BANK OF PHILIPPINE ISLANDS v. SPS. RAM M. SARDA

FACTS:

The Bank of the Philippine Islands (BPI) filed a complaint against spouses Ram M. Sarda and "Jane Doe" Sarda, alleging that they failed to settle their outstanding credit card debt. BPI presented documentary evidence and a witness to support their claim. The Regional Trial Court (RTC) ruled in favor of BPI and ordered the respondents to pay the accumulated amounts and attorney's fees.

The respondents appealed to the Court of Appeals (CA), arguing that BPI failed to establish their alleged obligation under the credit cards. The CA reversed the RTC's decision, stating that BPI failed to prove Mr. Sarda's possession of the credit card and authorization for the supplementary card. The CA also found that BPI failed to prove the receipt of monthly billing statements and demand letters by the respondents. However, the CA denied the respondents' counterclaim.

BPI filed a petition for review before the Supreme Court. BPI contends that the documentary evidence, including the statements of account, proves the respondents' liability. They argue that Mr. Sarda's physical possession of the credit card and authorization for the supplementary card are irrelevant as the transactions were reflected in the statements of account. The respondents argue that BPI raises factual issues not proper in a Rule 45 petition. They claim that the transactions reflected in the statements of account have been fully paid, thus there is no outstanding obligation.

In addition, it was discovered that a supplementary card was linked to the primary card without Mr. Sarda's knowledge or consent. Substantial amounts of purchases and cash advances were made using the supplementary card. BPI's witness admitted the irregularity of the supplementary card issuance. The respondents repeatedly denied applying for the supplementary card and argued that BPI should present clear evidence of Mr. Sarda's receipt of the credit cards. They also contended that they cannot be held liable for interests and charges without proof of their conformity and acceptance.

ISSUES:

  1. Whether Mr. Sarda received the credit card issued to him without his knowledge and consent.

  2. Whether there is sufficient evidence to establish that Mr. Sarda made the alleged purchases and cash advances using the credit card.

  3. Whether Mr. Sarda requested or applied for the supplementary card under the name of Ms. Tandogon.

  4. Whether the issuance of the supplementary credit card to the defendant was valid.

  5. Whether the plaintiff has presented sufficient evidence to prove that the defendant made purchases and cash advances using the supplementary card.

  6. Whether or not the credit card issuer failed to exercise proper diligence in the issuance of the credit cards.

  7. Whether or not the credit card issuer should bear the resulting loss or damage caused by its own acts and policies.

  8. Whether or not the credit card issuer has proven that the respondents connived with another person in committing fraud.

RULING:

  1. The Court finds no cogent reason to deviate from the findings and conclusion of the Court of Appeals.

  2. On the question of Mr. Sarda's receipt of the credit card, the Court notes that BPI failed to submit proof that the person who received the card on Mr. Sarda's behalf was authorized by him. Therefore, the evidence presented by BPI is self-serving and insufficient to prove Mr. Sarda's receipt and acceptance of the credit card.

  3. BPI relied on the statements of account sent to Mr. Sarda's office address as evidence that he made the alleged purchases and cash advances. However, respondents denied receiving any of these billings and BPI failed to present evidence to prove the identity of the person who actually made the payments and purchases. The submission of statements of account alone is not enough to establish Mr. Sarda's obligation to pay for the purchases.

  4. There is no evidence that Mr. Sarda requested or applied for the supplementary card under the name of Ms. Tandogon. BPI's witness admitted that it was a pre-qualified account, which means no application form was submitted for the issuance of the supplementary credit card.

  5. The issuance of the supplementary credit card without the defendant's application is significant because it affects the defendant's liability for the outstanding obligation. However, the plaintiff failed to present sufficient evidence to prove that the supplementary card was validly issued. The witness testified that there was only a verbal request made through a phone call, and there was no written request or record of the phone call. The plaintiff also failed to establish the identity of the person who took the phone call.

  6. The burden of proof rests upon the plaintiff to establish its case. In this case, the plaintiff failed to prove that the defendant made purchases and cash advances using the supplementary card. While the payments were made on the single account, this does not prove that the defendant actually received the card and used it. Without proof of the defendant's actual receipt of the card and the identity of the payor, it cannot be inferred that the defendant used the supplementary card.

  7. Yes, the credit card issuer failed to exercise proper diligence in the issuance of the credit cards.

  8. Yes, the credit card issuer should bear the resulting loss or damage caused by its own acts and policies.

  9. No, the credit card issuer has not proven that the respondents connived with another person in committing fraud.

PRINCIPLES:

  • In a petition for review on certiorari, the Court is generally limited to reviewing errors of law. However, there are exceptions when the factual findings are contrary to the evidence or when there is a misapprehension of facts.

  • When a pre-screened client is issued a credit card, acceptance of the credit card creates a contractual relationship between the cardholder and the credit card issuer.

  • The submission of statements of account alone is not sufficient to establish a cardholder's obligation to pay for purchases. Additional evidence is needed to prove the identity of the person who made the purchases and payments.

  • In the absence of evidence establishing the cardholder's authorization, a delivery receipt signed by someone other than the cardholder is insufficient to prove receipt and acceptance of the credit card.

  • In civil cases, the party that alleges a fact has the burden of proving it.

  • Banks are required to exercise a high degree of diligence in their business transactions, particularly in issuing credit cards. The Bangko Sentral ng Pilipinas prohibits the issuance of pre-approved credit cards and requires banks to ascertain the creditworthiness of applicants before issuing credit cards.

  • The Philippine Credit Card industry is regulated by R.A. No. 10870, which mandates credit card issuers to conduct "know-your-client" procedures and exercise proper diligence in ascertaining the applicants' creditworthiness.

  • Provisions in circulars issued by the Monetary Board prevail notwithstanding any contrary stipulations in the contract between the cardholder and the credit card issuer.

  • It is the duty of the credit card issuer to adduce clear and convincing evidence of connivance in cases of fraud committed by the cardholder. Bare insinuations and conjectures are not sufficient to establish liability.