Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ______ 
Introduced by Rep. MARIO VITTORIO “MARVEY” A. MARIÑO 
5th District, Batangas 
AN ACT LIMITING THE LIABILITY OF A CARDHOLDER FOR 
UNAUTHORIZED TRANSACTIONS IN CASES OF LOSS, FRAUD 
OR THEFT OF CREDIT OR DEBIT CARDS, AMENDING FOR THE 
PURPOSE REPUBLIC ACT NO. 10870 
EXPLANATORY NOTE 
Scenario: 
Juan Dela Cruz was issued a credit card by a certain bank. 
While he was in the mall, his wallet containing this credit card 
was pickpocketed. It was only when he was about to pay at a 
restaurant that he realized his wallet containing said credit card 
was missing. Prior reporting of the lost or stolen credit card, the 
thief successfully made several transactions using Juan Dela 
Cruz’s credit card. Juan Dela Cruz alone is made to answer and 
pay for all these fraudulent and unauthorized charges. The 
merchant store has no liability whatsoever. The credit card 
issuer would simply say “the credit card holder is completely 
liable for any transactions made prior the reporting of the lost 
or stolen credit card”.  
Forget the fact that your wallet was stolen, that your credit card was used by the 
thief, that your signature was forged, that no identification card was asked to be 
presented, or that your credit card activity was highly suspicious. Under our current 
laws, you are solely liable.  
For years, this has been the standard practice of credit card issuers—hold innocent 
cardholders liable for fraudulent and unauthorized transactions made prior to reporting 
of the lost or stolen credit card. While some credit card issuers are considerate enough 
to absolve innocent credit cardholders of liability, many still adhere to this standard 
practice as it has been reinforced by the recently enacted law, Republic Act (R.A.) No. 
10870 entitled “An Act Regulating the Philippine Credit Card Industry”. 
Section 15 of R.A. No. 10870 provides that in case a credit card is lost or stolen, 
any transaction made prior to reporting to the credit card issuer shall be for the account 
July 1, 2022 
12:25 pm
906


of the cardholder. While some people still find logic in this provision, its absoluteness 
in holding cardholders liable runs contrary to the declared policy of the State to protect 
cardholders against unfair practices, credit card fraud and scams.  
In countries like the United States of America and Malaysia, this practice of 
holding innocent cardholders liable for fraudulent and unauthorized transactions due to 
lost or stolen cards has long been abandoned. The Fair Credit Billing Act (FCBA), a 
United States federal law, limits the liability of cardholders for unauthorized charges to 
$50. Nonetheless, some credit card companies, like Visa and Mastercard, often waive 
the $50 liability.1 In fact, both Visa2 and Mastercard3 have zero liability protection 
for unauthorized transactions.  
Clause 15.2 of Bank Negara’s Credit Card Guidelines (BNM/RH/GL-041-01)(the 
“Guidelines”), on the other hand, provides that the cardholder’s maximum liability for 
unauthorized transactions as a consequence of a lost or stolen credit card shall be 
limited to the specified by the issuer of credit cards, which shall not exceed RM250, 
provided the cardholder has not acted fraudulently or has not failed to inform the issuer 
of credit cards as soon as reasonably practicable after having found that his credit card 
is lost or stolen.4 
It is time we follow suit and give this needed protection to the public. 
In view of the foregoing, immediate passage of this bill is earnestly requested. 
MARIO VITTORIO “MARVEY” A. MARIÑO 
1 Dilworth, K. (June 5, 2015). Your Rights Under the Fair Credit Billing Act. Retrieved on April 12, 2018 
from https://www.creditcards.com/credit-card-news/fair-credit-billing-act-1282.php 
2
Visa. 
Zero 
Liability. 
Retrieved 
on 
April 
16, 
2018 
from 
https://www.visa.com/chip/personal/security/zero-liability.jsp 
3
SEA 
Mastercard. 
Zero 
Liability 
Protection. 
Retrieved 
on 
April 
16, 
2018 
from 
https://sea.mastercard.com/en-region-sea/consumers/payment-technologies/safety-and-
security/zero-liability-protection.html 
4  Skrine Law Firm. Liability on Unauthorized Credit Card Charges. Retrieved April 12, 108 from 
http://www.skrine.com/home/index.php?option=com_content&view=article&id=500&Itemid=717 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ______ 
Introduced by Rep. MARIO VITTORIO “MARVEY” A. MARIÑO 
5th District, Batangas 
AN ACT LIMITING THE LIABILITY OF A CARDHOLDER FOR 
UNAUTHORIZED TRANSACTIONS IN CASES OF LOSS, FRAUD 
OR THEFT OF CREDIT OR DEBIT CARDS, AMENDING FOR THE 
PURPOSE REPUBLIC ACT NO. 10870 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 3 of Republic Act No. 10870 is amended to read as follows: 
“Sec. 3. Scope and Coverage. – This Act shall govern all credit AND DEBIT card 
issuers, acquirers and all credit AND DEBIT card transactions. 
SECTION 2. Section 5 of Republic Act No. 10870 is amended to read as follows: 
“Sec 5. Definition of terms. – As used in this Act, the following terms 
are defined as follows: 
(s) xxx
(t) Card fraud is a wide-ranging term for theft and fraud committed
using a credit or debit card or any similar payment mechanism as a
fraudulent source of funds. The purpose is to obtain unauthorized funds
from a credit card holder’s account. It is also adjunct to identity theft.
(u) Debit card is a plastic payment card that can be used instead of cash
when making purchases. It is similar to a credit card, but unlike a credit
card, the money comes directly from the user's bank account when
performing a transaction.
(v) Reasonable time is defined as so much time as is necessary under
the circumstances for a reasonable prudent and diligent man to do,
conveniently, what the contract or duty requires should be done, having
a regard for the rights, and possibility of loss, if any, to the other party.5”
5 Far East Realty Investment, Inc. v. Court of Appeals, 248 Phil. 497, 503-504 (1988) 
906


