailed provision was just such a stipulation. It is without any hesitation therefore that we strike it down.