Once credit card is used, holder bound to pay

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Persida Acosta

Persida Acosta

Dear PAO,

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I have a credit card. I did not apply for its issuance, but it was merely delivered in our house. I used it several times and now the bank is asking me to pay P50,000.00 plus interest and penalties as per the terms and conditions of the credit card agreement. Do I really have to pay for the latter? As far as I can recall, I did not sign any agreement with the credit card company. Like I said, it was just sent to our house.

Geoffrey

Dear Geoffrey,

Not all credit cards are issued by reason of the holders’ written or verbal application thereof. There are instances where credit card companies and banking institutions issue credit cards to persons who have not applied for the same. They are commonly known as “pre-screened clients,” and they are granted their credit cards not by virtue of an application but because of their good credit standing or because they have been recommended by another client of good standing or an officer of the institution itself.

Once the credit card is issued to the client, he has the option of using it or rejecting the same. If the card holder uses it, he thus binds himself to pay for the purchases and services he has acquired. This is because a credit card arrangement is a form of a contract of simple loan or mutuum whereby a person receives a loan of money or any other fungible thing, acquires ownership thereof, and is obliged to pay to the creditor an equal amount of the same kind and quality (Article 1953, New Civil Code of the Philippines).

Accordingly, you are obliged to pay the principal amount you owe the credit card company which issued your card. It is incumbent upon you to settle this because you have benefited from the use of such card.

Insofar as the payment of the interest and penalties as enumerated in the terms and conditions of the credit card agreement, you may only be obliged to settle the same if the company can positively show that you accepted the terms of the said agreement. Otherwise, you may only be held liable to pay legal interest from the time extrajudicial or judicial demand is made until full payment thereof. This is in consonance with the decision of the Supreme Court in the case of Alcaraz vs. Court of Appeals (G.R. No. 152202, July 28, 2006), wherein the high court declared that: “x x x the petitioner should not be condemned to pay the interests and charges provided in the Terms and Conditions on the mere claim of the private respondent without any proof of the former’s conformity and acceptance of the stipulations contained therein.\l “fnt30” 30 Even if we are to accept the private respondent’s averment that the stipulation quoted earlier is printed at the back of each and every credit card issued by private respondent Equitable, such stipulation is not sufficient to bind the petitioner to the Terms and Conditions without a clear showing that the petitioner was aware of and consented to the provisions of this document. This, the private respondent failed to do. ***” The court continues, “***It is, however, undeniable that petitioner Alcaraz accumulated unpaid obligations both in his peso and dollar accounts through the use of the credit card issued to him by private respondent Equitable. As such, petitioner Alcaraz is liable for the payment thereof. Since the provisions of the Terms and Conditions are inapplicable to petitioner Alcaraz, the legal interest on obligations consisting of loan or forbearance of money shall apply. ***”

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

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