ObliCon Doctrine: Article 1170 of the Civil Code, Those who in the performance of their

obligations are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages.
Title G.R. No. 174269
POLO S. PANTALEON, Date: May 8, 2009
Petitioner, Ponente: TINGA, J.
- versus -
AMERICAN EXPRESS INTERNATIONAL,
INC.,
Respondent.
Polo S. Pantaleon, petitioner. AMERICAN EXPRESS INTERNATIONAL,
INC. respondent.
Nature of the case: The case at bar is a Petition for Review on Certiorari on the assailed decision of the
Court of Appeals on 18 August 2006 and Reinstatement of the Decision of the Regional Trial Court of
Makati, Branch 145 in Civil Case No. 92-1665.
FACTS
AMEX is a resident foreign corporation engaged in the business of providing credit services through the
operation of a charge card system. Pantaleon has been an AMEX cardholder since 1980.

In October 1991, Pantaleon, together with his wife (Julialinda), daughter (Regina), and son (Adrian
Roberto), went on a guided European tour. On October 25, 1991, the tour group arrived in Amsterdam.
Due to their late arrival, they postponed the tour of the city for the following day.

The next day, the group began their sightseeing at around 8:50 a.m. with a trip to the Coster Diamond
House (Coster). To have enough time for take a guided city tour of Amsterdam before their departure
scheduled on that day, the tour group planned to leave Coster by 9:30 a.m. at the latest.

While at Coster, Mrs. Pantaleon decided to purchase some diamond pieces worth a total of
US$13,826.00. Pantaleon presented his American Express credit card to the sales clerk to pay for this
purchase. He did this at around 9:15 a.m. The sales clerk swiped the credit card and asked Pantaleon to
sign the charge slip, which was then electronically referred to AMEX’s Amsterdam office at 9:20 a.m.

At around 9:40 a.m., 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. At around 10
a.m., or 45 minutes after Pantaleon presented his credit card, AMEX still had not approved the
purchase. Since the city tour could not begin until the Pantaleons were onboard the tour bus, Coster
decided to release at around 10:05 a.m. the purchased items to Pantaleon even without AMEX’s
approval.

When the Pantaleons finally returned to the tour bus, they found their travel companions visibly
irritated. This irritation intensified when the tour guide announced that they would have to cancel the
tour because of lack of time as they all had to be in Calais, Belgium by 3 p.m. to catch the ferry to
London.
From the records, it appears that after Pantaleon’s purchase was transmitted for approval to AMEX’s
Amsterdam office at 9:20 a.m.; was referred to AMEX’s Manila office at 9:33 a.m.; and was approved by
the Manila office at 10:19 a.m. At 10:38 a.m., AMEX’s Manila office finally transmitted the Approval
Code to AMEX’s Amsterdam office. In all, it took AMEX a total of 78 minutes to approve Pantaleon’s
purchase and to transmit the approval to the jewelry store.
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 children’s 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 Pantaleon’s 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.
ISSUE/S
1. Whether or not Mora Solvendi should be appreciated in the case at bar.
2. Whether or not AMEX had committed a breach of its obligations to Pantaleon.
3. Whether or not AMEX is liable for damages.
RATIO DECIDENDI
1. Yes. Petitioner correctly cites that under mora solvendi, the three requisites for a finding of default
are that the obligation is demandable and liquidated; the debtor delays performance; and the creditor
judicially or extrajudicially requires the debtor’s performance. Petitioner asserts that the Court of
Appeals had wrongly applied the principle of mora accipiendi, which relates to delay on the part of the
obligee in accepting the performance of the obligation by the obligor. The requisites of mora accipiendi
are: an offer of performance by the debtor who has the required capacity; the offer must be to comply
with the prestation as it should be performed; and the creditor refuses the performance without just
cause.[19] The error of the appellate court, argues petitioner, is in relying on the invocation by
respondent of just cause for the delay, since while just cause is determinative of mora accipiendi, it is
not so with the case of mora solvendi.

Generally, the relationship between a credit card provider and its card holders is that of creditor-debtor,
with the card company as the creditor extending loans and credit to the card holder, who as debtor is
obliged to repay the creditor. This relationship already takes exception to the general rule that as
between a bank and its depositors, the bank is deemed as the debtor while the depositor is considered
as the creditor. Petitioner is asked, not baselessly, to again shift perspectives and again see the credit
card company as the debtor/obligor, insofar as it has the obligation to the customer as creditor/obligee
to act promptly on its purchases on credit.

Ultimately, petitioner’s perspective appears more sensible than if respondent were still to be regarded
as the creditor in the context of this cause of action. If there was delay on the part of respondent in its
normal role as creditor to the cardholder, such delay would not have been in the acceptance of the
performance of the debtors obligation (i.e., the repayment of the debt), but it would be delay in the
extension of the credit in the first place. Such delay would not fall under mora accipiendi, which
contemplates that the obligation of the debtor, such as the actual purchases on credit, has already been
constituted. Herein, the establishment of the debt itself (purchases on credit of the jewelry) had not yet
been perfected, as it remained pending the approval or consent of the respondent credit card company.

2. Yes. The popular notion that credit card purchases are approved “within seconds,” there really is no
strict, legally determinative point of demarcation on how long must it take for a credit card company to
approve or disapprove a customer’s purchase, much less one specifically contracted upon by the parties.
One hour appears to be patently unreasonable length of time to approve or disapprove a credit card
purchase. The culpable failure of AMEX herein is not the failure to timely approve petitioner’s purchase,
but the more elemental failure to timely act on the same, whether favorably or unfavorably. Even
assuming that AMEX’s credit authorizers did not have sufficient basis on hand to make a judgment, we
see no reason why it could not have promptly informed Pantaleon the reason for the delay, and duly
advised him that resolving the same could take some time.

3. Yes. The reason why Pantaleon is entitled to damages is not simply because AMEX incurred delay, but
because the delay, for which culpability lies under Article 1170, led to the particular injuries under
Article 2217 of the Civil Code for which moral damages are remunerative. The somewhat unusual
attending circumstances to the purchase at Coster – that there was a deadline for the completion of
that purchase by petitioner before any delay would redound to the injury of his several traveling
companions – gave rise to the moral shock, mental anguish, serious anxiety, wounded feelings and
social humiliation sustained by Pantaleon, as concluded by the RTC.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is REVERSED and
SET ASIDE. The Decision of the Regional Trial Court of Makati, Branch 145 in Civil Case No. 92-1665 is
hereby REINSTATED. Costs against respondent.

Notes
Article 1170 of the Civil Code, Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for
damages.

Article 2217 of the Civil Code, Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for omission.
1-C 2015-16 (CRISANG)
Modifications:

Source: http://sc.judiciary.gov.ph/jurisprudence/2010/august2010/174269.htm