REPUBLIC ACT NO.

8484 (The Access Device Regulation) An act regulating the issuance and use of access devices, prohibiting fraudulent acts committed relative thereto, providing penalties and for other purposes. The recent advances in modern technology have led to the extensive use of certain devices in commercial transactions, prompting the State to regulate the same. hence, on February 3, 1998, Congress enacted Republic Act Number 8484, otherwise known as The Access Devices Regulation Act of 1998. Termed as access devices by RA No. 8484, any card, plate, code, account number, electronic serial number, personal identification number, or other telecommunication service, equipment, or instrumental identifier, or other means of account access t hat can be used to obtain money, good, services or any other thing of value or to initiate transfer of funds (other than transfer originated solely by paper instrument) is now subject to regulation. The issuance and use of access devices are ought to regulate in order to protect the rights and define the liabilities of parties in commercial transactions involving them. Essentially, the law imposes duties both to the access device issuer and holder, and penalize certain acts deemed unlawful for being detrimental to either the issuer or holder, or both. The law mandates an access device issuer, or card issuer, to disclose either in writing or orally in any application or solicitation to open a credit card account the following: 1)annual percentage rate; 2) annual and other fees; 3) and balance calculation method; 4) cash advance fee; and 5)) over the limit fee. Moreover, the computation used in order to arrive at such charges and fees required, to the extent practicable, to be explained in detail and a clear illustration of the manner by which it is made to apply is also necessary. Nonetheless, there are certain exceptions for the above requirement of disclosure not to apply. This is when application or solicitation is made through telephone, provided that the issuer does not impose any annual fee, and fee in connection with telephone solicitation unless the customer signifies acceptance by using the card, and that a clear disclosure of the information enumerated in the preceding paragraph is made in writing within thirty (30) after the consumer requests for the card, but in no event later than the date of the delivery of the card, and that the consumer is not obligated to accept the card or account and the consumer will not be obligated to pay any fees or charges disclosed unless the consumer accepts the card or account by using the card. Failure on the part of the issuer to fulfill the above requirements will result in the suspension or cancellation of its authority to issue credit cards, after due notice and hearing, by the Banko Sentral ng Pilipinas, the Securities and Exchange Commission and such other government agencies. In sum therefore, the above omission is made punishable if the following elements occur. One, there is an application or solicitation. Second, such application or solicitation should include the information required by law. and third, failure on the part of the issuer to disclose such information. In one case (Ermitano v. GR No. 127246, April 21, 1999), the Supreme Court had the occasion to rule on the validity of contracts involving credit cards. The credit cards holder contended that the credit card company should be blamed for the charges the same being unwarranted by the contract. As stipulated, once a lost card has been reported, purchases made thereafter should not accrue on the part of the holder.

The Court said notwithstanding the fact that the contract of the parties is a contract of adhesion the same is valid. However, if the same should include terms difficult to interpret as to hide the true intent to the detriment of the holder, holding it void requires no hesitation. Thus, contracts which provide for ambiguous terms of payment, imposition of charges and fees may be held void invoking the principle of the contract of adhesion. Clearly, in this case decided in 1999, the Court was concerned about an access device issuers vulnerability to abuse the provisions of the contract. It is quite surprising, however, that the Court did not make reference to RA No. 8484 to think that it was already in effect when the resolution was promulgated. Nonetheless, in American Express International Co., Inc. vs. IAC (GR NO. 70766, November 9, 1988) Supreme Court turned down the argument of private respondent grounded on the adhesion principle saying indeed, in a contract of adhesion the maker of the contract has all the advantages, however, the one to whom it is offered has the absolute prerogative to accept or deny the same. On the other hand, an access device holder may be penalized when he or she fraudulently applied for such device. An access device fraudulently applied for means any access device that was applied for or issued on account of the use of falsified document, false information, fictitious identities and addresses, or any form of false pretense or misrepresentation. Thus, the use, trafficking in, possession, and inducing, enticing or in any manner allowing one to use access device fraudulently applied for are considered unlawful. The element of fraud is indispensable for this provision of RA 8484 to apply. It is a condition sine qua non before one may be charged with the defined offense. Thus, the law provides for presumptions of Intent to defraud on the basis of mere possession, control or custody of: a) an access device without lawful authority; b) acounterfeit access device; any device making or altering equipment; c) an access device or medium on which an access device is written not in the ordinary course of the possessors business; or d) any genuine access device, not in the name of the possessor. A card holder who abandons or surreptitiously leaves the place of employment, business or residence stated in his application for credit card, without informing the credit card company of the place where he could actually be found, if at the time of such abandonment or surreptitious leaving, the outstanding and unpaid balance is past due for at least ninety (90) days and is more than ten thousand pesos (P10,000.00), shall be prima facie presumed to have used his credit card with intent to defraud. At first glance, the above presumptions, when applied in real cases, may suffer from constitutional infirmities. The constitution provides that a person shall not be held to answer to a criminal offense without due process of law. it may be argued that such presumptions are rebuttable ones. However, the danger lies in the shifting of the burden of proof from the prosecution to the defense. The law provides for sixteen (16) prohibited acts which refer to the production, use, possession of or trafficking in unauthorized or counterfeit access devices. It also includes acts deemed fraudulent that increase the amount involved in commercial transactions using access devices. Obtaining money or anything of value through the use of an access device with intent to defraud or gain, and fleeing thereafter. In the final analysis, the law basically seeks to address the issue of fraud in the issuance and use of access devices, especially credit cards. Fraud may be committed by the issuer by making false or vague information in the application or solicitation to opencredit card accounts. The applicant or holder, on the other hand, fraudulently misrepresents himself by giving wrong identity, false profession or employment, or bloated income.

