POLO S. PANTALEON vs. AMERICAN EXPRESS INTERNATIONAL, INC.

,
The petitioner joined an escorted tour of Western Europe organized by Trafalgar Tours of
Europe, Ltd. During the last day of the tour, the group arrived at the Coster Diamond House in
Amsterdam. Mrs. Pantaleon had already planned to purchase even before the tour began a 2.5
karat diamond brilliant cut, and she found a diamond close enough in approximation that she
decided to buy.2 Mrs. Pantaleon also selected for purchase a pendant and a chain, all of which
totaled U.S. $13,826.00. To pay for these purchases, Pantaleon presented his American
Express credit card together with his passport to the Coster sales clerk. However, This occurred
at around 15 minutes before the tour group was slated to depart from the store. It was 45
minutes only after they decided to release the items even without respondents approval of the
purchase. The spouses Pantaleon returned to the bus. It is alleged that their offers of apology
were met by their tourmates with stony silence. The tour groups visible irritation was aggravated
when the tour guide announced that the city tour of Amsterdam was to be canceled due to lack
of remaining time.
After the star-crossed tour had ended, the Pantaleon family proceeded to the United States
before returning to Manila. 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 brouhaha. First was when Pantaleon purchased golf equipment which he cancelled
and decided to purchase and borrow money instead from a friend, after more than 30 minutes
had transpired without the purchase having been approved. Next, Pantaleon 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.
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 respondents refusal to provide credit authorization for the aforementioned
purchases. Since respondent refused to accede to Pantaleons demand for an apology, the
aggrieved cardholder instituted an action for damages with the Regional Trial Court (RTC) of
Makati City, Branch
RTC rendered a decision13 in favor of Pantaleon. CA reversed the decision.
ISSUE: whether respondent, in connection with the aforementioned transactions, had committed
a breach of its obligations to Pantaleon.
HELD:
Petitioner correctly cites that under mora solvendi, the three requisites for a finding of default are
that the obligation is demandable and liquidated; the debtor delays performance; and the

creditor judicially or extrajudicially requires the debtors performance. Petitioner asserts that the
Court of Appeals had wrongly applied the principle of mora accipiendi, which relates to delay on
the part of the obligee in accepting the performance of the obligation by the obligor. The
requisites of mora accipiendi are: an offer of performance by the debtor who has the required
capacity; the offer must be to comply with the prestation as it should be performed; and the
creditor refuses the performance without just cause.19 The error of the appellate court, argues
petitioner, is in relying on the invocation by respondent of "just cause" for the delay, since while
just cause is determinative of mora accipiendi, it is not so with the case of mora solvendi.
We can see the possible source of confusion as to which type of mora to appreciate.
Generally, the relationship between a credit card provider and its card holders is that of
creditor-debtor, with the card company as the creditor extending loans and credit to the
card holder, who as debtor is obliged to repay the creditor. This 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.21 Petitioner is
asking us, not baselessly, to again 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.
Ultimately, petitioners perspective appears more sensible than if we were to still regard
respondent as the creditor in the context of this cause of action. If there was delay on the part of
respondent in its normal role as creditor to the cardholder, such delay would not have been in
the acceptance of the performance of the debtors 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 constituted. Herein, 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 respondent credit card company.
Still, in order for us to appreciate that respondent was in mora solvendi, we will have to first
recognize that there was indeed an obligation on the part of respondent to act on petitioners
purchases with "timely dispatch," or for the purposes of this case, within a period significantly
less than the one hour it apparently took before the purchase at Coster was finally approved.
The findings of the trial court, to our mind, amply established that the tardiness on the part of
respondent in acting on petitioners purchase at Coster did constitute culpable delay on its part
in complying with its obligation to act promptly on its customers purchase request, whether such
action be favorable or unfavorable.
We do not wish do dispute that 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 cardholder,

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. Even assuming
that respondents credit authorizers did not have sufficient basis on hand to make a judgment,
we see no reason why respondent 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, petitioner was left uncomfortably dangling in the
chilly autumn winds in a foreign land and soon forced to confront the wrath of foreign folk.
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.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is
REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Makati, Branch 145 in
Civil Case No. 92-1665 is hereby REINSTATED. Costs against respondent.
OVERSEAS BANK OF MANILA, vs. COURT OF APPEALS, INTEGRATED REALTY
CORPORATION, and RAUL L. SANTOS, respondents.