 
SECTION 3. Section 8 of Republic Act No. 10870 is amended to read as follows: 
 
“Sec. 8. Service Level Agreement – There shall be, in the service level 
agreement between the acquiring banks and their partner merchants, a 
provision requiring merchants to perform due diligence to establish 
identity of the cardholders. 
 
THE IDENTITY OF A CARDHOLDER SHALL BE ASCERTAINED 
BY 
REQUIRING 
THE 
PRESENTATION 
OF 
A 
VALID 
IDENTIFICATION CARD, A COMPARISON OF THE NAME AND 
SIGNATURE ON THE CREDIT CARD WITH THE NAME AND 
SIGNATURE ON THE ID PRESENTED BY THE CARDHOLDER, 
OR SOME OTHER MEANS OF AUTHENTICATING THE 
IDENTITY OF THE CARDHOLDER. 
 
Nothing in this Act shall preclude a card issuer from verifying or 
seeking confirmation with the cardholder any purchase if in their 
assessment there is reasonable concern as to the validity of the purchase.” 
 
SECTION 4. A new section designated as Sec. 8-A is hereby inserted to read as 
follows: 
 
Sec. 8-A. Liability of Partner Merchants – Merchants shall bear the loss 
for failure to observe the due diligence required under Section 8 in 
ascertaining the identity of a cardholder in case of unauthorized 
transactions due to lost or stolen credit or debit cards and other cases of 
card fraud. 
 
SECTION 5. Section 11 of Republic Act No. 10870 is amended to read as follows: 
 
“Sec. 11. Information to be Disclosed. – A credit card issuer shall 
disclose to all credit cardholders and potential credit cardholders the 
following information: 
 
xxx 
 
(h) xxx  
 
(i) A CLEAR AND PROPER DESCRIPTION OF THE MEANS BY 
WHICH THE CARD ISSUER MAY BE NOTIFIED OF THE LOSS 
OR THEFT OF CREDIT OR DEBIT CARD. THE TELEPHONE 
NUMBER DEDICATED SOLELY FOR REPORTING LOSS OR 
THEFT OF CREDIT OR DEBIT CARDS SHALL BE PRINTED IN 
THE TERMS AND CONDITIONS AND BILLING STATEMENT. 
 
(j) A REMINDER TO THE CARDHOLDER IN THE TERMS AND 
CONDITIONS AND BILLING STATEMENT THAT THE FAILURE 
TO REPORT THE LOSS OR THEFT OF A CREDIT OR DEBIT 
CARD WITHIN REASONABLE TIME WOULD RESULT TO 


POTENTIAL 
LIABILITY 
FOR 
UNAUTHORIZED 
TRANSACTIONS. 
 
(k) Any other information that may be required by the BSP. 
 
xxx” 
 
 
SECTION 6. Section 15 of Republic Act No. 10870 is amended to read as follows: 
 
Sec. 15. Lost or Stolen Card. – In case a card is lost or stolen, a 
cardholder incurs no liability from the unauthorized use of a card: 
Provided, that the cardholder does not act fraudulently: Provided further, 
that the cardholder reports the loss or theft of the card within reasonable 
time: Provided, finally, that the cardholder has not reported two or more 
incidents of unauthorized use in the immediately preceding 12-month 
period.  
 
SECTION 7. A new section designated as Sec. 15-A is hereby inserted to read as 
follows: 
 
Sec. 15-A. Burden of proof.  In any action by a card issuer to enforce 
liability for the use of a credit card, the burden of proof is upon the card 
issuer to show that the use was authorized or, if the use was 
unauthorized, then the burden of proof is upon the card issuer to show 
that the conditions set forth in Section 15 have not been met. 
 
SECTION 8. A new section designated as Sec. 15-B is hereby inserted to read as 
follows: 
 
Sec. 15-B. Card Security Features – To protect cardholders from 
fraudulent and unauthorized transactions, card issuers shall establish 
card security features such as but not limited to the following: 
 
a. A PIN-enabled card allowing the cardholder to make purchases only 
by keying in a 4 or 6-digit PIN.   
b. Transaction notification alerting cardholders of their recent 
transactions and charges via SMS, e-mail or other electronic means. 
c. Transaction validation requiring cardholders to validate recent 
transactions or charges via SMS, e-mail or other electronic means. 
 
SECTION 9. Repealing Clause. – All laws, decrees, executive orders, 
memorandum circulars inconsistent with the provisions of this Act are hereby amended, 
repealed or modified accordingly. 
 
SECTION 10. Effectivity. – This act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in two (2) newspapers of general circulation. 
 
 
Approved,