Take the case for instance of Citibank v. Gatchalian (GR No. 111222, January 18, 1995) which shows how credit card applicants through false representation were able to amass in simple terms P790,000.00 from petitioner. In this case, two employees of the Asian-Pacific Broadcasting Co,. Inc. (ABCI) applied for nineteen (19( credit cards with Citibank using different names other than their real names. The Citibank approved the applications and the credit cards were delivered to them for use. However, this case involves an illegal dismissal case where a Citibank employee was found guilty of gross negligence for effecting the delivery of the credit cards. Her dismissal was affirmed in this case. Insofar as access device issuers are concerned, Eermitano v. C.A., may be a case in point. The credit card holder lost his credit card which he immediately reported to the card issuer. The contract stipulated that in case of lost, the same should be reported immediately, otherwise purchases made shall be charged to the holder. In this case, despite the prompt reporting of the holder, the issuer still charged the purchases against the former. The Court in this case held the issuer in breach of the contract. The penalties provided for by RA 8484 are imprisonment and fine. Imprisonment is from six (6) years to ten (10) years and fine ranges from ten thousand pesos (10,000.00) or twice the value of the offense, whichever is higher. The penalties are increased in case the offender has a similar previous conviction, meaning if he was previously found violating RA 8484. In which case, the accused shall suffer imprisonment of not less than twelve (12) years and not more than twenty (20) years. The two other stages of felony, as defined by the Revised Penal Code is also made punishable. Thus, attempted and frustrated are meted out with the penalties of imprisonment and fine albeit only in fractions of the above penalties. R.A. 8484 may seem to favor the issuer. A credit card company may only be meted out the penalty of cancellation or suspension, which may be considered as mere administrative sanctions. In fact, it is not the courts which impose such sanctions but administrative agencies such as the Bangko Sentral and the Securities and Exchange Commission. On the other hand, a holder or mere possessor of a counterfeit fraudulently applied for access device may be convicted and be made to suffer imprisonment and fine.

JURISPRUDENCE: Citibank v Gatchalian, (G.R. No. 111222, January 18, 1995) It shows how credit card applicants through false representation were able to amass in simple terms P790,000.00 from petitioner. In this case, two employees of the Asian-Pacific Broadcasting Co., Inc. (ABCI) applied for nineteen (19) credit cards with Citibank using different names other than their real names. The Citbank approved the applications and the credit cards were delivered to them for use. However, this case involves an illegal dismissal case where a Citibank employee was found guilty of gross negligence for effecting the delivery of the credit cards. Her dismissal was affirmed in this case.

