CREDIT TRANSACTION CASE DIGEST/ PANTALEON V. AMERICAN EXPRESS INT’L/ GR. NO. 174269 (2010)

CREDIT TRANSACTION CASE DIGEST
PANTALEON VS. AMERICAN EXPRESS INT’L
GR. NO. 174269 (2010)

TOPIC/DOCTRINE

When cardholders use their credit cards to pay for their purchases, they merely offer to enter into a loan agreement with the credit card company. Only after the latter approves the purchase request that the parties enter into a binding loan contract.

FACTS

            AMEX is a resident foreign corporation engaged in the business of providing credit services through the operation of a charge card system. Pantaleon has been an AMEX cardholder since 1980. When Pantaleon tried to use his credit card to purchase jewelry amounting to USD13,826, it took AMEX a total of 78 minutes to approve Pantaleon’s purchase and transmit the approval to the jewelry store. 

In the terms and conditions of the credit card membership agreement, AMEX has no obligation to approve the purchase request of its credit cardholders.          

ISSUE

Whether AMEX defaulted on its obligation.

RULING

            The court ruled in the negative.

            The court held that when cardholders use their credit cards to pay for their purchases, they merely offer to enter into a loan agreement with the credit card company. Only after the latter approves the purchase request that the parties enter into a binding loan contract.

Based on the above, the court held that since AMEX has no obligation to approve the purchase request of its credit cardholders pursuant to the terms and conditions of the credit card membership agreement, the cardholder cannot claim that the former defaulted in its obligation. Without a demandable obligation, there can be no finding of default under Article 1169.

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