CASE BrieF NO. 2006-0820


“Even if the Terms and Conditions are printed at the back of each and every credit card issued by Equitable, such is not sufficient to bind Alcaraz to the Terms and Conditions without a clear showing that he was aware of and consented thereto.”


CASE: Crisostomo Alcaraz vs. CA and Equitable Credit Card Network, Inc. [G.R. NO. 152202 July 28, 2006]

PONENTE: Associate Justice Reynato S. Puno

SUBJECT:

  1. REMEDIAL LAW:
    i. Motion for Continuance or Postponement
  2. TORTS AND DAMAGES:
    i. Legal Interests
  3. NEW CIVIL CODE:
    i. Obligations and Contracts – Use of Credit Cards

FACTS:        Equitable issued a credit card to Crisostomo Alcaraz. Alcaraz through the use of the said credit card secured cash advances and purchased goods and services on credit with Equitable’s affiliated merchant establishments. Thus, he accumulated unpaid credit with Equitable and despite the receipt of several demand letters, failed to pay his outstanding obligations.

In its complaint before the lower court, Equitable sought the payment of the accumulated outstanding balance including interest of 2.5% per month as well as a monthly late penalty/surcharge as provided in the “Terms and Conditions Governing the Issuance and Use of Equitable Visa Card”. Equitable claims Alcaraz has an accumulated outstanding balance of US$8,970.54 in his dollar account as of February 18, 1999, and P192,500.00 on his peso account as of February 28, 1999 inclusive of interest and surcharges.

Alcaraz admitted he had made use of the credit card issued in his name by Equitable, but contested the amount of his liability. He alleged that he was issued the credit card as an “honorary member.” As such, he was not required to submit any application or sign any document prior to the issuance of the card and he was entitled to pay on an installment basis without any interest. He denied signing the document Terms and Conditions Governing the Issuance and Use of Equitable Visa Card.

After several postponements of the pretrial conference, the trial court declared Alcaraz as in default upon motion of Equitable and allowed the latter to present its evidence ex parte.  After Equitable’s presentation of evidence, the RTC ruled in its favor. Alcaraz elevated the case to the appellate court.

Again, the Court of Appeals ruled in favor of Equitable.

Undaunted, Alcaraz goes to the Supreme Court via a Petition for Review on Certiorari.

Alcaraz laments that the trial court acted arbitrarily when it did not postpone and reschedule the pretrial conference on February 23, 1999 despite the manifestation of Alcarz’s wife that he suffered a stroke which rendered him paralyzed while Atty. Ben Ibuyan, Alcaraz’s counsel, suffered from a “lingering gall bladder ailment.”

Alcaraz also contends that he is not bound by the Terms and Conditions as he never signed it.

Equitable, on the other hand, claims that at the back of the credit card itself the following is stated:

“By signing or using this card, the holder agrees to be bound by Equitable Bank’s Credit Card Agreement, all future amendments thereto. . . .”

Equitable maintains that the above stipulation is a standard clause printed at the back of each credit card that it issued and that the Agreement mentioned therein refers to the Terms and Conditions which governs the use of the credit card as contained in Equitable’s standard application form. Thus, by signing the back of the credit card, Alcaraz has explicitly consented to the Terms and Conditions including the applicable interests, service fees, attorney’s fees and liquidated damages in the event of nonpayment within the period stated in the statements of account regularly sent every month to Alcaraz.

ISSUES:

A.       Whether the RTC acted arbitrarily when it did not postpone and reschedule the pretrial conference on February 23, 1999 despite the manifestation of Alcaraz’s wife that he suffered a stroke which rendered him paralyzed while Atty. Ben Ibuyan, Alcaraz’s counsel, suffered from a “lingering gall bladder ailment.”
B.       Whether Alcaraz is bound by the Terms and Conditions governing the use of the credit card?
C.       Is Alcaraz still liable for the legal interest?

RULING:

A. It did not.

In the case at bar, both Alcaraz and his counsel did not appear at the scheduled pretrial. Instead, it was his wife alone who made the verbal manifestation on behalf of her Alcaraz and his counsel while presenting an unverified medical certificate on the latter’s behalf. As correctly observed by the Court of Appeals, the records are bereft of any medical certificate, verified or unverified, in the name of Alcaraz to establish the cause of his absence at the pretrial conference. Even assuming arguendo that Alcaraz and Atty. Ibuyan’s absence on the February 23, 1999 pretrial conference is due to justifiable causes, Alcaraz is represented by a law firm and not by Atty. Ibuyan alone. As such, any of the latter’s partners or associates could have appeared before the court and participate in the pretrial or at least make the proper motion for postponement if necessary.

A charge of arbitrariness and bias against the trial court, in this case against the judge as well as all the court personnel, is a serious charge that must be substantiated. Bare allegations of partiality will not suffice. It must be shown that the trial court committed acts or engaged in conduct clearly indicative of bias or pre-judgment against a party. The Alcaraz failed to do so in this case. The disallowance of a motion for postponement is not sufficient to show arbitrariness and partiality of the trial court. As this Court ruled in the case of Gochan v. Gochan (2003), to wit:

. . . . A motion for continuance or postponement is not a matter of right, but a request addressed to the sound discretion of the court. Parties asking for postponement have absolutely no right to assume that their motions would be granted. Thus, they must be prepared on the day of the hearing.

B.       Alcaraz is not bound by the Terms and Conditions.

Equitable has the burden of proving the material allegations of its complaint with the requisite quantum of evidence. One such material allegation is the applicability of the provisions of the Terms and Conditions to Alcaraz. In support thereof Equitable presented a copy of the Terms and Conditions as contained in its standard application form and a copy of its “Visa Card” issued to another client in order to show the alleged standard stipulation printed at the back of the card. The standard application form presented to the court does not bear the signature of Alcaraz. In fact, as admitted by Equitable, Alcaraz, as a pre-screened client, did not submit or sign any application form or document prior to the issuance of the credit card. Neither is there any evidence on record that Alcaraz was shown a copy of the Terms and Conditions before or after the issuance of the credit card in his name, much less that he has given his consent thereto. As correctly pointed out by the Court of Appeals, Alcaraz should not be condemned to pay the interests and charges provided in the Terms and Conditions on the mere claim of Equitable without any proof of the former’s conformity and acceptance of the stipulations contained therein. Even if we are to accept the Equitable’s averment that the stipulation quoted earlier is printed at the back of each and every credit card issued by Equitable, such stipulation is not sufficient to bind Alcaraz to the Terms and Conditions without a clear showing that he was aware of and consented to the provisions of this document.

C.       Alcaraz is liable for legal interests.

It is undeniable that Alcaraz accumulated unpaid obligations through the use of the credit card issued to him by Equitable. As such, Alcaraz is liable for the payment thereof. Since the provisions of the Terms and Conditions are inapplicable to Alcaraz, the legal interest on obligations consisting of loan or forbearance of money shall apply. As this Court ruled in the landmark case of Eastern Shipping Lines, Inc. v. Court of Appeals, to wit:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

. . . .

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

Hence, it is only from the date of judicial or extrajudicial demand that the legal rate of interest shall apply until full payment thereof.

Related Case BrieFs:

  1. Gochan v. Gochan (2003)

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