Insofar as access device issuers are concerned, Eermitano v. CA, may be a case in point. The credit card holder lost his credit card which he immediately reported to the card issuer. The contract stipulated that in case of lost, the same should be reported immediately, otherwise purchaser made shall be charged to the holder. In this case, despite the prompt reporting of the holder, the issuer still charged the purchases against the former. The Court in this case held that issuer in breach of the contract. Luis Marcos Laurel v Hon. Zeus Abrogar Posted on June 29, 2013 Luis Marcos Laurel vs Hon. Zeus Abrogar GR No. 155076 January 13, 2009 FACTS Laurel was charged with Theft under Art. 308 of the RPC for allegedly taking, stealing, and using PLDT's international long distance calls by conducting International Simple Resale (ISR) a method of outing and completing international long-distance calls using lines, cables, antennae, and/or air wave frequency which connect directly to the local/domestic exchange facilities of the country where the call is destined. PLDT alleged that this service was stolen from them using their own equipment and caused damage to them amounting to P20,370,651.92. PLDT alleges that the international calls and business of providing telecommunication or telephone service are personal properties capable of appropriation and can be objects of theft. ISSUE WON Laurel's act constitutes Theft HELD Art.308, RPC: Theft is committed by any person who, with intent to gain but without violence against, or intimidation of persons nor force upon things , shall take personal property of another without the latters consent. Elements of Theft under Art.308, RPC: 1. There be taking of Personal Property; Taking be done with Intent to Gain; 4. Taking be done without the owners consent; 5. No violence against, or intimidation of, persons or force upon things Personal Property anything susceptible of appropriation and not included in Real Property Thus, the term personal property as used in Art.308, RPC should be interpreted in the context of the Civil Code's definition of real and personal property. Consequently, any personal property, tangible or intangible, corporeal or incorporeal, capable of appropriation may be the subject of theft (*US v Carlos; US v Tambunting; US v Genato*), so long as the same is not included in the enumeration of Real Properties under the Civil Code. The only requirement for personal property to capable of theft, is that it be subject to appropriation. Art. 416 (3) of the Civil Code deems Forces of Nature which are brought under the control of science, as Personal Property. The appropriation of forces of nature which are brought under control by science can be achieved by tampering with any apparatus used for generating or measuring such forces of nature, wrongfully redirecting such forces of nature from such apparatus, or using any device to fraudulently obtain such forces of nature. In the instant case, the act of conducting ISR operations by illegally connecting various equipment or apparatus to PLDTs telephone system, through which petitioner is able to resell or re-route international long distance calls using PLDTs facilities constituteSubtraction. Moreover, interest in business should be classified as personal property since it is capable of appropriation, and not included in the enumeration of real properties.

2. 3.

Said Personal Property belongs to another;

Therefore, the business of providing telecommunication or telephone service are personal property which can be the object of theft under Art. 308 of the RPC. The act of engaging in ISR is an act of subtraction penalized under the said article. While international long-distance calls take the form of electrical energy and may be considered as personal property, the said long-distance calls do not belong to PLDT since it could not have acquired ownership over such calls. PLDT merely encodes, augments, enhances, decodes and transmits said calls using its complex communications infrastructure and facilities. Since PLDT does not own the said telephone calls, then it could not validly claim that such telephone calls were taken without its consent. What constitutes Theft is the use of the PLDT's communications facilities without PLDT's consent. The theft lies in the unlawful taking of the telephone services & businesses. The Amended Information should be amended to show that the property subject of the theft were services and business of the offended party. MARK SOLEDAD y CRISTOBAL,Petitioner, - versus - PEOPLE OF THE PHILIPPINES,Respondent. G.R. No. 184274 This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse and set aside the Court of Appeals (CA) Decision[1] dated June 18, 2008 and Resolution[2] dated August 22, 2008 in CA-G.R. CR. No. 30603. The assailed Decision affirmed with modification the September 27, 2006 decision[3] of the Regional Trial Court (RTC), Branch 202, Las Pias City, finding petitioner Mark C. Soledad guilty beyond reasonable doubt of Violation of Section 9(e), Republic Act (R.A.) No. 8484, or the Access Devices Regulations Act of 1998; while the assailed Resolution denied petitioners motion for reconsideration. The facts of the case, as narrated by the CA, are as follows: Sometime in June 2004, private complainant Henry C. Yu received a call on his mobile phone from a certain Tess or Juliet Villar (later identified as Rochelle Bagaporo), a credit card agent, who offered a Citifinancing loan assistance at a low interest rate. Enticed by the offer, private complainant invited Rochelle Bagaporo to go to his office in Quezon City. While in his office, Rochelle Bagaporo indorsed private complainant to her immediate boss, a certain Arthur [later identified as petitioner]. In their telephone conversation, [petitioner] told private complainant to submit documents to a certain Carlo (later identified as Ronald Gobenchiong). Private complainant submitted various documents, such as his Globe handyphone original platinum gold card, identification cards and statements of accounts. Subsequently, private complainant followed up his loan status but he failed to get in touch with either [petitioner] or Ronald Gobenchiong. During the first week of August 2004, private complainant received his Globe handyphone statement of account wherein he was charged for two (2) mobile phone numbers which were not his. Upon verification with the phone company, private complainant learned that he had additional five (5) mobile numbers in his name, and the application for said cellular phone lines bore the picture of [petitioner] and his forged signature. Private complainant also checked with credit card companies and learned that his Citibank Credit Card database information was altered and he had a credit card application with Metrobank Card Corporation (Metrobank).

