ACOL VS.

PCCCI
GR NO 135149
JULY 25, 2006

FACTS:
Petitioner Manuel Acol is a holder of a credit card that he applied from the respondent.
On April 18, 1987, he discovered the loss of his credit card and immediately reported the
incident to the respondent’s office o n the following day (April 19). He again reiterated the loss
on 20th and immediately complied with the necessary requirements involving the loss and
submitted the same. On the 21t, the respondent then issued a special cancellation bulletin
informing its accredited establishments of the loss of the cards of enumerated holders.
Unfortunately, it turned out that somebody used the petitioner’s card on the 19th and 20th to
purchase items amounting to P76,067.28. The Petitioner informed the respondent that he would
only be paying for the purchase made on the 19th by the virtue of provision #1of the terms and
conditions of the credit card. It provided that the holders are responsible for all charges until its
expiration or its return to the card user or until a reasonable time after receipt by the card user of
written notice of loss of the card and its actual inclusion in the cancellation bulletin.

ISSUE:
Whether or not the provision in the contract was valid and binding to the petitioner

RULING:
The provision is invalid because it is repugnant to public policy. The stipulation requires
2 conditions for petitioner to be relieved of responsibility from unauthorized charges: (1) receipt
by the card issuer of a written notice of the loss and (2) the notification to the issuer accredited
establishments regarding the loss. Such is contrary to public policy. Prompt notice by the
cardholder to the credit card company should be enough to relieve the former or liability
occasioned by unauthorized use of the stolen/lost card. As the petitioner points out, the
effectivity of the cancellation rests beyond the control of the card holder. Even if the petitioner
has done everything to give the respondent the required notice, the lifting of the liabilities from
the unauthorized transactions still rests on the respondents’ promptness (which may consume an
indefinite time) to notify the card holders. Should the respondents fail to act promptly, then such
provision would necessarily mean that the subsequent transactions of the lost/stolen card would
be charged at the petitioner’s expense, even if he has already notified the bank. Article 1306 of
the Civil Code prohibits contracting parties from establishing stipulations contrary to public
policy. Thus, the Supreme Court in this case has struck the invalid provision down.