PEOPLE vs. CONCEPCION, 44 Phil.

126

FACTS: Venancio Concepcion, President of the

Philippine National Bank and a member of the
Board thereof, authorized an extension of
credit in favor of "Puno y Concepcion, S. en C.
to the manager of the Aparri branch of the
Philippine
National
Bank.
"Puno
y
Concepcion, S. en C." was a co-partnership
where Concepcion is a partner. Subsequently,
Concepcion was charged and found guilty in
the Court of First Instance of Cagayan with
violation of section 35 of Act No. 2747. Section
35 of Act No. 2747 provides that the National
Bank shall not, directly or indirectly, grant
loans to any of the members of the board of
directors of the bank nor to agents of the
branch banks. Counsel for the defense argue
that the documents of record do not prove
that authority to make a loan was given, but
only show the concession of a credit. They
averred that the granting of a credit to the copartnership "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the
Philippine National Bank, is not a "loan"
within the meaning of section 35 of Act No.
2747.

ISSUE: Whether or not the granting of a credit

of P300,000 to the co-partnership "Puno y
Concepcion,
S.
en
C."
by
Venancio
Concepcion, President of the Philippine
National Bank, a "loan" within the meaning of
section 35 of Act No. 2747.

HELD: The Supreme Court ruled in the

affirmative. The "credit" of an individual
means his ability to borrow money by virtue of
the confidence or trust reposed by a lender
that he will pay what he may promise. A "loan"
means the delivery by one party and the
receipt by the other party of a given sum of
money, upon an agreement, express or
implied, to repay the sum loaned, with or

without interest. The concession of a "credit"

necessarily involves the granting of "loans" up
to the limit of the amount fixed in the "credit,"

CAROLYN M. GARCIA vs. RICA MARIE S.

THIO, GR. No. 154878, March 16, 2007

FACTS:
Sometime
in
February
1995,
respondent Rica Marie S. Thio received from
petitioner Carolyn M. Garccia a crossed check
in the amount of $100,000.00 payable to the
order of Marilou Santiago. Thereafter, Carolyn
received from Rica payments of the sum due.
In June 1995, Rica received another check in
the amount of P500,000.00 from Carolyn and
payable to the order of Marilou. Payments
were made by Rica representing interests.
There was failure to pay the principal amount
hence a complaint for sum of money with
damages was filed by Carolyn. Rica contended
that she had no obligation to petitioner as it
was Marilou who was indebted as she was
merely asked to deliver the checks to the latter
and that the check payments she issued were
merely intended to accommodate Marilou. The
RTC ruled in favor of Carolyn but the CA
reversed on the ground that there was no
contract between Rica and Carolyn as there is
nothing in the record that shows that
respondent received money from petitioner
and that the checks received by respondent,
being crossed, may not be encashed but only
deposited in the bank by the payee thereof,
that is, by Marilou Santiago herself.

ISSUE: Whether or not there was a contract of

loan between petitioner and respondent.

HELD: There Court ruled in the affirmative. A

loan is a real contract, not consensual, and as

such is perfected only upon the delivery of the

object of the contract. Art. 1934 of the Civil
Code provides that an accepted promise to
deliver something by way of commodatum or
simple loan is binding upon the parties, but
the commodatum or simple loan itself shall
not be perfected until the delivery of the object
of the contract. Upon delivery of the object of
the contract of loan (in this case the money
received by the debtor when the checks were
encashed the debtor acquires ownership of
such money or loan proceeds and is bound to
pay the creditor an equal amount. It is
undisputed that the checks were delivered to
respondent. However, these checks were
crossed and payable not to the order of
respondent but to the order of a certain
Marilou Santiago. The Supreme Court agrees
with petitioner that delivery is the act by
which the res or substance thereof is placed
within the actual or constructive possession
or control of another. Although respondent did
not physically receive the proceeds of the
checks, these instruments were placed in her
control and possession under an arrangement
whereby she actually re-lent the amounts to
Santiago. Hence, Rica is the debtor and not
Marilou.

PRODUCERS BANK OF THE PHILIPPINES vs.

