PANTALEON VS CA

FACTS
The Pantaleons went on a tour and during the tour, the wife bought jewelry from a
store. Pantaleon paid for the purchase using his Amex card. There was a long process
of verification and approval. When they went back, the other tourists were angry
because they missed another schedule. This is decision granting a motion for
reconsideration. The first decision of SC was reversed in favor of Amex.
Ruling: There is a contract between the two - the credit agreement. Amex would
extend a credit facility to Pantaleon which he could use subject to approval by Amex
per transaction. On other hand, Pantaleon, in exchange of the credit facility agreed to
pay all amounts drawn from the facility for the purchases using the credit card. But,
Amex is not under any obligation to approve. Amex could decide to approve or
disapprove any transaction. Amex was not in default because there is no
obligation to approve the purchase in the first place. Only upon approval would
Pantaleon have a loan liability. For each transaction, Pantaleon was offering to
borrow money to pay this purchase - an offer to borrow. When Amex approves, it's
an agreement by Amex to lend the money to be used for the purchase. Then when
Amex lends, Pantaleon, in exchange, undertakes to pay whatever may be due under
the credit card account. Amex also did not abuse its right since Amex in verifying if
the transaction is legitimate - an exercise of due diligence. Otherwise, Amex will be
liable in case it is a false purchase.
For there to be default, the first requirement is there must be an obligation. Because if
there is no obligation, there is no prestation to be demanded from the debtor.
Whether or not there is judicial or extrajudicial demand, nothing will happen. There
will be no default. The general rule: for a debtor may be placed in default by the
creditor, there must be a demand - judicial or extrajudicial demand on the given
due date of performance. Without demand, the debtor will not be in default.