Thereafter, private complainant and Metrobanks junior assistant manager Jefferson Devilleres lodged a complaint with the National Bureau of Investigation (NBI) which conducted an entrapment operation. During the entrapment operation, NBIs Special Investigator (SI) Salvador Arteche [Arteche], together with some other NBI operatives, arrived in Las Pias around 5:00 P.M. [Arteche] posed as the delivery boy of the Metrobank credit card. Upon reaching the address written on the delivery receipt, [Arteche] asked for Henry Yu. [Petitioner] responded that he was Henry Yu and presented to [Arteche] two (2) identification cards which bore the name and signature of private complainant, while the picture showed the face of [petitioner]. [Petitioner] signed the delivery receipt. Thereupon, [Arteche] introduced himself as an NBI operative and apprehended [petitioner]. [Arteche] recovered from [petitioner] the two (2) identification cards he presented to [Arteche] earlier.[4]

Petitioner was thus charged with Violation of Section 9(e), R.A. No. 8484 for possessing a counterfeit access device or access device fraudulently applied for. The accusatory portion of the Information reads: That on or about the 13th day of August 2004, or prior thereto, in the City of Las Pias, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating with certain Rochelle Bagaporo a.k.a. Juliet Villar/Tess and a certain Ronald Gobenciong a.k.a. Carlo and all of them mutually helping and aiding each other, did then and there willfully, unlawfully and feloniously defraud complainant HENRY YU by applying a credit card, an access device defined under R.A. 8484, from METROBANK CARD CORPORATION, using the name of complainant Henry C. Yu and his personal documents fraudulently obtained from him, and which credit card in the name of Henry Yu was successfully issued and delivered to said accused using a fictitious identity and addresses of Henry Yu, to the damage and prejudice of the real Henry Yu. CONTRARY TO LAW.[5] Upon arraignment, petitioner pleaded not guilty. Trial on the merits ensued. After the presentation of the evidence for the prosecution, petitioner filed a Demurrer to Evidence, alleging that he was not in physical and legal possession of the credit card presented and marked in evidence by the prosecution. In an Order dated May 2, 2006, the RTC denied the Demurrer to Evidence as it preferred to rule on the merits of the case.[6] On September 27, 2006, the RTC rendered a decision finding petitioner guilty as charged, the dispositive portion of which reads: In the light of the foregoing, the Court finds accused Mark Soledad y Cristobal a.k.a. Henry Yu, Arthur GUILTY beyond reasonable doubt of violation of Section 9(e), Republic Act 8484 (Access Device Regulation Act of 1998). Accordingly, pursuant to Section 10 of Republic Act 8484 and applying the Indeterminate Sentence Law, said accused is hereby sentenced to suffer an imprisonment penalty of six (6) years of prision correccional, as minimum, to not more than ten (10) years of prision mayor, as maximum. Further, accused is also ordered to pay a fine of Ten Thousand Pesos (P10,000.00) for the offense committed. SO ORDERED.[7] On appeal, the CA affirmed petitioners conviction, but modified the penalty imposed by the RTC by deleting the terms prision correccional and prision mayor.

Hence, this petition raising the following issues: (1) Whether or not the Information is valid; petitioner was

(2) Whether or not the Information charges an offense, or the offense found guilty of;

(3) Whether or not petitioner was sufficiently informed of the nature of the accusations against him; (4) Whether or not petitioner was legally in possession of the credit card subject of the case.[8] The petition is without merit. Petitioner was charged with Violation of R.A. No. 8484, specifically Section 9(e), which reads as follows: Section 9. Prohibited Acts. The following acts shall constitute access device fraud and are hereby declared to be unlawful: xxxx (e) possessing one or more counterfeit access devices or access devices fraudulently applied for. Petitioner assails the validity of the Information and claims that he was not informed of the accusation against him. He explains that though he was charged with possession of an access device fraudulently applied for, the act of possession, which is the gravamen of the offense, was not alleged in the Information. We do not agree. Section 6, Rule 110 of the Rules of Criminal Procedure lays down the guidelines in determining the sufficiency of a complaint or information. It states: SEC. 6. Sufficiency of complaint or information. A complaint or information is sufficient if it states the name of the accused; the designation of the offense given by the statute; the acts or omissions complained of as constituting the offense; the name of the offended party; the approximate date of the commission of the offense; and the place where the offense was committed. In the Information filed before the RTC, it was clearly stated that the accused is petitioner Mark Soledad yth day of August 2004 in the City of Las Pias. Undoubtedly, the Information contained all the necessary details of the offense committed, sufficient to apprise petitioner of the nature and cause of the accusation against him. As aptly argued by respondent People of the Philippines, through the Office of the Solicitor General, although the word possession was not used in the accusatory portion of the Information, the word possessing appeared in its preamble or the first paragraph thereof. Thus, contrary to petitioners contention, he was apprised that he was being charged with violation of R.A. No. 8484, specifically section 9(e) thereof, for possession of the credit card fraudulently applied for. Cristobal a.k.a. Henry Yu/Arthur. It was also specified in the preamble of the Information that he was being charged with Violation of R.A. No. 8484, Section 9(e) for possessing a counterfeit access device or access device fraudulently applied for. In the accusatory portion thereof, the acts constituting the offense were clearly narrated in that [petitioner], together with other persons[,] willfully, unlawfully and feloniously defrauded private complainant by applying [for] a credit card, an access device defined under R.A. [No.] 8484, from Metrobank Card Corporation, using the name of

