PANTALEON v.

AMEX

Doctrine: The contractual relationship that arises between a card-issuer and a cardholder in a card membership agreement is a consensual contract to
loan. The creditor-debtor relationship that arises after a card-issuer has approved the cardholder’s purchase request is a real contract of loan (see
Somera p. 46).

Facts:
 The Pantaleon family were on a guided tour at the Coster Diamond House in Amsterdam. The tour group planned on leaving at 9:30 am to have
enough time to tour the city before their departure to Belgium on the same day. 
 9:15 am, while at Coster, petitioner, lawyer Polo Pantaleon used his AMEX credit card to purchase diamond pieces for his wife amounting to $13,
826.
 9:40 am, petitioner asked to cancel the sale since Coster still had not received any approval from AMEX. However, the store manager
convinced petitioner to wait for a few more minutes. 
 By 10:05 am or 50 minutes later, Coster released the diamond pieces without AMEX’s approval considering that the tour was already
behind schedule and could not continue without the Panteleon family onboard the bus. 
 Upon returning to the bus, they found their travel companions irritated considering that the rest of the tour would be cancelled due to lack of time
since they had to be in Belgium by 3 pm. 
 The records also show that it was only at 10:38 am or 78 minutes later when AMEX Manila’s approval was transmitted to AMEX Amsterdam and
to Coster. 
 After their trip to Europe, the Panteleon family went to the USA where they again experienced delays in securing the approval of AMEX in
purchasing golf equipment and children’s shoes. 
 Upon returning to Manila, petitioner demanded an apology from AMEX for the humiliation and inconvenience he and his family
experienced due to the delays in securing approval for his credit card purchases.
 AMEX explained that the delay in Amsterdam was due to the amount involved which deviated from petitioner’s established purchase
pattern.
 With this, petitioner filed an action for damages against AMEX. Pantaleon contends that:
(1) AMEX has the obligation to approve all his charge requests since his credit card has no pre-set spending limit.
(2) AMEX was in delay/mora solvendi when it failed to act on his charge requests within a specific period of time. In his 12 years of being an
AMEX cardholder, AMEX has always approved his charges in a matter of 3 or 4 seconds. 
 RTC ruled for petitioner. CA reversed the decision. With this, petitioner filed a petition with the SC. SC reversed the decision and found AMEX in
delay in complying with its obligation to act with timely dispatch on petitioner’s purchases. 
 With this, AMEX filed a MR with the SC and contended that: 
(1) While the total amount of Pantaleon’s previous purchases using his AMEX credit card did exceed said amount, these purchases were
made in a span of more than 10 years, and not in a single transaction.
(2) Because this was the biggest single transaction that was ever made using his credit card, extraordinary diligence and careful
review of credit history and bank references were required to ensure the cardholder’s protection to minimize the possibility that a third
party was fraudulently using his credit card; and to protect itself from the risk that the cardholder might not be able to pay for his purchases
on credit.
Issue:
a. WON AMEX has the obligation to approve the charges. (NO)
b. WON AMEX was in delay in acting on the charges. (NO)
c. WON Pantaleon is entitled to damages. (NO)

Held:

a) No, AMEX has no obligation to approve the charges. When cardholders use their credit cards to pay for their purchases, they merely offer
to enter into loan agreements with the card-issuer. The card-issuer still has to determine whether it will allow the charge, based on the
cardholder’s past credit history. Only after the card-issuer approves the charge that the parties enter into binding loan contracts. Since the
card membership agreement states that AMEX reserves the right to deny authorization for any requested charge, AMEX has no
obligation to approve the purchase requests of its cardholders. 

A credit card is any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, goods, property, labor or
services or anything of value on credit. Credit card transactions involve 3 contracts:
(1) a sales contract between the cardholder and merchant or business establishment,
(2) a loan agreement between cardholder and card-issuer, and
(3) a promise to pay between the card-issuer and merchant or business establishment.

b) No, AMEX was never in delay in acting on the charges. Without a demandable obligation, there can be no finding of default. (in
agreement, expressly stated in the terms of the credit card that Pantaleon is not obligated to approve Pantaleon’s purchase request)
(1) no obligation could arise on the part of AMEX until after AMEX transmits its approval of the charges.
(2) AMEX has no obligation to approve charges made by its cardholders.
(3) there is no contractual stipulation nor specific law that requires AMEX to act on charges within a specific period of time.
 BSP Circular – requires credit card companies to exercise extraordinary diligence. The “matter of seconds” standard of
Pantaleon should be in line with the NCC’s policy on reasonableness.
(4) Petitioner’s previous experiences with AMEX approving his charges in a matter of seconds is not a source of a legally enforceable right,
AMEX’s review procedure was done to ensure the cardholder’s protection and to prevent the possibility that the credit card was being
fraudulently used by a third person, Pantaleon thus cannot claim that AMEX was in delay in acting on the charges.
(5) AMEX acted in good faith. Good faith is presumed. No evidence of bad faith.

c) No, Pantaleon is not entitled to damages. Plaintiff cannot claim damages when his own act was the proximate cause of the injury. In this
case, Pantaleon knew that the bus had to leave by 9:30 am but he still pushed through with the transaction and made the tour group wait for him
and his wife. He could have prevented humiliation and embarrassment had he cancelled the sale instead. Thus, Pantaleon is not entitled to
damages.

Dispositive: SC granted the MR. No damages were awarded in favor of petitioner.

Notes:
a) A credit card is any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, goods, property, labor or
services or anything of value on credit.

b) Credit card transactions involve 3 contracts: (1) a sales contract between the cardholder and merchant or business establishment, (2) a loan
agreement between cardholder and card-issuer, and (3) a promise to pay between the card-issuer and merchant or business establishment.

c) A card membership agreement is a binding contract between the credit card-issuer and the cardholder. It is a contract of adhesion, which is
just as binding as ordinary contracts for the reason that the party who adheres to the contract is free to reject it entirely. The only effect is that the
terms of the contract are construed strictly against the party who drafted it.

d) While a card-issuer and cardholder relationship relates merely to an agreement providing for credit facility to the cardholder, a  creditor-debtor
relationship involves the actual credit on loan agreement involving 3 contracts and only arises after the card-issuer has approved the cardholder’s
purchase request.