Pantaleon v.

American Express
G.R. No. 174269

FACTS: The petitioner (Pantaleon) and his family joined an escorted tour of Western Europe. In Coster Diamond House,
Amsterdam, Mrs. Pantaleon (wife) was about to buy a 2.5 karat diamond brilliant cut, a pendant and a chain, all of which
totalled U.S. $13,826.00. To pay these purchases, around 9:15am, Pantaleon presented his American Express Credit
Card together with his passport. By 9:40am, Pantaleon was already worried about further inconveniencing the tour group,
he asked the store clerk to cancel the sale. The store manager though asked him to wait a few more minutes. Around
10:00am (around 45 minutes after Pantaleon had presented his AmexCard), Coster decided to release the items even
without the approval of American Express for the purchase. This was 30 minutes after the tour group was supposed to
have left the store. The spouses Pantaleon returned. Their offers of apology were met by their tour mates with stony
silence. The tour group’s visible irritation was aggravated when the tour guide announced that the city tour of Amsterdam
was to be cancelled due to lack of remaining time. Mrs. Pantaleon ended up weeping. After the star-crossed tour had
ended, the Pantaleon family proceeded to the U.S. before returning to Manila. While in the U.S., Pantaleon continued to
use his AmEx card, several times without hassle or delay, but with two other incidents similar to the Amsterdam brouhaha.

After coming back to Manila, Pantaleon sent a letter through counsel to the respondent, demanding an apology for the
"inconvenience, humiliation and embarrassment he and his family thereby suffered" for respondent’s refusal to provide
credit authorization for the aforementioned purchases. In response, respondent sent a letter dated 24 March 1992, 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." Makati City RTC rendered a
decision in favor of Pantaleon, awarding him ₱500,000.00 as moral damages, ₱300,000.00 as exemplary damages,
₱100,000.00 as attorney’s fees, and ₱85,233.01 as expenses of litigation. The Court of Appeals rendered a
decision reversing the award of damages in favor of Pantaleon, holding that respondent had not breached its obligations
to petitioner. Hence, this petition.

ISSUES:
Whether or not Amex was in default or mora.
Whether Amex (Credit Card Company) is in mora solvendi or in mora accipiendi.

RULING: Yes. The Court is convinced that Amex’s delay constituted breach of its contractual obligation to act on his use
of the card abroad “with special handling. The culpable failure of respondent 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 the respondent’s credit authorizers did not have sufficient basis on hand to make a judgment, we see no reason
why Amex could not have promptly informed petitioner the reason for the delay, and duly advised him that resolving the
same could take some time. In that way, petitioner would have had informed basis on whether or not to pursue the
transaction at Coster, given the attending circumstances. instead, Pantaleon was left uncomfortably dangling in the chilly
autumn winds in a foreign land and soon forced to confront the wrath of foreign folk. The delay committed by Amex was
clearly attended by unjustified neglect and bad faith, since it alleges to have consumed more than one hour to simply go
over Pantaleon’s pas credit history with Amex, his payment record and his credit and bank references, when all such data
are already stored and readily available from its computer. There is nothing in Pantaleon’s billing history that would
warrant the imprudent suspension of action by Amex in processing the purchase.

Amex is in mora solvendi. Generally, the relationship between a credit card provided and its card holder is that of creditor-
debtor, with the card company as a creditor extending loans and credit to the card holder, who as debtor is obliged to
repay the creditor. The 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. In the present case, we should 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. If there was delay on the part of Amex in its normal role as
creditor to the cardholder, such delay would not have been in acceptance of the performance of the debtor’s 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 instituted. 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 credit card company.
Notes / Doctrine:

Requisites of Mora Solvendi (delay of debtor)

1. Obligation is demandable and liquidated;
2. debtor delays performance; and
3. the creditor judicially or extrajudicially required the debtor’s performance.