COURT OF APPEALS, GR No. 115324

FACTS: Sometime in 1979, private respondent

Franklin Vives, upon request of his friend
Angeles Sanchez and relying on the assurance
that he could withdraw his money within a
months time, issued a check in the amount of
Two Hundred Thousand Pesos in favor of
Sterela Marketing and Services owned by one
Col. Arturo Doronilla. Subsequently, private
respondent and his wife found out that Sterela
cant be found on the address previously given
to then, so they went to petitioner Producers
Bank of the Philippines to verify if their money
was still intact. They were informed that part
of the amount had been withdrawn by

Doronilla and that the latter instructed the

bank to debit from the savings account the
amount and deposit it in his current account
Private respondent filed an action for recovery
of sum of money against Doronilla, Sanchez,
Dumagpi and petitioner. The trial court ruled
in favour of herein private respondents. On
appeal of the case, the appellate court
affirmed the decision of the RTC. Petitioner
contends that the transaction between private
respondent and Doronilla is a simple loan
(mutuum) since all the elements of a mutuum
are present: first, what was delivered by
private respondent to Doronilla was money, a
consumable
thing;
and
second,
the
transaction was onerous as Doronilla was
obliged to pay interest. Hence, petitioner
argues that it cannot be held liable because it
is not privy to the transaction between the
latter and Doronilla. Private respondent, on
the other hand, argues that the transaction
between him and Doronilla is not a mutuum
but an accommodation, since he did not
actually part with the ownership of
his P200,000.00 but retained some degree of
control over his money through his wife who
was made a signatory to the savings account
and in whose possession the savings account
passbook was given.

ISSUE: Whether or not the contract between

Sanchez and Doronilla and Vives is a contract
of commodatum, thus making petitioner Bank
liable.

HELD: Supreme Court held that the contract

is commodatum. Although in view of Article
1933 of the Civil Code, the object in
commodatum is non-consumable, but Article
1936 of the Civil Code provides Consumable
goods may be the subject of commodatum if
the purpose of the contract is not the
consumption of the object, as when it is
merely for exhibition. Thus, if consumable
goods are loaned only for purposes of
exhibition or when the intention of the parties

is to lend consumable goods and to have the

very same goods returned at the end of the
period agreed upon, the loan is commodatum
and not a mutuum. The evidence shows that
private respondent merely "accommodated"
Doronilla by lending his money without
consideration, as a favor to his good friend
Sanchez. It was however clear to the parties to
the transaction that the money would not be
removed from Sterelas savings account and
would be returned to private respondent after
thirty (30) days.
CAROLYN M. GARCIA vs. RICA MARIE S.
THIO, GR. No. 154878, March 16, 2007

FACTS:
Sometime
in
February
1995,
respondent Rica Marie S. Thio received from
petitioner Carolyn M. Garccia a crossed check
in the amount of $100,000.00 payable to the
order of Marilou Santiago. Thereafter, Carolyn
received from Rica payments of the sum due.
In June 1995, Rica received another check in
the amount of P500,000.00 from Carolyn and
payable to the order of Marilou. Payments
were made by Rica representing interests.
There was failure to pay the principal amount
hence a complaint for sum of money with
damages was filed by Carolyn. Rica contended
that she had no obligation to petitioner as it
was Marilou who was indebted as she was
merely asked to deliver the checks to the latter
and that the check payments she issued were
merely intended to accommodate Marilou. The
RTC ruled in favor of Carolyn but the CA
reversed on the ground that there was no
contract between Rica and Carolyn as there is
nothing in the record that shows that
respondent received money from petitioner
and that the checks received by respondent,
being crossed, may not be encashed but only
deposited in the bank by the payee thereof,
that is, by Marilou Santiago herself.

ISSUE: Whether or not there was a contract of

loan between petitioner and respondent.

HELD: There Court ruled in the affirmative. A

loan is a real contract, not consensual, and as
such is perfected only upon the delivery of the
object of the contract. Art. 1934 of the Civil
Code provides that an accepted promise to
deliver something by way of commodatum or
simple loan is binding upon the parties, but
the commodatum or simple loan itself shall
not be perfected until the delivery of the object
of the contract. Upon delivery of the object of
the contract of loan (in this case the money
received by the debtor when the checks were
encashed the debtor acquires ownership of
such money or loan proceeds and is bound to
pay the creditor an equal amount. It is
undisputed that the checks were delivered to
respondent. However, these checks were
crossed and payable not to the order of
respondent but to the order of a certain
Marilou Santiago. The Supreme Court agrees
with petitioner that delivery is the act by
which the res or substance thereof is placed
within the actual or constructive possession
or control of another. Although respondent did
not physically receive the proceeds of the
checks, these instruments were placed in her
control and possession under an arrangement
whereby she actually re-lent the amounts to
Santiago. Hence, Rica is the debtor and not
Marilou.

