1

PANTALEON V AMERICAN EXPRESS INTERNATIONAL

(G.R. No. 174260, August 25, 2010)
Access Devices Regulation Act of 1998

FACTS:
Polo Pantaleon and his family, while in Amsterdam, visited the Coster Diamond House. Thereon, Mrs.
Pantaleon decided to purchase jewelry with Polo presenting his American Express [“AMEX”] credit card to
pay. During this entire transaction, AMEX took a total of 78 minutes to approve and submit approval to
Coster.

While on a trip to the US, Polo experienced yet more delays in securing approval for purchases using his
card. During those transactions, AMEX took 15 to 20 minutes to approve.

Upon returning to Manila, Polo demanded an apology from AMEX for the humiliation and inconvenience he
and his family experienced due to the delays. AMEX responded by explaining that the delay was caused by
the huge amount involved, which deviated from Polo’s established charge purchase pattern.

Dissatisfied with AMEX’s explanation, Polo filed an action for damages which the RTC subsequently
granted. The CA reversed, ruling that the delay was not attended by bad faith, malice, or gross negligence.

Hence, the present petition for review on certiorari. In a previous decision, the SC reversed the CA’s
decision and held that AMEX was guilty of debtor’s default, as it had an obligation to approve or disapprove
Polo’s purchase requests with “timely dispatch.”

Polo, in his contention, assumes he is entitled to two privileges - a) that since his card has no pre-set
spending limit, AMEX has the obligation to approve all his charge requests; and b) without such obligation,
AMEX is at least obliged to act within a specific period of time.

ISSUES:
1. W/N AMEX has the obligation to approve all of Polo’s charge requests
2. Without such obligation, W/N AMEX is obligated to act on its cardholders’ purchase requests within
a specific period of time

RULING:
1. NO.
2. NO.

RATIO:
Preliminarily, a credit card is defined as "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." [Section 3, RA 8484] This means that the consumer-credit arrangement that exists between the
issuer and the holder of the credit card enables the latter to procure goods or services "on a continuing
basis as long as the outstanding balance does not exceed a specified limit." The card holder is, therefore,
given "the power to obtain present control of goods or service on a promise to pay for them in the future."

1. When cardholders use their CCs to pay for their purchases, they merely offer to enter into
loan agreements with the CC company. Only after the latter approves the purchase requests that
2

the parties enter into binding loan contracts, in keeping with Article 1319 of the Civil Code (on
manifestation of consent in contracts). This view finds support in the reservation found in the card
membership agreement, which states that AMEX “reserves the right to deny authorization for any
requested Charge.”

Precisely because of these grounds, AMEX has no obligation to approve any and all charge
requests made by its card holders.

Polo cannot claim that AMEX defaulted in its obligation. AMEX is not obligated to approve
Pantaleon’s purchase request. Apart from this, Pantaleon also failed to make a demand. Without
these elements, there can be no finding of default.

2. For his contention, Polo alleges that a) his card has no pre-set spending limit; and b) in his 12
years of using his card, AMEX always approved within a matter of seconds. However, these
contentions failed to convince, to wit:

a. No pre-set spending limits

- Having no pre-set spending limit simply means that the charges made by the
cardholder are approved based on his ability to pay. Thus, everytime Polo
charges a purchase on his card, the CC company still has to determine
whether it will allow the same based on his credit history. This right to review
by AMEX is corollary to its right to deny authorization for any requested charge.

b. AMEX always approved within seconds

- Pantaleon failed to present any evidence to show that AMEX acted on requests in
a matter of three or four seconds as an established practice. More importantly,
even if AMEX, as a matter of practice or custom, acted on its customers’ purchase
requests in a matter of seconds, this would still not be enough to establish a
legally demandable right; as a general rule, a practice or custom is not a source of
a legally demandable or enforceable right.

Moreover, based on the credit card membership agreement, there is no

provision that obligates AMEX to act on all purchase requests within a
specifically defined period of time.

Nor is there any Philippine law on credit card transactions which provides the
same - the Access Devices Regulation Act, as the controlling legislation that
regulates the issuance and use of access devices such as CCs do not contain
any provision requiring CC companies to act within any specific period of time; and
the BSP, having supervisory power over CC companies, have not issued any
circular to that effect.