“CREDIT OR DISCREDIT”

In modern age of computers, many Filipino consumers were able to cope up with the modern
trend of commercial transaction with the use of their fingertips anytime anywhere. I am
referring to readily available online shopping sites, other booking sites and the like, and even
cellphone application that make our lives easier as a consumer. Just simply browse your choice
of product as the case maybe and pay by way of Cash on Delivery (COD) basis, or with the use
of electronic payment through the so called “Credit Card”. Imagine with just one swipe of this
powerful card you will get what you want just like a swish and flick of a magic wand.

But what really is the legal implication of having a credit card? Legally speaking, having in
possession of a credit card creates an obligation of a creditor debtor relationship. The credit
cardholder being the “debtor” and the issuing bank being the “creditor”. Along with this, the
cardholder has to assume the monthly interest and surcharges contained therein as a form of
penalty, in the event of delay or non-payment. In both ways, they have created their own
bilateral obligations that is set forth in the terms and condition for the issuance and use of the
credit card. In the event of delay or non-payment, that is where the serious burden sets in,
when the credit card companies oftentimes employed unbearable procedure in collection of
payment.

So what is then the legal consequence of non-payment? Can anyone be imprisoned for non-
payment of such? Can we do something to reduce the towering interest rate contained in the
agreement?

It is submitted that in case of non-payment alone, despite demand by his creditor, may only
give rise to the filing of an action to compel him to pay which is purely civil and not criminal in
nature, estafa is a different concept. It is even worthy to note that failure to pay alone does
not amount to any criminal liability, which may lead to imprisonment, since there is a
constitutional safeguard that prohibits the same which provides that, “ no one shall be
imprisoned by reason of debt” (Section 20, Article III). As regards the towering interest rate,
the Supreme Court in the case of Macalinao vs. BPI G.R. No. 175490, promulgated on
September 17, 2009 and other several cases finds that 3% monthly or 36% yearly interest for
the use of credit card is excessive, iniquitous, unconscionable, and exorbitant and the basis of
such reduction is Article 1229 of the Civil Code, in that way debtors are protected by law and
jurisprudence.

Conversely, although non-payment alone does not lead to criminal liability, the use of an access
device such as a credit card in obtaining money or anything of value, with intent to defraud or
with intent to gain and fleeing thereafter, is punishable by a fine and/or imprisonment as
provided for by Section 9 (j) and Section 10, RA 8484 or the Access Devices Regulation Act of
1998).

In addition, the law also provides that, a credit card holder is presumed to have used his credit
card with intent to defraud, if he abandons or surreptitiously leaves his 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 P10,000.00. (Section 14, Ibid.)

With all the legal consequences and implication discussed, the key in avoiding these future
problems that might arise with the use of the credit card is to be a responsible card holder by
paying your bills on time to avoid payment of fees, surcharges and penalties, and inform your
issuing bank of all matters pertaining to the use or even misuse of the credit card for after all, it
is much better to live a debt free life free from the burdens of debt.