Title
BPI Express Card Corp. vs. Olalia
Case
G.R. No. 131086
Decision Date
Dec 14, 2001
Credit cardholder not liable for unauthorized extension card charges due to issuer's failure to prove compliance with issuance requirements and negligence.
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Case Digest (G.R. No. 131086)

Facts:

1. Parties Involved:

  • Petitioner: BPI Express Card Corporation (BECC), a credit card company.
  • Respondent: Eddie C. Olalia, a cardholder of BECC.

2. Credit Card Issuance:

  • Eddie C. Olalia applied for and was granted a BECC credit card with a credit limit of P5,000.
  • In January 1991, his card expired, and a renewal card was issued.

3. Extension Card Issuance:

  • BECC issued an extension card in the name of Cristina G. Olalia, respondent’s ex-wife, as an extension of Olalia’s credit card.
  • BECC claims the extension card was delivered and received by Olalia along with his renewal card.
  • Olalia denies applying for or receiving the extension card.

4. Unauthorized Purchases:

  • The extension card was used for purchases in Iloilo and Bacolod from March to April 1991, totaling P101,844.54.
  • Olalia denied liability, stating he did not authorize the issuance or use of the extension card. He also claimed his ex-wife had been residing in the U.S. since 1986 and was not in the Philippines during the transactions.

5. Legal Proceedings:

  • BECC filed a collection case against Olalia, who admitted liability only for P13,883.27, representing purchases made under his own card.
  • The Regional Trial Court (RTC) initially ruled in favor of BECC, holding Olalia liable for P136,290.97.
  • The Court of Appeals (CA) reversed the RTC decision, limiting Olalia’s liability to P13,883.27.

Issue:

  1. Whether an extension card in the name of Cristina G. Olalia was validly issued and received by Eddie C. Olalia.
  2. Whether Eddie C. Olalia can be held liable for purchases made using the extension card.

Ruling:

The Supreme Court denied BECC’s petition and affirmed the decision of the Court of Appeals. The Court held that:

  • Eddie C. Olalia is not liable for the purchases made using the extension card in the name of Cristina G. Olalia.
  • Olalia is only liable for P13,883.27, representing purchases made under his own credit card.

Ratio:

  1. Requirements for Issuance of Extension Card:

    • Under the terms and conditions of the BECC credit card agreement, two requirements must be met for the issuance of an extension card:
      a) Payment of the necessary fee.
      b) Submission of an application for the extension card.
    • BECC failed to prove that these requirements were complied with. Olalia did not apply for an extension card, and no evidence of payment for such a card was presented.
  2. Burden of Proof on BECC:

    • The Court ruled that BECC, as the drafter of the credit card agreement (a contract of adhesion), bears the burden of proving compliance with its terms.
    • BECC failed to provide sufficient evidence, such as a signed application or payment receipt, to show that Olalia authorized the issuance of the extension card.
  3. Negligence of BECC:

    • BECC’s failure to secure the specimen signature of Cristina G. Olalia or verify her identity before issuing the extension card constitutes negligence.
    • This negligence absolves Olalia from liability for unauthorized transactions made using the extension card.
  4. Strict Construction Against Drafter:

    • As a contract of adhesion, the terms of the credit card agreement are construed strictly against BECC, the party that drafted it.
  5. Limited Liability of Olalia:

    • Olalia is only liable for P13,883.27, representing purchases made under his own credit card. He cannot be held liable for transactions made using the irregularly issued extension card.

Conclusion:

The Supreme Court upheld the decision of the Court of Appeals, ruling that Eddie C. Olalia is not liable for the unauthorized use of the extension card. BECC’s failure to comply with the requirements for issuing the extension card and its negligence in verifying the cardholder’s identity absolved Olalia from liability for the disputed transactions.


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