Pantaleon v.

American Express, 629 SCRA 276 (2010)

Doctrine: Simply put, every credit card transaction involves three contracts, namely: (a) the sales
contract between the credit card holder and the merchant or the business establishment which accepted the
credit card; (b) the loan agreement between the credit card issuer and the credit card holder; and lastly, (c) the
promise to pay between the credit card issuer and the merchant or business establishment.

Facts: (Note that this case is a Motion for Reconsideration)

AmEx is an international credit card company. In October 1991, Atty. Pantaleon, together with his family, went on
a guided European tour. When they were in Amsterdam, Atty. Pantaleon decided to purchase some diamond
pieces from the Coster Diamond House worth a total of US$13,826.00. Pantaleon presented his American Express
credit card to the sales clerk to pay for this purchase. Coster had not received approval from AMEX for the
purchase so Pantaleon asked the store clerk to cancel the sale. The store manager, however, convinced Pantaleon
to wait a few more minutes. Subsequently, the store manager informed Pantaleon that AMEX was asking for bank
references; Pantaleon responded by giving the names of his Philippine depository banks.

During the tour in Amsterdam they were riding a tour bus. Due to the delay due to AmEx caused to Atty
Pantaleon, the tour was cancelled because the tour bus was obligated to wait for its tourists. In all, it took AMEX
a total of 78 minutes to approve Pantaleon’s purchase and to transmit the approval to the jewelry store.
After the trip to Europe, the Pantaleon family proceeded to the United States. Again, Pantaleon experienced delay
in securing approval for purchases using his American Express credit card on two separate occasions. He
experienced the first delay when he wanted to purchase golf equipment in the amount of US$1,475.00 at the
Richard Metz Golf Studio in New York on October 30, 1991. Another delay occurred when he wanted to purchase
children’s shoes worth US$87.00 at the Quiency Market in Boston on November 3, 1991.
Upon return to Manila, Pantaleon sent AMEX a letter demanding an apology for the humiliation and
inconvenience he and his family experienced due to the delays in obtaining approval for his credit card purchases.
AMEX responded by explaining that the delay in Amsterdam was due to the amount involved, and the charged
purchase of US$13,826.00 deviated from Pantaleon’s established charge purchase pattern. Dissatisfied with this
explanation, Pantaleon filed an action for damages against the credit card company with the Makati RTC.

RTC found AMEX guilty of delay. On appeal, the CA reversed the awards. - While the CA recognized that delay in
the nature of mora accipiendi or creditor’s default attended AMEX’s approval of Pantaleon’s purchases, it
disagreed with the RTC’s finding that AMEX had breached its contract, noting that the delay was not attended by
bad faith. SC reversed the CA decision. In its motion for reconsideration, AMEX argues that this Court erred when it
found AMEX guilty of culpable delay in complying with its obligation to act with timely dispatch on Pantaleon’s
purchases. While AMEX admits that it normally takes seconds to approve charge purchases, it emphasizes that
Pantaleon experienced delay in Amsterdam because his transaction was not a normal one.

Issue/s: Should AmEx be held liable for culpable delay?

Held: NO. Nagdiscuss pa ng history ng credit card yung ponente
Simply put, every credit card transaction involves three contracts, namely: (a) the sales contract between the
credit card holder and the merchant or the business establishment which accepted the credit card; (b) the loan
agreement between the credit card issuer and the credit card holder; and lastly,
(c) the promise to pay between the credit card issuer and the merchant or business establishment. From the loan
agreement perspective, the contractual relationship begins to exist only upon the meeting of the offer and
acceptance of the parties involved. In more concrete terms, when cardholders use their credit cards to pay for
their purchases, they merely offer to enter into loan agreements with the credit card company. Only after the
latter approves the purchase requests that the parties enter into binding loan contracts, in keeping with Article
1319 of the Civil Code, which provides:
“Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer.”
This view finds support in the reservation found in the card membership agreement itself, particularly
paragraph 10, which clearly states that AMEX “reserve*s+ the right to deny authorization for any requested
Charge.” By so providing, AMEX made its position clear that it has no obligation to approve any and all charge
requests made by its card holders.
Since AMEX has no obligation to approve the purchase requests of its credit cardholders, Pantaleon cannot
claim that AMEX defaulted in its obligation. Article 1169 of the Civil Code, which provides the requisites to
hold a debtor guilty of culpable delay, states:
“Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment of their obligation. x x x.
The three requisites for a finding of default are: (a) that the obligation is demandable and liquidated;
(b) the debtor delays performance; and (c) the creditor judicially or extrajudicially requires the debtor’s
performance.”
Based on the above, the first requisite is no longer met because AMEX, by the express terms of the credit
card agreement, is not obligated to approve Pantaleon’s purchase request. Without a demandable
obligation, there can be no finding of default.

Dispositive: WHEREFORE, premises considered, we SET ASIDE our May 8, 2009 Decision and GRANT the present
motion for reconsideration. The Court of Appeals Decision dated August 18, 2006 is hereby AFFIRMED. No costs.