G.R. NO. 174269, 2009-05-08

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2 years ago

An obligation is an act or course of action to which an individual is morally or legally obligated.

As a credit card provider, you are the creditor as to which the credit card holder or debtor is obliged to repay to. However, things might change if the credit card holder starts to use the credit card. The credit card provider is now the debtor which is obliged to perform its obligation, to approve or disapprove the purchases in a matter of seconds, and the credit card holder becomes the creditor. If the credit card provider committed a breach of its obligation, or if they fail to do what they supposed to do, the law will never sleep on them.

The below case is about a credit card provider who failed to fulfill his obligation to the credit card holder. Let me share with my knowledge about how the law will take place in case of this event emphasizing the facts, the issue, and the ruling of the court.

Polo S. Pantaleon vs. American Express International, Inc.


The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina and son Adrian Roberto, joined an escorted tour. In the last day of the tour, the group arrived at the Coster Diamond House in Amsterdam; they were led to the store’s showroom to allow them to select items for purchase. Mrs. Pantaleon purchased a diamond, a pendant and a chain, 3 all of which totaled $13,826.

Pantaleon showed his American Express credit card and passport to the Coster sales clerk to pay for his transactions. The sales clerk scanned Pantaleon's credit card and asked him to sign the charging slip. The store clerk told Pantaleon ten minutes later that his AmexCard had not yet been accepted. His son, who had already boarded the tour bus, returned to Coster shortly after and told the other Pantaleon family members that the whole tour group was waiting for them. Pantaleon, still concerned about causing more disruption to the tour group, asked the store clerk to postpone the deal. The shop manager, on the other hand, requested that he wait a few minutes longer.

The store manager told Pantaleon after 15 minutes that the respondent had requested bank references. Pantaleon gave his depositary banks' names, then told his daughter to get back on the bus and apologise to the tour group for the wait. Coster agreed to release the purchase 45 minutes after Pantaleon showed his AmexCard and 30 minutes after the tour party was due to leave the shop, despite the fact that the respondent had not approved the purcgase. Pantaleon's spouses boarded the bus again.

Before returning to Manila, the Pantaleon family traveled to the United States. Pantaleon continued to use his AmEx card while in the United States, and did so many times without issue or delay, although there were two other events that were close to the Amsterdam incident. Pantaleon used his AmEx card to buy golf equipment, but he later canceled the transaction and borrowed money from a friend after waiting more than 30 minutes for the order to be authorised. Pantaleon used the card to buy children's shoes in a Boston store, and it took respondent 20 minutes to authorize the transaction.

Pantaleon submitted a letter to the respondent by counsel after returning to Manila, requesting an explanation for the pain, shame, and embarrassment he and his family had endured as a result of the respondent's failure to offer credit permission for the aforementioned transactions Respondent sent a letter in response, explaining, among other things, that the delay in approving the transaction from Coster was due to the fact that the charged purchase was outside of the defined charge purchase sequence. Since the respondent failed to comply with Pantaleon's appeal for an apology, the aggrieved cardholder filed a lawsuit for damages in Makati City's Regional Trial Court, Branch 145. Pantaleon demanded that he be paid for moral and punitive damages, as well as attorney's compensation and legal costs.

The Regional Trial Court had concluded that the usual approval period for sales was a matter of seconds, based on Pantaleon's and respondent's credit authorizer, Edgardo Jaurigue's testimony. According to that criterion, respondent was clearly behind on the three transactions at issue. The Court of Appeals seems to have acknowledged that respondent had been slow in approving the sales. It did, however, draw two main conclusions in favour of the respondent. First, the appeals court found no evidence of bad faith, malice, or criminal incompetence in the delay. Second, it found that respondent had made conscientious efforts to have the transactions approved, despite the fact that they were not in compliance with the charge pattern petitioner had developed for himself, as shown by the fact that at Coster, he was making his first major single charge transaction, and the evidence of petitioner's previous expenses with respondent at the time does not justify his ability to make such a purchase.


1. Whether or not respondent, in connection with the aforementioned transactions, had committed a breach of its obligations to Pantaleon.


1. Yes, American Express International, Inc. had committed a breach of its obligation to Pantaleon. The defendant admitted that the average acceptance time could be three or four seconds. Especially with cards used overseas, which necessitate special treatment, i.e., priority. The defendant's negligence was evidently accompanied by unjustified indifference and bad faith. It is, however, stated in Civil Code, Art. 1170 that “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”

There are two types of moras mentioned in this case; mora solvendi (debtor’s default) and mora accipiendi (creditor’s default). The Court of Appeals, on the other hand, had applied the theory of mora accipiendi incorrectly, which refers to the obligee's hesitation in approving the obligor's fulfillment of the duty. We can see how deciding which kind of mora to enjoy may be a source of uncertainty. In general, a credit card provider's arrangement with its cardholders is that of borrower-debtor, with the card issuer acting as the creditor, issuing loans and credit to the cardholder, who, as the debtor, is responsible for repaying the creditor. This arrangement already deviates from the general concept that the bank is the debtor and the depositor is the creditor when it comes to a bank and its depositors. We can finally see that the credit card provider as debtor which is obliged to approve or disapprove the purchase caused a delay and were in default.


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