complainant Henry C. Yu and his personal documents fraudulently obtained from him, and which credit card in the name of Henry Yu was successfully issued, and delivered to said accused using a fictitious identity and addresses of Henry Yu, to the damage and prejudice of the real Henry Yu. Moreover, it was identified that the offended party was private complainant Henry Yu and the crime was committed on or about the 13 The Courts discussion in People v. Villanueva[9] on the relationship between the preamble and the accusatory portion of the Information is noteworthy, and we quote: The preamble or opening paragraph should not be treated as a mere aggroupment of descriptive words and phrases. It is as much an essential part [of] the Information as the accusatory paragraph itself. The preamble in fact complements the accusatory paragraph which draws its strength from the preamble. It lays down the predicate for the charge in general terms; while the accusatory portion only provides the necessary details. The preamble and the accusatory paragraph, together, form a complete whole that gives sense and meaning to the indictment. x x x. xxxx Moreover, the opening paragraph bears the operative word accuses, which sets in motion the constitutional process of notification, and formally makes the person being charged with the commission of the offense an accused. Verily, without the opening paragraph, the accusatory portion would be nothing but a useless and miserably incomplete narration of facts, and the entire Information would be a functionally sterile charge sheet; thus making it impossible for the state to prove its case. The Information sheet must be considered, not by sections or parts, but as one whole document serving one purpose, i.e., to inform the accused why the full panoply of state authority is being marshaled against him. Our task is not to determine whether allegations in an indictment could have been more artfully and exactly written, but solely to ensure that the constitutional requirement of notice has been fulfilled x x x.[10] Besides, even if the word possession was not repeated in the accusatory portion of the Information, the acts constituting it were clearly described in the statement [that the] credit card in the name of Henry Yu was successfully issued, and delivered to said accused using a fictitious identity and addresses of Henry Yu, to the damage and prejudice of the real Henry Yu. Without a doubt, petitioner was given the necessary data as to why he was being prosecuted. Now on the sufficiency of evidence leading to his conviction. Petitioner avers that he was never in possession of the subject credit card because he was arrested immediately after signing the acknowledgement receipt. Thus, he did not yet know the contents of the envelope delivered and had no control over the subject credit card.[11] Again, we find no value in petitioners argument. The trial court convicted petitioner of possession of the credit card fraudulently applied for, penalized by R.A. No. 8484. The law, however, does not define the word possession. Thus, we use the term as defined in Article 523 of the Civil Code, that is, possession is the holding of a thing or the enjoyment of a right. The acquisition of possession involves two elements: the corpus or the material holding of the thing, and the animus possidendi or the intent to possess it.[12] Animus possidendi is a state of mind, the presence or determination of which is largely dependent on attendant events in each case. It may be inferred from the prior or contemporaneous acts of the accused, as well as the surrounding circumstances.[13] In this case, prior to the commission of the crime, petitioner fraudulently obtained from private complainant various documents showing the latters identity. He, thereafter, obtained cellular phones using private complainants identity. Undaunted, he fraudulently

applied for a credit card under the name and personal circumstances of private complainant. Upon the delivery of the credit card applied for, the messenger (an NBI agent) required two valid identification cards. Petitioner thus showed two identification cards with his picture on them, but bearing the name and forged signature of private complainant. As evidence of the receipt of the envelope delivered, petitioner signed the acknowledgment receipt shown by the messenger, indicating therein that the content of the envelope was the Metrobank credit card. Petitioner materially held the envelope containing the credit card with the intent to possess. Contrary to petitioners contention that the credit card never came into his possession because it was only delivered to him, the above narration shows that he, in fact, did an active part in acquiring possession by presenting the identification cards purportedly showing his identity as Henry Yu. Certainly, he had the intention to possess the same. Had he not actively participated, the envelope would not have been given to him. Moreover, his signature on the acknowledgment receipt indicates that there was delivery and that possession was transferred to him as the recipient. Undoubtedly, petitioner knew that the envelope contained the Metrobank credit card, as clearly indicated in the acknowledgment receipt, coupled with the fact that he applied for it using the identity of private complainant. Lastly, we find no reason to alter the penalty imposed by the RTC as modified by the CA. Section 10 of R.A. No. 8484 prescribes the penalty of imprisonment for not less than six (6) years and not more than ten (10) years, and a fine of P10,000.00 or twice the value of the access device obtained, whichever is greater. Thus, the CA aptly affirmed the imposition of the indeterminate penalty of six years to not more than ten years imprisonment, and a fine of P10,000.00. WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated June 18, 2008 and Resolution dated August 22, 2008 in CA-G.R. CR. No. 30603 are AFFIRMED. SO ORDERED