Requisites of Mora Accipiendi

1. An offer of performance by the debtor who has the required capacity;
2. offer must be to comply with the prestation as it should be performed; and
3. creditor refuses the performance without just cause.

Moral damages
1. Can be availed in cases of breach of contract where the defendant acted fraudulently or in bad faith.
2. In the present case, there was a deadline for the completion of that purchase by Pantaleon 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 Panaleon family. These circumstances are
fairly unusual, and should not give rise to a general entitlement for damages under a more mundane set of facts.
3. There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages,
since each case must be governed by its own peculiar facts, however, it must be commensurate to the loss or
injury suffered.
 GF Equity v. Arturo Valenzona
G.R. No. 156841

Mutuality is one of the characteristics of a contract, its validity or performance or compliance of which cannot be left to the
will of only one of the parties.

FACTS: GF Equity hired Arturo Valenzona (Valenzona) as head basketball coach of Alaska team. As head coach,
Valenzona was required to comply to his duties such as coaching at all practices and games scheduled for the team.
Under their contract, Valenzona would receive P 35,000.00 monthly and GF Equity will provide him with a service vehicle
and gasoline allowance. Under paragraph 3 of the same contract it was stipulated there that;“If at any time during
the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or competitive ability to
coach the team, the CORPORATION may terminate this contract.” Subsequently, Valenzona was terminated.
GF equity invoked paragraph 3 of the said contract. Counsel of Valenzona demands for compensation arising from
arbitrary and unilateral termination of his employment. However, GF equity refused it. Valenzona filed a complaint before
the Regional Trial Court (RTC) of Manila against GF Equity for breach of contract. Valenzona contends that
the condition in paragraph 3 violates Article 1308 of New Civil Code (NCC). But the RTC dismissed the complaint and
affirmed the validity of paragraph 3 on the grounds that Valenzona was fully aware of entering into a bad bargain.

On appeal, the Court of Appeals (CA) held that the questioned provision in the contract ―merely confers upon
GF Equity the right to fire its coach upon a finding of inefficiency, a valid reason within the ambit of its management
prerogatives, subject to limitations imposed by law, although not expressly stated in the clause; and ―the right granted in
the contract can neither be said to be immoral, unlawful, or contrary to public policy. It concluded, however, that while
―the mutuality of the clause‖ is evident, GF Equity ―abused its right by arbitrarily terminating Valenzona‘s employment
and opened itself to a charge of bad faith.

ISSUE: Whether or not paragraph 3 of the contract is violative of the principle of mutuality of contracts

HELD: The ultimate purpose of the mutuality principle is thus to nullify a contract containing a condition which makes its
fulfilment or pre-termination dependent exclusively upon the uncontrolled will of one of the contracting parties. The
contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract — that ―if the coach, in the sole
opinion of the corporation, fails to exhibit sufficient skill or competitive ability to coach the team, the corporation may
terminate the contract. The assailed condition clearly transgresses the principle of mutuality of contracts. It leaves the
determination of whether Valenzona failed to exhibit sufficient skill or competitive ability to coach Alaska team solely to the
opinion of GF Equity. In other words, GF Equity was given an unbridled prerogative to pre-terminate the contract
irrespective of the soundness, fairness or reasonableness, or even lack of basis of its opinion. To sustain the validity of
the assailed paragraph would open the gate for arbitrary and illegal dismissals, for void contractual stipulations would be
used as justification therefor. The nullity of the stipulation notwithstanding, GF Equity was not precluded from the right to
pre-terminate the contract. The pre-termination must have legal basis, however, if it is to be declared justified.

While GF Equity’s act of pre-terminating Valenzona’s services cannot be considered wilful as it was based on a
stipulation, albeit declared void, it, in doing so, failed to consider the abuse of rights principle enshrined in Art. 19 of the
Civil Code which provides that every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith. But while Article 19 lays down a rule of conduct
for the government of human relations and for the maintenance of social order, it does not provide a remedy for its
violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.