COLITO T. PAJUYO vs. COURT OF APPEALS,

GR. No. 146364, June 3, 2004

FACTS: In June 1979, petitioner Colito T.

Pajuyo purchased the rights over a property

from Pedro Perez. Thereafter, he constructed a

house therein and he and his family lived
there. Later, Pajuyo agreed to let private
respondent Eddie Guevarra to live in the
house for free provided that the latter
maintain the cleanliness and orderliness of
the house. They also agreed that Guevarra
should leave the premises upon demand.
Subsequently, when Pajuyo told Guevarra that
he needed the house, Guevarra refused, hence
an ejectment case was filed. Guevarra claimed
that Pajuyo had no valid title or right of
possession over the lot where the house
stands because the lot is within the 150
hectares set aside for socialized housing. The
MTC ruled that the subject of the agreement
between Pajuyo and Guevarra is the house
and not the lot. Pajuyo is the owner of the
house, and he allowed Guevarra to use the
house only by tolerance. Thus, Guevarras
refusal to vacate the house on Pajuyos
demand
made
Guevarras
continued
possession of the house illegal. Aggrieved,
Guevarra appealed to the Regional Trial Court
which only affirmed the MTC decision. At the
CA, the latter reversed the RTC decision. The
Court of Appeals ruled that the Kasunduan is
not
a
lease
contract
but
a commodatum because the agreement is not
for a price certain. Since Pajuyo admitted that
he resurfaced only in 1994 to claim the
property, the appellate court held that
Guevarra has a better right over the property
under Proclamation No. 137. At that time,
Guevarra was in physical possession of the
property.

ISSUE: Whether or not the contract between

petitioner and private respondent is one of
commodatum.

HELD: The Supreme Court held that the

contract is not a commodatum. In a contract
of commodatum, one of the parties delivers to
another something not consumable so that
the latter may use the same for a certain time

and return it. An essential feature of

commodatum is that it is gratuitous. Another
feature is that the use of the thing belonging
to another is for a certain period. Thus, the
bailor cannot demand the return of the thing
loaned until after the expiration of the period
stipulated, or after accomplishment of the use
for which the commodatum is constituted. If
the bailor should have urgent need of the
thing, he may demand its return for
temporary use. If the use of the thing is
merely tolerated by the bailor, he can demand
the return of the thing at will, in which case
the contractual relation is called a precarium.
The Kasunduan reveals
that
the
accommodation accorded by Pajuyo to
Guevarra was not essentially gratuitous. While
the Kasunduan did not require Guevarra to
pay rent, it obligated him to maintain the
property in good condition. The imposition of
this
obligation
makes
the Kasunduan a
contract different from a commodatum. The
effects of the Kasunduan are also different
from that of a commodatum.

QUINTOS vs. BECK, 69 Phil 108

FACTS: Beck is a tenant of defendant

Margarita Quintos. As such, Beck occupied
Quintos house. Quintos granted Beck the use
of the furniture found on the leased house,
among these were three gas heaters and 4
electric lamps, subject to the condition that
the defendant would return them to the
plaintiff upon the latter's demand. Quintos
sold the pieces of furniture to Maria Lopez and
Rosario Lopez and thereafter notified Beck of
the conveyance. Beck informed Quintos that
the latter can get the furniture at the ground
floor of the house, however, at a later date,
Beck told Quintos that he will return only the
other furniture but not the gas heaters and
the electric lamps as he is to return them only
after the expiration of the lease contract.

When the lease contract expires, Beck

deposited the furniture to the sheriffs
warehouse. Quintos refused to get the
furniture in view of the fact that the defendant
had declined to make delivery of all of them.
Consequently, Quintos brought an action to
compel Beck to return her certain furniture
which she lent him for his use. The trial court
ruled in favour of Beck holding that Quintos
failed to comply with her obligation to get the
furniture when they were offered to her. On
appeal of the case, the Court of First Instance
of Manila affirmed the lower courts decision.
Hence, this petition.

ISSUE: Whether or not the trial court erred in

ruling that Quintos failed to comply with her
obligation to get the furniture when they were
offered to her.