Raul L. Santos made a time deposit with defendant OBM in the amount of P 500,000.00. and
another deposit with defendant OBM in the amount of P 200,000.00
Defendant IRC thru its President-defendant Raul L. Santos, applied for a loan and/or credit line
(Exhibit A) in the amount of P 700,000.00 with plaintiff bank. To secure the said loan, defendant
Raul L. Santos executed the two time deposits in favor of plaintiff.
The defendant OBM after the due dates of the time deposit certificates, did not pay plaintiff
PNB. Plaintiff demanded payment from defendants IRC and Raul L. Santos and from defendant
OBM. Defendants IRC and Raul L. Santos replied that the obligation (loan) of defendant IRC
was deemed paid with the irrevocable assignment of the time deposit certificates
On April 6, 1969 (sic), ** PNB filed a complaint to collect from IRC and Santos the loan of P
700,000.00 with interest as well as attomey's fees. It impleaded OBM as a defendant to compel
it to redeem and pay to it Santos' time deposit certificates with interest, plus exemplary and
corrective damages, attorney's fees, and cost.
IRC and Santos alleged that PNB has no cause of action against them because their obligation
to PNB was fully paid or extinguished upon the' irrevocable' assignment of the time deposit
certificates, and that they are not answerable for the insolvency of OBM They filed a
counterclaim for damages against PNB and a cross-claim against OBM alleging that OBM acted

fraudulently in refusing to pay the time deposit certificates to PNB resulting in the filing of the
suit against them by PNB, and that, therefore, OBM should pay them whatever amount they may
be ordered by the court to pay PNB with interest. In its answer to the complaint, OBM denied
knowledge of the time deposit certificates because the alleged time deposit of Santos 'does not
appear in its books of account.
Lower court rendered judgment for the plaintiff. CA promulgated its appealed decision, with a
modification and the deletion of that portion of the judgment of the trial court ordering OBM to
pay IRC and Santos whatever amounts they will pay to PNB with interest from the date of
payment.
ISSUE:
whether the liability of IRC and Santos with PNB should be deemed to have been paid by virtue
of the deed of assignment made by the former in favor of PNB
HELD:
The contention of IRC and Santos that the irrevocable assignment of the time deposit
certificates to PNB constituted payment' of their obligation to the latter is not well taken.
Where a certificate of deposit in a bank, payable at a future day, was handed over by a debtor to
his creditor, it was not payment, unless there was an express agreement on the part of the
creditor to receive it as such, and the question whether there was or was not such an
agreement, was one of facts to be decided by the jury.
Notwithstanding the express terms of the 'Stock Assignment Separate from Certificate',
however, We hold and rule that the transaction should not be regarded as an absolute
conveyance in view of the circumstances obtaining at the time of the execution thereof.
The character of the transaction between the parties is to be determined by their intention,
regardless of what language was used or what the form of the transfer was. If it was intended to
secure the payment of money, it must be construed as a pledge; but if there was some other
intention, it is not a pledge. However, even though a transfer, if regarded by itself, appears to
have been absolute, its object and character might still be qualified and explained by a
contemporaneous writing declaring it to have been a deposit of the property as collateral
security. It has been said that a transfer of property by the debtor to a creditor, even if sufficient
on its face to make an absolute conveyance, should be treated as a pledge if the debt continues
in existence and is not discharged by the transfer, and that accordingly, the use of the terms
ordinarily importing conveyance, of absolute ownership will not be given that effect in such a
transaction if they are also commonly used in pledges and mortgages and therefore do not

unqualifiedly indicate a transfer of absolute ownership, in the absence of clear and

unambiguous language or other circumstances excluding an intent to pledge. 10
The facts and circumstances leading to the execution of the deed of assignment, as found by
the court a quo and the respondent court, yield said conclusion that it is in fact a pledge. The
deed of assignment has satisfied the requirements of a contract of pledge (1) that it be
constituted to secure the fulfillment of a principal obligation; (2) that the pledgor be the absolute
owner of the thing pledged; (3) that the persons constituting the pledge have the free disposal of
their property, and in the absence thereof, that they be legally authorized for the purpose. 11
The further requirement that the thing pledged be placed in the possession of the creditor, or of
a third person by common agreement 12 was complied with by the execution of the deed of
assignment in favor of PNB.
It must also be emphasized that Santos, as assignor, made an express undertaking that he
would remain liable for any outstanding balance of his obligation should PNB be unable to
actually receive or collect the assigned sums resulting from any agreements, orders or decisions
of the court or for any other cause whatsoever. The term "for any cause whatsoever" is broad
enough to include the situation involved in the present case.
Under the foregoing circumstances and considerations, the unavoidable conclusion is that IRC
and Santos should be held liable to PNB for the amount of the loan with the corresponding
interest thereon.