PANTALEON V. AMERICAN EXPRESS INTERNATIONAL INC.

POLO S. PANTALEON, Petitioner,

AMERICAN EXPRESS INTERNATIONAL, INC., Respondent
May 8, 2009 | Tinga, J.

FACTS:
 Petitioner, with the entire family went on a European Tour organized by Trafalgar Tours of Europe.
 They visited Amsterdam (2nd to the last day of the tour – but they arrived late, so they started the tour to Amsterdam
early on their last day).
o They arrived at the Coster Diamond House (where there was a lecture on the art of diamond polishing)
around 8:50AM, and agreed that the tour to the Coster would end by 9:30 so they can still visit other
places.
o They were led to the showroom.
o Mrs. Pantaleon bought a 2.5 karat diamond brilliant cut with pendant and chain—TOTAL: US$13,826
 9:15AM: She used his husband’s American Express credit card together with his passport to the
Coster sales clerk.
 9:20AM: charge purchase was referred electronically to Amex’s Amsterdam office
 9:30AM: Store clerk told Pantaleon that Amex Card had not yet been approved.
 Meanwhile, his son (who already boarded the bus) went back to Coster to inform his
parents that the entire tour group was already waiting for them (LOOOL shit’s gonna
go down ok sorry for the commentary)
 9:40AM: Pantaleon asked if to cancel the sale
 But store manager asked for them to wait for a few more minutes.
 9:55AM: Store informed Pantaleon that Amex had demanded bank references.
 So Pantaleon supplied the names of his depositary banks.
 10:00AM (30 minutes after the group was supposed to have left the store, and 45 minutes after
Pantaleon had presented his Amex card): the store released the items even without Amex’s
approval of the purchase.
o The spouses Pantaleon returned to the bus.
 Their offers of apology were met by their tourmates with stony silence.
 The tour group's visible irritation was aggravated when the city tour of Amsterdam was to be
canceled due to lack of remaining time.
 Mrs. Pantaleon ended up weeping, while her husband had to take a tranquilizer to calm his
nerves.
 The Approval Code was transmitted to Amex’s Amsterdam Office at 10:38AM – 78 minutes from the time the
purchases were electronically transmitted to Amex’s Amsterdam office.
 Two other transactions of Pantaleon in the US also met the same fate.
 After coming back to Manila, Pantaleon sent a letter to Amex demanding an apology for the "inconvenience,
humiliation and embarrassment he and his family thereby suffered" for its refusal to provide credit authorization for
the said purchases.
o RESPONSE OF AMEX (did not issue apology): 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"
o Pantaleon instituted an ACTION FOR DAMAGES:
 P2,000,000.00, as moral damages
 P500,000.00, as exemplary damages
 P100,000.00, as attorney's fees
 P50,000.00 as litigation expenses
RTC: in favor of Pantaleon – Amex was in breach because the normal approval time for purchases was “a matter of seconds”
 P500,000.00 as moral damages
 P300,000.00 as exemplary damages
 P100,000.00 as attorney's fees
 P85,233.01 as expenses of litigation

CA: reversed – Amex did not breach its obligation to Pantaleon

 Conceded that there had been delay on the part of respondent in approving the purchases. However—
o Delay was not attended by bad faith, malice, or gross negligence
o Amex had exercised diligent efforts to effect the approval of the purchases which were not in accordance
with the charge pattern that Pantaleon had established for himself

On appeal to SC: Pantaleon argues—

 Amex’s failure to timely approve/disapprove constituted mora solvendi
 Amex is liable to Pantaleon for damages under NCC21 even assuming that it had not been in breach.

ISSUE: WON Amex is liable for moral damages (YES)

 The failure of Amex to timely approve the sale constituted culpable delay on its part in complying with its obligation
to act promptly on its customer’s purchase request.
o Both parties presented evidence that the processing and approval of plaintiff's charge purchase at the
Coster Diamond House was way beyond the normal approval time of a "matter of seconds".
o The Credit Authorization System (CAS) record on the Amsterdam transaction showed how Amex
Netherlands viewed the delay as unusually frustrating because at 01:33 and 02:08 (Phoenix time),
Netherlands office had been asking “How long will this take?”
o Although there is no strict rule on how long it must take for a credit card company to approve a purchase,
this is one of those instances when "you'd know it when you'd see it", and one hour appears to be an
awfully long, patently unreasonable length of time.
o The culpable failure here was to timely act on the purchase, whether favorably or unfavorably.
 Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad faith.
o The findings of the trial court established bad faith and unjustified neglect of Amex, attributable in
particular to the "dilly-dallying" of Amex’s Manila credit authorizer.
 Although the Card Membership Agreement is silent as to the amount of time it should take Amex
to grant authorization, Amex acknowledged that the normal time for approval should only take
3-4 seconds.
 Especially so with cards used abroad which requires “special handling.”
o All data as to his past credit history, payment records, and credit and bank references were stored and
readily available from Amex’s computers.
o Nothing in Pantaleon’s billing history would warrant the imprudent suspension of action in processing the
purchase.

o Petitioner is entitled to damages 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 for which moral
damages are remunerative.
 Moral damages do not avail to soothe the plaints of the simply impatient.
 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.
SC AWARDED P500,000 AS MORAL DAMAGES. No hard-and-fast rule as to how much, since each case must be governed by
its own peculiar facts, BUT IT MUST BE COMMENSURATE TO THE LOSS/INJURY SUFFERED.