Professional Documents
Culture Documents
Diez
JD- II
Credit Transactions
Atty. Stephen L. Yu (Mon:8:00-10:00pm)
Thu: 9:00-10:00pm
Philippine jurisdiction generally adheres to the Gray ruling, recognizing the relationship between the credit
card issuer and holder as a contractual one that is governed by the terms and conditions found in the card
membership agreement. A card membership agreement is a contract of adhesion.
With regard to AMEXs obligations, Pantaleon assumes that since his credit card has no pre-set spending
limit, AMEX has to approve all charge requests. However, the Court said that there is first a need to
distinguish a relationship between credit card issuer-holder to a creditor-debtor relationship. In an issuerholder relationship, it relates merely to an agreement providing for credit facility to the holder. On the other
hand, in a creditor-debtor relationship, it involves the actual credit on loan agreement involving three
contracts.
When cardholders use their cards to pay, they merely offer to enter into loan agreements with the
company. It is only after the approval do the parties enter into binding loan contracts, in keeping with NCC
1319.This is supported in the reservation found in the card membership agreement which clearly states
that AMEX "reserves the right to deny authorization for any requested Charge."
Thus, since AMEX has no obligation to approve purchase requests, Pantaleon cant claim that AMEX
defaulted. In this case, there is no demandable obligation. Before the credit card issuer accepts this offer,
no obligation relating to the loan agreement exists between them. A demand presupposes the existence
of an obligation between the parties. Moreover, AMEX is not bound or obligated to act on its cardholders
purchase requests within any specific period of time.
Since there is no legal injury or breach of any contractual obligation on the part of AMEX, it is not liable to
pay damages to Pantaleon.