G.R. No.

174269 May 8, 2009

POLO S. PANTALEON, Petitioner,
vs.
AMERICAN EXPRESS INTERNATIONAL, INC., Respondent.

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 complications in the Credit Card
transaction(The Delay due to AmEx) caused to Atyy 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 Pantaleons
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 childrens 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
the charged purchase of US$13,826.00 deviated from Pantaleons established charge purchase pattern.
Dissatisfied with this explanation, Pantaleon filed an action for damages against the credit card company
with the Makati City Regional Trial Court (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 creditors default attended AMEXs approval of Pantaleons purchases, it disagreed with the
RTCs 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 Pantaleons 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.
ince 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 debtors
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 Pantaleons 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.

G.R. No. 155223 April 4, 2007

BOBIE ROSE V. FRIAS, represented by her Attorney-in-fact, MARIE F. FUJITA, Petitioner,
vs.
FLORA SAN DIEGO-SISON, Respondent.

Doctrine: The payment of regular interest constitutes the price or cost of the use of money, and until the
principal sum due is returned to the creditor, regular interest continues to accrue since the debtor
continues to use such principal amount. For a debtor to continue in possession of the principal of the loan
and to continue to use the same after maturity of the loan without payment of the monetary interest
constitutes unjust enrichment on the part of the debtor at the expense of the creditor.

Facts: On 7 Dec 1990, Bobie Rose Frias and Dr. Flora San-Diego Sison entered into a MOA over Frias
property
MOA consideration is 3M
Sison has 6 months from the date of contracts execution to notify Frias of her intention to purchase the
property with the improvements at 6.4M
Prior to this 6 month period, Frias may still offer the property to other persons, provided that 3M shall be paid
to Sison including interest based on prevailing compounded bank interest + amount of sale in excess of 7M
[should the property be sold at a price greater than 7M]
In case Frias has no other buyer within 6 months from the contracts execution, no interest shall be charged
by Sison on the 3M
In the event that on the 6th month, Sison would decide not to purchase the property, Frias has 6 months to
pay 3M (amount shall earn compounded bank interest for the last 6 months only)
3M treated as a loan and the property considered as the security for the mortgage
Upon notice of intention to purchase, Sison has 6 months to pay the balance of 3.4M (6.4M less 3M MOA
consideration)
Frias received from Sison 3M (2M in cash; 1M post-dated check dated February 28, 1990, instead of 1991,
which rendered the check stale). Frias gave Sison the TCT and the Deed of Absolute Sale over the property.
Sison decided not to purchase the property, so she notified Frias through a letter dated March 20, 1991
[Frias received it only on June 11, 1991], and Sison reminded Frias of their agreement that the 2M Sison paid
should be considered as a loan payable within 6 months. Frias failed to pay this amount.
Sison filed a complaint for sum of money with preliminary attachment. Sison averred that Frias tried to
deprive her of the security for the loan by making a false report of the loss of her owners copy of TCT,
executing an affidavit of loss and by filing a petition[1] for the issuance of a new owners duplicate copy.
RTC issued a writ of preliminary attachment upon the filing of a 2M bond.
RTC found that Frias was under obligation to pay Sison 2M with compounded interest pursuant to their
MOA. RTC ordered Frias to pay Sison:
2M + 32% annual interest beginning December 7, 1991 until fully paid
70k representing premiums paid by Sison on the attachment bond with legal interest counted from the
date of this decision until fully paid
100k moral, corrective, exemplary damages [liable for moral damages because of Frias fraudulent
scheme]
100k attorneys fees + cost of litigation
CA affirmed RTC with modification32% reduced to 25%. CA said that there was no basis for Frias to say
that the interest should be charged for 6 months only. It said that a loan always bears interest; otherwise, it
is not a loan. The interest should commence on June 7, 1991 until fully paid, with compounded bank
interest prevailing at the time [June 1991] the 2M was considered as a loan (as certified by the bank).

Issue/s: WON compounded bank interest should be limited to 6 months as contained in the MOA. NO
WON Sison is entitled to moral damages. YES
WON the grant of attorneys fees is proper, even if not mentioned in the body of the decision. NO

Held: CA committed no error in awarding an annual 25% interest on the 2M even beyond the 6-month
stipulated period. In this case, the phrase "for the last six months only" should be taken in the context of the
entire agreement.
SC notes that the agreement speaks of two (2) periods of 6 months each (see FACTSwords in bold &
underline). No interest will be charged for the 1st 6-month period [while Sison was making up her mind], but
only for the 2nd 6-month period after Sison decided not to buy the property. There is nothing in the MOA
that suggests that interest will be charged for 6 months only even if it takes forever for Frias to pay the loan.
The payment of regular interest constitutes the price or cost of the use of money, and until the principal sum
due is returned to the creditor, regular interest continues to accrue since the debtor continues to use such
principal amount. For a debtor to continue in possession of the principal of the loan and to continue to use
the same after maturity of the loan without payment of the monetary interest constitutes unjust enrichment
on the part of the debtor at the expense of the creditor.

Dispositive: WHEREFORE, in view of all the foregoing, the Decision dated June 18, 2002 and the Resolution
dated September 11, 2002 of the Court of Appeals in CA-G.R. CV No. 52839 are AFFIRMED with
MODIFICATION that the award of attorneys fees is DELETED.