Mandarin Villa, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondent, Clodualdo de Jesus, a lawyer and businessman, hosted a dinner at petitioner's restaurant, Mandarin Villa. He offered to pay the bill of P2,658.50 using his BANKARD credit card. The waiter twice verified the card, and both times the machine indicated "CARD EXPIRED." Despite private respondent's assertion that the card expired in September 1990, the restaurant cashier refused to honor it. Private respondent then produced his BPI Express Credit Card, which was accepted and honored. Procedural History: Private respondent filed a suit for damages. The trial court awarded moral damages, exemplary damages, and attorney's fees. Both petitioner and BANKARD appealed. The Court of Appeals modified the decision, holding Mandarin Villa solely responsible for damages, absolving BANKARD, and reducing the awarded damages. The Petition: Mandarin Villa filed a petition with the Supreme Court, raising issues of whether it was bound to accept credit card payments, whether it was negligent, and if so, whether its negligence was the proximate cause of the damage.
Issue(s)
Whether petitioner is bound to accept payment by means of credit card. Whether petitioner was negligent under the circumstances. If negligent, whether such negligence was the proximate cause of the private respondent's damage.
Ruling
The petition is dismissed. The Court of Appeals' decision finding Mandarin Villa solely responsible for damages and absolving BANKARD is affirmed, with modifications to the awarded damages.
Ratio Decidendi
On whether petitioner is bound to accept payment by means of credit card: The Court held that Mandarin Villa, being affiliated with BANKARD and displaying a sign indicating acceptance of Bankard, was bound to honor valid credit cards. The "Agreement" between petitioner and BANKARD, stipulating the merchant's obligation to honor valid cards, constituted a stipulation pour autrui under Article 1311 of the Civil Code. Private respondent's offer to pay with his BANKARD credit card was an acceptance of this stipulation. Furthermore, the posted "Bankard is accepted here" sign created an estoppel, preventing petitioner from disclaiming its obligation to accept the card. On whether petitioner was negligent: The Court found petitioner negligent. The Point of Sale (POS) Guidelines required checking the expiry date embossed on the card if the machine indicated "CARD EXPIRED." The private respondent's card clearly showed an expiry date of "SEP 90," meaning it was unexpired on October 19, 1989. Petitioner's failure to perform this simple check and its immediate dishonor of the card, despite the card being valid, demonstrated a lack of reasonable care and caution expected of an ordinary prudent person in the same situation. The Court of Appeals correctly observed that petitioner overlooked the option to check the embossed expiry date. On whether such negligence was the proximate cause of the private respondent's damage: The Court ruled that petitioner's negligence was the proximate cause of the damage. Private respondent's alleged lack of sufficient cash was not negligence and not the proximate cause, especially since credit card payments are common practice and petitioner itself accepted another credit card. The remark by Professor Lirag was not a supervening event or the proximate cause; it merely aggravated the embarrassment already caused by the dishonor of the valid credit card. The humiliation and embarrassment stemmed directly from the petitioner's act of dishonoring the credit card.
Main Doctrine
A restaurant affiliated with a credit card company, which displays a sign accepting such cards, is bound by its agreement to honor valid credit cards presented by cardholders. Dishonoring a valid credit card due to a verification error, without following proper procedures outlined in the POS Guidelines, constitutes negligence. The humiliation and embarrassment resulting from such dishonor are direct damages, and the remark of a guest does not constitute a supervening event or proximate cause.