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 127246 April 21, 1999 SPOUSES LUIS M. ERMITAO and MANUELITA C. ERMITAO , petitioners, vs. THE COURT OF APPEALS AND BPI EXPRESS CARD CORP., respondents.

QUISUMBING, J This petition for review under Rule 45, of the Rules of Court, seeks to set aside the decision of the Court of Appeals in C.A.-G.R. CV No. 47888 reversing the trial court's 1 judgment in Civil Case No. 61357, as well as the resolution of the Court of Appeals denying petitioners' motion for reconsideration. In dispute is the validity of the stipulation embodied in the standard application form for credit cards furnished by private respondent. The stipulation makes the cardholder liable

for purchases made through his lost or stolen credit card until (a) notice of such loss or theft has been given to private respondent and (b) the latter has communicated such loss or theft to its member-establishments. The facts, as found by the trial court, are not disputed. Petitioner Luis Ermitao applied for a credit card from private respondent BPI Express Card Corp. (BECC) on October 8, 1986 with his wife, Manuelita, as extension cardholder. The spouses were given credit cards with a credit limit of P10,000.00. They often exceeded this credit limit without protest from BECC. On August 29, 1989, Manuelita's bag was snatched from her as she was shopping at the Greenbelt Mall in Makati, Metro Manila. Among the items inside the bag was her BECC credit card. That same night she informed, by telephone, BECC of the loss. The call was received by BECC offices through a certain Gina Banzon. This was followed by a letter dated August 30, 1989. She also surrendered Luis' credit card and requested for replacement cards. In her letter, Manuelita stated that she "shall not be responsible for any and all charges incurred [through the use of the lost card] after August 29, 1989. 2 However, when Luis received his monthly billing statement from BECC dated September 20, 1989, the charges included amounts for purchases made on August 30, 1989 through Manuelita's lost card. Two purchases were made, one amounting to P2,350.05 and the other, P607.50. Manuelita received a billing statement dated October 20, 1989 which required her to immediately pay the total amount of P3,197.70 covering the same (unauthorized) purchases. Manuelita again wrote BECC disclaiming responsibility for those charges, which were made after she had served BECC with notice of the loss of her card. Despite the spouses' refusal to pay and the fact that they repeatedly exceeded their monthly credit limit, BECC sent them a notice dated December 29, 1989 stating that their cards had been renewed until March 1991. Notwithstanding this, however, BECC continued to include in the spouses' billing statements those purchases made through Manuelita's lost card. Luis protested this billing in his letter dated June 20, 1990. However, BECC, in a letter dated July 13, 1990, pointed out to Luis the following stipulation in their contract: In the event the card is lost or stolen, the cardholder agrees to immediately report its loss or theft in writing to BECC . . . purchases made/incurred arising from the use of the lost/stolen card shall be for the exclusive account of the cardholder and the cardholder continues to be liable for the purchases made through the use of the lost/stolen BPI Express Card until after such notice has been given to BECC and the latter has communicated such loss/theft to its member establishments. 3 Pursuant to this stipulation, BECC held Luis liable for the amount of P3,197.70 incurred through the use of his wife's lost card, exclusive of interest and penalty charges. In his reply dated July 18, 1990, Luis stressed that the contract BECC was referring to was a contract of adhesion and warned that if BECC insisted on charging him and his wife for the unauthorized purchases, they will sue BECC for damages. This warning notwithstanding, BECC continued to bill the spouses for said purchases. 4 On April 10, 1991, Luis used his credit card to purchase gasoline at a Caltex station. The latter, however, dishonored his card. In reply to Luis' demand for an explanation, BECC wrote that it transferred the balance of his old credit card to his new one, including the unauthorized charges. Consequently, his outstanding balance exceeded his credit limit of P10,00000. He was informed that his credit card had not been cancelled but, since he exceeded his credit limit, he could not avail of his credit privileges.