HELD: The contract entered into between the

parties is one of commadatum. Under it the
plaintiff gratuitously granted the use of the
furniture to the defendant, reserving for
herself the ownership thereof. By this contract
the defendant bound himself to return the
furniture to the plaintiff, upon the latters
demand. The obligation voluntarily assumed
by the defendant to return the furniture upon
the plaintiff's demand, means that he should
return all of them to the plaintiff at the latter's
residence or house. The defendant did not
comply with this obligation when he merely
placed them at the disposal of the plaintiff,
retaining for his benefit the three gas heaters
and the four electric lamps. The trial court,
therefore, erred when it came to the legal
conclusion that the plaintiff failed to comply
with her obligation to get the furniture when
they were offered to her.

REPUBLIC v. BAGTAS, 116 SCRA 262

FACTS: On May 8, 1948, Jose Bagtas

borrowed from the Bureau of Animal Industry
three bulls for one year for breeding purposes
upon payment of a breeding fee of 10% of the
book value of the bulls. After one year, the
contract was renewed but only for one bull.
Bagtas offered to buy the bulls at book value
less depreciation, but the Bureau told him
that he should either return the bulls or pay
for their book value. Bagtas failed to pay the
book value, so the Republic filed an action
with the CFI Manila to order the return of the
bulls or the payment of the book value.
Felicidad Bagtas, the surviving spouse and
administratrix of the decedents estate, said
that the two bulls have already been returned
in 1952, and that the remaining one died of
gunshot during a Huk raid. It was established
that the two bulls were returned, thus, there
is no more obligation on the part of Bagtas.
With regards the bull not returned, Felicidad
maintained that the obligation is extinguished
since the contract is that of a commodatum
and that the loss through fortuitous event
should be borne by the owner.

ISSUE: Whether or not the contract entered

into between Bagtas and the Republic is that
of commodatum making Bagtas not liable for
the death of the bull.

HELD:
A
contract
of commodatum is
essentially gratuitous. If the breeding fee be
considered compensation, then the contract
would be a lease of the bull. Under article
1671 of the Civil Code the lessee would be
subject to the responsibilities of a possessor in
bad faith because she had continued
possession of the bull after the expiry of the
contract.
Even
if
the
contract
be commodatum, still Bagtas is liable because
article 1942 of the Civil Code provides that a
bailee in a contract of commodatum is liable
for loss of the things even if it should be

through a fortuitous event if he keeps it longer

than the period stipulated or if the thing
loaned has been delivered with appraisal of its
value, unless there is a stipulation exempting
the bailee from responsibility in case of a
fortuitous event. The loan of one bull was
renewed for another period of one year but
Bagtas kept and used the bull more than one
year where during a Huk raid it was killed by
stray bullets. Furthermore, when lent and
delivered to the deceased husband of Bagtas,
the bulls had each an appraised book value. It
was not stipulated that in case of loss of the
bull due to fortuitous event the late husband
of the appellant would be exempt from liability.

Saura Import and Export Co. Inc. v. DBP, 44

SCRA 445 (1972) - DJ

Doctrine: Promise to deliver a commodatum is

binding as contract however the commodatum
itself shall only be binding upon delivery

cancellation of the mortgage was requested to

make way for the registration of a mortgage
contract over the same property in favor of
Prudential Bank and Trust Co., the latter
having issued Saura letter of credit for the
release of the jute machinery. As security,
Saura execute a trust receipt in favor of the
Prudential. For failure of Saura to pay said
obligation, Prudential sued Saura.

After 9 years after the mortgage was cancelled,

Saura sued RFc alleging failure to comply with
tits obligations to release the loan proceeds,
thereby prevented it from paying the obligation
to Prudential Bank.

The trial court ruled in favor of Saura, ruling

that there was a perfected contract between
the parties ad that the RFC was guilty of
breach thereof.

ISSUE
Whether or not there was a perfected contract
between the parties.

FACTS

HELD

Saura applied to the Rehabilitation Finance

Corporation (RFC), before its conversion into
DBP, for an industrial loan to be used for
construction of factory building, for payment
of the balance of the purchase price of the jute
machinery and equipment and as additional
working capital. In Resolution No.145, the
loan application was approved to be secured
first by mortgage on the factory buildings, the
land site, and machinery and equipment to be
installed.

The Court held in the affirmative. Article 1934

provides: An accepted promise to deliver
something by way of commodatum or simple
loan is binding upon the parties, but the
commodatum or simple loan itself shall not be
perfected until delivery of the object of the
contract.

The mortgage was registered and documents

for the promissory note were executed. The

There was undoubtedly offer and acceptance

in the case. When an application for a loan of
money was approved by resolution of the
respondent corporation and the responding
mortgage was executed and registered, there
arises a perfected consensual contract.

