Pantaleon vs. American Express International Inc.

August 25, 2010

TOPIC: Simple Loan ( Obligations and Contracts )

PONENTE: Associate Justice Dante O. Tinga

PRINCIPLES: 1.) “Mora Solvendi”: Delay of the obligor/debtor in the performance of the obligation
to the creditor. Thus, civil liability arises.

2.) Article 1170 of the New Civil Code

FACTS:

Petitioner, lawyer Polo Pantaleon and his family joined a group tour for Europe in October of 1991.
The tour group arrived in Amsterdam in the afternoon of 25th October 1991. On the next day, they
visited Coster Diamond House in Amsterdam where Mrs. Pantaleon purchased and pendant and a
chain, which totaled U.S. $13,826.00.

For the payment, Pantaleon presented his American Express credit card together with his passport
to the Coster sales clerk. To his dismay, the approval took 78 minutes to complete from the time of
purchase, when normally communication of approval or disapproval only takes seconds. This
resulted to the delay of the entire tour group for their next destination as they had to wait for the
Pantaleon family. Much worse, the next tour destination was cancelled due to the insufficiency of
time. This made the family embarrassed.

After Europe tour, the Pantaleon family proceeded to the United States before returning to Manila
on 12 November 1991. While in the United States, Pantaleon continued to use his AmEx card,
several times without hassle or delay, but with two other incidents similar to the Amsterdam
purchase. On 30th of October 1991. Pantaleon purchased golf equipment amounting to US
$1,475.00 using his AmEx card, but he cancelled his credit card purchase and borrowed money
instead from a friend, after more than 30 minutes had transpired without the purchase having been
approved. On 3 November 1991, Pantaleon used the card to purchase children’s shoes worth $87.00
at a store in Boston, and it took 20 minutes before this transaction was approved by respondent.

This prompted Pantaleon to send letter through counsel of Amex, demanding an apology for the
inconvenience, humiliation and embarrassment he and his family suffered. Respondent did not
accede the request, thus, Pantaleon instituted an action for damages with the Regional Trial Court
RTC of Makati City.

On 5 August 1996, the Makati City RTC rendered a decision in favor of Pantaleon but reversed by
Court of Appeals on the 18th of August.

ISSUE:
WHETHER OR NOT THERE IS A BREACH BY AMERICAN EXPRESS INTERNATIONAL IN THE LOAN
CONTRACT BY COMMUNICATING THE APPROVAL OF THE PURCHASE USING AMERICAN EXPRESS
CARD.

RULING:

Yes. American Express committed a breach against the loan contract with Pantaleon, the petitioner,
which makes it liable for damages.

In the context of American express being obligated to extend the credit to the card holder in the
reasonable time, it is considered an obligor or debtor and Pantaleon a creditor. Since there is a delay
in communicating the approval or disapproval of the purchase in a timely manner, there is, thus, a
delay on the part of the obligor, Amex in the performance of its prestation to Pantaleon.

It has been noted that the normal duration of the approval or disapproval only takes 4 to 5 seconds.
However, in this case, it took 78 minutes approval communication from the time of purchase. There
is no hard and fast rule as to the extent of time for the approval or disapproval communication but
78 minutes delay is unreasonable. Hence, this performance of Amex is considered “mora solvendi”
which makes it liable for damages as expressed in articles 21, 1170, and 2217 of the civil code.