PANTALEON v AMERICAN EXPRESS INTERNATIONAL, INC

RATIO DECIDENDI: Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad
faith.
QUICK FACTS:
Petitioner purchased items when he was in the States using his AmExcredit card. During three particular instances,
clearance of his purchase took too longand under those circumstances caused him moral shock, mental anguish,
seriousanxiety, wounded feelings and social humiliation.
FACTS:
Name of Offended party (petitioner): Polo S. Pantaleon Name of respondent: American Express International, Inc.-The
petitioner, lawyer Polo Pantaleon, his wife, daughter and son joined an escorted tour of Western Europe organized by
Trafalgar Tours of Europe, Ltd., in October of 1991. -The tour group arrived in Amsterdam in the afternoon of 25 October
1991, the second to the last day of the tour. As the group had arrived late in the city, they failed to engage in any sightseeing so they agreed that they would start early the next day to see the entire city before ending the tour.-The following
day, the last day of the tour, the group arrived at the Coster Diamond House. The group had agreed that the visit to Coster
should end by 9:30 a.m. to allow enough time to take in a guided city tour of Amsterdam.- While in the diamond house, led
to the stores showroom to allow them to select items for purchase. Mrs. Pantaleon decided to buy a 2.5 karat diamond
brilliant cut, and she found a diamond close enough in approximation. Mrs. Pantaleon also selected for purchase a pendant
and a chain, all of which totaled U.S. $13,826.00.-Pantaleon presented his American Express credit card together with his
passport to the Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before the tour group was slated to
depart from the store. The sales clerk took the cards imprint, and asked Pantaleon to sign the charge slip. The charge
purchase was then referred electronically to respondents Amsterdam office at 9:20 a.m.-clearance took too long. At
9:40am, Pantaleon asked the store clerk to cancel the sale to avoid further delaying and inconveniencing the tour group.
At around 10:00a.m, 30 minutes after the tour group was supposed to have left the store, Coster decided to release the
items even without respondents approval of the purchase.-due to the delay, the city tour of Amsterdam was to be
canceled due to lack of remaining time. The spouses Pantaleon allegedly offered their apologies but were met by their
tour mates with stony silence and visible irritation. Mrs. Pantaleon ended up weeping, while her husband had to take a
tranquilizer to calm his nerves.-two instances similar to the Castor incident happened.
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 afriend, after more than 30 minutes had transpired without the purchase having been
approved.
used the card to purchase childrens shoes worth $87.00 at a store in Boston, and it took 20 minutes before this
transaction was approved by respondent.
Petitioners: after coming back to Manila, sent a letter demanding an apology for the inconvenience, humiliation and
embarrassment he and his family thereby suffered for respondents refusal to provide credit authorization for the
aforementioned purchases.
Respondent: refused to give an apology, sent a letter stating among others that the delay in authorizing the purchase from
Coster was attributable to the circumstance that the charged purchase of US $13,826.00 "was out of the usual charge
purchase pattern established."
RTC : petitioner instituted an action for damages. Petitioner won.
Court awarded P 500,000.00 as moral damages, P300,000.00 as exemplary damages, P 100,000.00 as attorneys fees,
and P 85,233.01 as expenses of litigation.
normal approval time for purchases was "a matter of seconds." Based on that standard, respondent had been in clear
delay with respect to the three subject transactions.
CA: reversed the award of damages in favor of Pantaleon, holding that respondent had not breached its obligations to
petitioner.
delay was not attended by bad faith, malice, or gross negligence.
respondent "had exercised diligent efforts to effect the approval" of the purchases, which were "not in accordance with
the charge pattern" petitioner had established for himself
ISSUE:
1)WON has committed a breach of its obligations.2)WON respondent is liable for damages.
DECISION:
Petition granted. CA decision set aside.
HELD:

1)There was a breach.-Notwithstanding 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 customers purchase, much less one specifically contracted upon by the parties. Yet this is one of
those instances when "youd know it when youd see it," and one hour appears to be an awfully long, patently
unreasonable length of time to approve or disapprove a credit card purchase.-the respondent has the right, if not the
obligation, to verify whether the credit it is extending upon on a particular purchase was indeed contracted by the card
holder ,and that the cardholder is within his means to make such transaction. The culpable failure of respondent herein is
not the failure to timely approve petitioners purchase, but the more elemental failure to timely act on the same, whether
favorably or unfavorably.
Respondent should have promptly informed petitioner the reason for the delay, and duly advised him that resolving the
same could take some time sothat petitioners will know WON to continue with the purchases2)YES.-Moral damages avail
in cases of breach of contract where the defendant acted fraudulently or in bad faith, and the court should find that under
the circumstances, such damages are due.-in this case, there was bad faith and unjustified neglect of respondent,
attributable in particular to the "dilly-dallying" of respondents Manila credit authorizer, Edgardo Jaurique. This, to the
Courts mind, amounts to a wanton and deliberate refusal to comply with its contractual obligations, or at least abuse of
its rights, under the contract.-The delay committed by defendant was clearly attended by unjustified neglect and bad faith,
since it alleges to have consumed more than one hour to simply go over plaintiffs past credit history with defendant, his
payment record and his credit and bank references, when all such data are already stored and readily available from its
computer and the fact that there were no delinquencies in the plaintiffs account
-It should be emphasized that the reason why petitioner is entitled to damages is not simply because respondent 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.
In this case, it was sufficiently shown that the incident gave rise to the moral shock, mental anguish, serious anxiety,
wounded feelings and social humiliation to the petitioner.
Amount should be commensurate to the loss or injury suffered. Petitioners original prayer for P5,000,000.00 for moral
damages is excessive under the circumstances, and the amount awarded by the trial court of P500,000.00 in moral
damages more seemly.
-Likewise, we deem exemplary damages available under the circumstances, and the amount of P 300,000.00 appropriate.
There is similarly no cause though to disturb the determined award of P 100,000.00 as attorneys fees, and P 85,233.01 as
expenses of litigation.