G.R. No. 119850. June 20, 1996 FRANCISCO, J.

:
Petitioner: MANDARIN VILLA, INC.
Respondents: COURT OF APPEALS, and CLODUALDO DE JESUS

DOCTRINE: A card holders offer to pay by means of his credit card constitutes not
only an acceptance of the provisions of a stipulation pour autrui but also an explicit
communication of his acceptance to the obligor.
SUMMARY: De Jesus, lawyer and business, treated his friends for dinner in Mandarin.
De Jesus offered to pay the bill with his BANKARD credit card but it was returned and
the waiter informed him that his credit card had expired. De Jesus argued that it was
not yet expired, as evidenced by the expiry date embossed in front of the card.
Thereafter, De Jesus and 2 other friends approached the cashier, card was again
verified and same info was produced (CARD EXPIRED). One guest exclaimed Clody,
may problema ba? Baka kailangang maghugas na kami ng pinggan? De Jesus left
and got his BPI card which was accepted. Consequently, De Jesus filed a claim for
damages for the humiliation he felt during the incident. RTC said both Mandarin and
BANKARD were liable jointly and severally. CA held that only Mandarin is liable.
W/N Mandarin is bound to accept payment by means of credit card? YES.
Mandarin is affiliated with Bankard. In fact, an "Agreement" entered into by Mandarin
and Bankard provides that it shall honor credit cards presented by its holders as long
as the same has not yet expired. While De Jesus may not be a party to the said
agreement, the stipulation in the Agreement between Mandarin and BANKARD
conferred a favor upon De Jesus, a holder of credit card validly issued by BANKARD.
This stipulation is a stipulation pour autrui and under Article 1311, De Jesus may
demand its fulfillment provided he communicated his acceptance to the petitioner
before its revocation. In this case, De Jesus offer to pay by means of his BANKARD
credit card constitutes not only an acceptance of the said stipulation but also an explicit
communication of his acceptance to the obligor.
FACTS:

Clodualdo de Jesus, a practicing lawyer and businessman, hosted a dinner

for his friends at the Mandarin Villa Seafoods Village, Greenhills,
Mandaluyong City.

After dinner the waiter handed to him the bill in the amount of P2,658.50.

De Jesus offered to pay the bill through his credit card issued by Philippine
Commercial Credit Card, Inc. (BANKARD).

This card was accepted by the waiter who immediately proceeded to the
restaurants cashier for card verification.

10 minutes later, however, the waiter returned and audibly informed De Jesus

that his credit card had expired.

De Jesus remonstrated that said credit card had yet to expire on September
1990, as embossed on its face.
The waiter was unmoved, thus, De Jesus and (2) of his guests approached
the restaurants cashier who again passed the credit card over the verification
computer. The same information was produced - CARD EXPIRED.
De Jesus and his guests returned to their table. Professor Lirag (another
guest) uttered the following remarks: Clody, may problema ba? Baka
kailangang maghugas na kami ng pinggan?
Thereupon, De Jesus left the restaurant and got his BPI Express Credit Card
from his car and offered it to pay their bill. This was accepted and honored by
the cashier after verification. Petitioner and his companions left afterwards.
De Jesus filed a suit for damages. Trial court ordered Mandarin and
BANKARD to pay jointly and severally De Jesus (a) moral damages in the
amount of P250,000 (b) exemplary damages in the amount of P100,000 and
(c) attorneys fees and litigation expenses in the amount of P50,000
CA Held that MANDARIN is solely responsible for damages, Absolved
BANKARD of any responsibility for damages; Moral: 25,000; Exemplary:
10,000
Mandarin appealed. It contended that it cannot be faulted for its cashiers
refusal to accept De Jesus BANKARD credit card, the same not being a legal
tender.
o De Jesus offer to pay by means of credit card partook of the nature
of a proposal to novate an existing obligation for which Mandarin, as
creditor, must first give its consent otherwise there will be no binding
contract between them.

ISSUES:
1. W/N Mandarin is bound to accept payment by means of credit card? YES
2. W/N Mandarin is negligent under the circumstances? YES
3. If negligent, W/N such negligence is the proximate cause of the De Jesus
damage? YES
RATIO:
1. Mandarin is bound to accept payment via credit card.

Mandarin is affiliated with BANKARD, in fact, an Agreement was entered into

by Mandarin and BANKARD which provides:
The MERCHANT shall honor validly issued PCCCI credit cards
presented by their corresponding holders in the purchase of goods

and/or services supplied by it provided that the card expiration date has
not elapsed and the card number does not appear on the latest
cancellation bulletin of lost, suspended and canceled PCCCI credit
cards and, no signs of tampering, alterations or irregularities appear on
the face of the credit card.
STIPULATION POUR ATRUI!!!

While De Jesus may not be a party to the said agreement, the above-quoted
stipulation conferred a favor upon De Jesus, a holder of credit card validly
issued by BANKARD.

This stipulation is a stipulation pour autrui and under Article 1311 of the
Civil Code, De Jesus may demand its fulfillment provided he communicated
his acceptance to Mandarin before its revocation.

In this case, De Jesus offer to pay by means of his BANKARD credit card
constitutes not only an acceptance of the said stipulation but also an explicit
communication of his acceptance to the obligor.

In addition, the record shows that Mandarin posted a logo inside Mandarin
Villa Seafood Village stating that Bankard is accepted here. This
representation is conclusive upon Mandarin which it cannot deny or disprove
as against De Jesus, the party relying thereon.
Mandarin, therefore, cannot disclaim its obligation to accept De Jesus
BANKARD credit card without violating the equitable principle of estoppel.

2.

Mandarin is negligent and such is the proximate cause of the damage to De

Jesus.
The SC ruled that Mandarin was indeed negligent. The test for determining
the existence of negligence in a case may be stated as follows: did the
defendant in doing the alleged negligent act use the reasonable care and
caution which an ordinary prudent person would have used in the same
situation? If not, then he is guilty of negligence.
In the case at bar, the Point of Sale Guidelines which outlined the steps that
Mandarin must follow under the circumstances reveals that whenever the
words CARD EXPIRED flashes on screen, Mandarin should check cards
expiry date as embossed in the card itself.
If unexpired, Mandarin should honor the card. Clearly, it has not yet expired in
19 Oct 1989 when the same was dishonored by Mandarin.

Hence, Mandarin did not use the reasonable care and caution which an
ordinary prudent person would have used in the same situation and as
such, petitioner is guilty of negligence.

The humiliation and embarrassment of De Jesus was brought about by the

fact of dishonor by Mandarin of De Jesus valid BANKARD. Hence,
Mandarins negligence is the proximate cause of De Jesus damage.