G.R. No. 119379 September 25, 1998
RODELO G. POLOTAN, SR., petitioner, vs. HON. COURT OF APPEALS (Eleventh Division), REGIONAL TRIAL COURT IN MAKATI CITY (Branch 132), and SECURITY DINERS INTERNATIONAL CORPORATION, respondents.

FACTS

Private respondent Security Diners International Corporation (Diners Club) is a credit card company. Petitioner Rodelo G. Polotan, Sr. applied for membership in October 1985. The application form contained terms and conditions, including a provision that the cardholder agrees to pay interest per annum at 3% plus the prime rate of Security Bank and Trust Company, and authorized Diners Club to increase the rate in the event of changes in prevailing market rates. Ofricano Canlas obligated himself jointly and severally with petitioner. Petitioner was issued a card and, as of May 8, 1987, incurred charges plus interest and service charges totaling P33,819.84, which became due. After demands for payment failed, Diners Club filed a Complaint for Collection. The Regional Trial Court ruled in favor of Diners Club, ordering petitioner and Canlas to pay jointly and severally the amount with interest and attorney’s fees. The Court of Appeals affirmed the decision.

ISSUE

The core issue is factual: whether petitioner indeed owed Diners Club the amount demanded. Petitioner raised specific legal errors, including: (1) the validity of the interest provision in the contract as being obscure, ambiguous, and illegal for allowing escalation without downward adjustment; (2) whether the Court of Appeals erred in allowing private respondent to contradict its own Statement of Account regarding petitioner’s wife’s account; (3) the credibility of a witness’s explanation; and (4) the denial of damages to petitioner.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals with MODIFICATION reducing the attorney’s fees to 15%. The Court held that the factual findings of the lower courts, which concluded petitioner owed the debt, are final and conclusive, and petitioner did not show any exception to warrant review. On the contract issues, the Court acknowledged it was a contract of adhesion but held it binding as petitioner was free to reject it entirely. The Court found the interest provision valid, noting escalation clauses are permissible in commercial contracts and petitioner failed to cite any specific violation of Central Bank Circular 905. The Court also found no error in the lower courts’ evaluation of evidence regarding the Statement of Account, accepting the explanation that the wife’s zero balance was due to a policy change consolidating accounts, not payment. Consequently, there was no basis to award damages to petitioner.