DISPOSITIVE: REVERSED

BPI Inv. Corp. v. CA and ALS M & D Corp.,

377 SCRA 117 (2002) - Rikki

Contract to Loan, Art. 1934

BPI INVESTMENT CORPORATION, petitioner,

vs. HON. COURT OF APPEALS and ALS
MANAGEMENT
&
DEVELOPMENT
CORPORATION,respondents.

Doctrine: A loan contract is not a consensual

contract but a real contract. It is perfected
only upon the delivery of the object of the
contract. (NCC 1934)

Facts:
1. Frank Roa originally obtained a loan from
Ayala Investment and Dev't Corp (now BPIIC)
for the construction of his house in Alabang.
The house was mortgaged to AIDC to secure
the loan. The house and lot was eventually
sold to private respondents for P850,000. They
paid P350,000 and assumed P500,000 debt of
Roa.

2. Private respondents wanted to assume the

old debt of Roa to the AIDC, but the latter
refused. Instead, it offered a new load of
P500,000 to be applied to Roa's debt and
secured by the same property. at an interest
rate of 20% per annum and service fee of 1%
per annum on the outstanding principal
balance payable within ten years in equal
monthly amortization of P9,996.58 and
penalty interest at the rate of 21% per annum

per day from the date the amortization

became due and payable.

3. On August 13, 1982, ALS and Litonjua

updated Roas arrearages by paying BPIIC the
sum of P190,601.35. This reduced Roas
principal balance to P457,204.90 which, in
turn, was liquidated when BPIIC applied
thereto the proceeds of private respondents
loan of P500,000. On September 13, 1982,
BPIIC released to private respondents
P7,146.87, purporting to be what was left of
their loan after full payment of Roas loan.

4. BPIIC instituted foreclosure proceedings

against private respondents on the ground
that they failed to pay the mortgage
indebtedness which from May 1, 1981 to June
30, 1984, amounted to Four Hundred Seventy
Five Thousand Five Hundred Eighty Five and
31/100 Pesos (P475,585.31).

5. RTC and CA favored private respondents.

The contract of loan between BPIIC and ALS &
Litonjua was perfected only on September 13,
1982, the date when BPIIC released the
purported balance of the P500,000 loan after
deducting therefrom the value of Roas
indebtedness. Thus, payment of the monthly
amortization should commence only a month
after the said date, as can be inferred from the
stipulations in the contract. This, despite the
express agreement of the parties that payment
shall commence on May 1, 1981. Evidence
showed that private respondents had an
overpayment, because as of June 1984, they
already paid a total amount of P201,791.96.
Therefore, there was no basis for BPIIC to
extrajudicially foreclose the mortgage and
cause
the
publication
in
newspapers
concerning private respondents delinquency
in the payment of their loan

Issue:
Is the contract of loan consensual
(subject to party stipulation)?

respondents is DELETED, but the award to

them of attorneys fees in the amount of
P50,000 is UPHELD. Additionally, petitioner is
ORDERED to pay private respondents
P25,000 as nominal damages. Costs against
petitioner.

Held: NO.

A loan contract is not a consensual contract

but a real contract. It is perfected only upon
the delivery of the object of the contract. (NCC
1934)
The loan contract between BPI, on the one
hand, and ALS and Litonjua, on the other,
was perfected only on September 13, 1982,
the date of the second release of the loan.
Following the intentions of the parties on the
commencement of the monthly amortization,
as found by the Court of Appeals, private
respondents obligation to pay commenced
only on October 13, 1982, a month after the
perfection of the contract
We also agree with private respondents that a
contract of loan involves a reciprocal
obligation, wherein the obligation or promise
of each party is the consideration for that of
the other.
It is a basic principle in reciprocal obligations
that neither party incurs in delay, if the other
does not comply or is not ready to comply in a
proper manner with what is incumbent upon
him. Only when a party has performed his
part of the contract can he demand that the
other party also fulfills his own obligation and
if the latter fails, default sets in.

Dispositive:
WHEREFORE, the decision dated February
28, 1997, of the Court of Appeals and its
resolution dated April 21, 1998, are
AFFIRMED WITH MODIFICATION as to the
award of damages. The award of moral and
exemplary damages in favor of private

Pantaleon v. American Express, 629 SCRA

276 (2010) - Kikoy
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.

*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.

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.

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.

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

*SC reversed the CA decision.

Issue/s:Should
culpable delay?

AmEx

be

held

liable

for

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 counteroffer.
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
aafirmed