Once more, Luis pointed out that notice of the lost card was given to BECC before the purchases were made. Subsequently, BECC cancelled the spouses' credit cards and advised them to settle the account immediately or risk being sued for collection of said account. Constrained, petitioners sued BECC for damages. The trial court ruled in their favor, stating that there was a waiver on the part of BECC in enforcing the spouses' liability, as indicated by the following circumstances: (1) Its failure to inform the spouses that the unauthorized charges on the lost card would be carried over to their replacement cards; and (2) Its act of unqualifiedly replacing the lost card and Luis' card which were both surrendered by the spouses, even after the spouses unequivocally denied liability for the unauthorized purchases. The trial court further noted that the suspension of the spouses' credit cards was based upon the "lame excuse" that the credit limit had been exceeded, despite the fact that BECC allowed the spouses previously to exceed their credit limit, even for almost two years after the loss of Manuelita's card. Moreover, the credit limit was exceeded only after BECC added the unauthorized purchases to the liability of the spouses. BECC continued to send the spouses separate billing statements that included the unauthorized purchases, with interest and penalty charges. The trial court opined that the only purpose for the suspension of the spouses' credit privileges was to compel them to pay for the unauthorized purchases. The trial court ruled that the latter portion of the condition in the parties' contract, which states that liability for purchases made after a card is lost or stolen shall be for the account of the cardholder until after notice of the loss or theft has been given to BECC and after the latter has informed its member establishments , is void for being contrary to public policy and for being dependent upon the sole will of the debtor. 5 Moreover, the trial court observed that the contract between BECC and the Ermitaos was a contract of adhesion, whose terms must be construed strictly against BECC, the party that prepared it. The dispositive portion of the trial court's decision reads: WHEREFORE, and IN VIEW OF THE ALL THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in favor of the plaintiffs, Spouses Luis M. Ermitao and Manuelita C. Ermitao and against defendant BPI Express Card Corporation: 1. Ordering the said defendant to pay the plaintiffs the sum of P100,000.00 as moral damages. 2. Ordering said defendant to pay the plaintiffs the sum of P50,000.00 as exemplary damages. 3. Ordering said defencant to pay the plaintiffs the sum equivalent to twenty per cent (20%) of the amounts abovementioned as and for attorney's fees and expenses of litigation, and 4. Ordering the said defendant to pay the costs of suit. SO ORDERED

But, on appeal this decision was reversed. The Court of Appeals stated that the spouses should be bound by the contract, even though it was one of adhesion. It also said that Luis, being a lawyer, had "all the tools to drive a hard bargain had he wanted to. 6 It cited the case of Serra v. Court of Appeals 7 wherein this Court ruled that contracts of adhesion are as binding as ordinary contracts. The petitioner in Serra was a CPA-lawyer, "a highly educated man . . . who should have been more cautious in (his) transactions. . . 8 The Court of Appeals therefore disposed of the appeal as follows: THE FOREGOING CONSIDERED, the contested decision is REVERSED. Plaintiffs/appellees are hereby directed to pay the defendant/appellant the amount of P3,197.70 with 3% interest per month and an additional 3% penalty equivalent to the amount due every month until full payment. Without cost. SO ORDERED.
9

Hence, this recourse by petitioners, in which they claim that the Court of Appeals gravely erred in: (i) Ruling that petitioners should be bound by the stipulations contained in the credit card application a document wholly prepared by private respondent itself taking into consideration the professional credentials of petitioner Luis M. Ermitao; (ii) Relying on the case of Serra v. Court of Appeals, 229 SCRA 60, because unlike that case, petitioners have no chance at all to contest the stipulations appearing in the credit card application that was drafted entirely by private respondent, thus, a clear contract of adhesion; (iii) Ruling that private respondent is not estopped by its subsequent acts after having been notified of the loss/theft of the credit card issued to petitioners, and (iv) Holding that the onerous and unconscionable condition in the credit card application that the cardholder continues to be liable for purchases made on lost or stolen credit cards not only after such notice has been given to appellant but also after the latter has communicated such loss/theft to its member establishments without any specific time or period is valid. 10 At the outset, we note that the contract between the parties in this case is indeed a contract of adhesion, so-called because its terms are prepared by only one party while the other party merely affixes his signature signifying his adhesion thereto. 11 Such contracts are not void in themselves. 12 They are as binding as ordinary contracts. Parties who enter into such contracts are free to reject the stipulations entirely. This Court, however, will not hesitate to rule out blind adherence to such contracts if they prove to be too one-sided under the attendant facts and circumstances. 13 The resolution of this petition, in our view, hinges on the validity and fairness of the stipulation on notice required by private respondent in case of loss or theft of a BECCissued credit card. Because of the peculiar nature of contracts of adhesion, the validity thereof must be determined in light of the circumstances under which the stipulation is intended to apply. 14 The stipulation in question reads: In the event the card is lost or stolen, the cardholder agrees to immediately report its loss or theft in citing to BECC . . . purchases made/incurred arising from the use of the lost/stolen card shall be for the

exclusive account of the cardholder and the cardholder continues to be liable for the purchases made through the use of the lost/stolen BPI Express Card until after such notice has been given to BECC and the latter has communicated such loss/theft to its member establishments. For the cardholder to be absolved from liability for unauthorized purchases made through his lost or stolen card, two steps must be followed: (1) the cardholder must give written notice to BECC, and (2) BECC must notify its member establishments of such loss or theft, which, naturally, it may only do upon receipt of a notice from the cardholder. Both the cardholder and BECC, then, have a responsibility to perform, in order to free the cardholder from any liability arising from the use of a lost or stolen card. In this case, the cardholder, Manuelita, has complied with what was required of her under the contract with BECC. She immediately notified BECC of the loss of her card on the same day it was lost and, the following day, she sent a written notice of the loss to BECC. That she gave such notices to BECC is admitted by BECC in the letter sent to Luis by Roberto L. Maniquiz, head of BECC's Collection Department. 15 Having thus performed her part of the notification procedure, it was reasonable for Manuelita and Luis, for that matter to expect that BECC would perform its part of the procedure, which is to forthwith notify its member-establishments. It is not unreasonable to assume that BECC would do this immediately, precisely to avoid any unauthorized charges. Clearly, what happened in this case was that BECC failed to notify promptly the establishment in which the unauthorized purchases were made with the use of Manuelita's lost card. Thus, Manuelita was being liable for those purchases, even if there is no showing that Manuelita herself had signed for said purchases, and after notice by her concerning her card's loss was already given to BECC. BECC asserts that the period that elapsed from the time of the loss of the card to the time of its unauthorized use was too short such that "it would be next to impossible for respondent to notify all its member-establishments regarding the fact of the loss. 16 Nothing, however, prevents said member-establishments from observing verification procedures including ascertaining the genuine signature and proper identification of the purported purchaser using the credit card. BECC states that, "between two persons who are negligent, the one who made the wrong possible should bear the loss." We take this to be an admission that negligence had occurred. In effect, BECC is saying that the company, and the member-establishments or the petitioners could be negligent. However, according to BECC, petitioners should be the ones to bear the loss since it was they who made possible the commission of a wrong. This conclusion, however, is self-serving and obviously untenable. From one perspective, it was not petitioners who made possible the commission of the wrong. It could be BECC for its failure to immediately notify its members-establishments, who appear lacking in care or instruction by BECC in proper procedures, regarding signatures and the identification of card users at the point of actual purchase of goods or services. For how else could an unauthorized person succeed to use Manuelita's lost card? The cardholder was no longer in control of the procedure after it has notified BECC of the card's loss or theft. It was already BECC's responsibility to inform its memberestablishments of the loss or theft of the card at the soonest possible time. We note that BECC is not a neophyte financial institution, unaware of the intricacies and risks of providing credit privileges to a large number of people. It should have anticipated an occurrence such as the one in this case and devised effective ways and means to prevent it, or otherwise insure itself against such risk. Prompt notice by the cardholder to the credit card company of the loss or theft of his card should be enough to relieve the former of any liability occasioned by the unauthorized use of his lost or stolen card. The questioned stipulation in this case, which still requires the

cardholder to wait until the credit card company has notified all its memberestablishments, puts the cardholder at the mercy of the credit card company which may delay indefinitely the notification of its members to minimize if not to eliminate the possibility of incurring any loss from unauthorized purchases. Or, as in this case, the credit card company may for some reason fail to promptly notify its members through absolutely no fault of the cardholder. To require the cardholder to still pay for unauthorized purchases after he has given prompt notice of the loss or theft of his card to the credit card company would simply be unfair and unjust. The Court cannot give its assent to such a stipulation which could clearly run against public policy. 17 On the matter of the damages petitioners are seeking, we must delete the award of exemplary damages, absent any clear showing that BECC acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, as required by Article 2232 of the Civil Code. We likewise reduce the amount of moral damages to P50,000.00, considering the circumstances of the parties to the case. WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 47888 is hereby REVERSED and the decision of the Regional Trial Court, Branch 157, Pasig City in Civil Case No. 61375 is REINSTATED, with the MODIFICATION that the award of exemplary damages in the amount of P50,000.00 is hereby deleted; and the amount of moral damages is reduced to P50,000.00; but private respondent is further ordered to pay P25,000 as attorney's fees and litigation expenses. Costs against private respondents.1wphi1.nt SO ORDERED.