SECOND DIVISION

[G.R. No. 174269. May 8, 2009.]

POLO S. PANTALEON , petitioner, vs . AMERICAN EXPRESS

INTERNATIONAL, INC. , respondent.

DECISION

TINGA , J : p

The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina
and son Adrian Roberto, 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 sight-seeing.
Instead, it was agreed upon 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 in Amsterdam around 10 minutes before 9:00 a.m. 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. The group was ushered into Coster shortly before 9:00
a.m., and listened to a lecture on the art of diamond polishing that lasted for around ten
minutes. 1 Afterwards, the group was led to the store's showroom to allow them to
select items for purchase. 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, 3 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. 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 card's imprint, and asked Pantaleon to sign the charge slip. The
charge purchase was then referred electronically to respondent's Amsterdam o ce at
9:20 a.m.
Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not
yet been approved. His son, who had already boarded the tour bus, soon returned to
Coster and informed the other members of the Pantaleon family that the entire tour
group was waiting for them. As it was already 9:40 a.m., and he was already worried
about further inconveniencing the tour group, Pantaleon asked the store clerk to cancel
the sale. The store manager though asked plaintiff to wait a few more minutes. After 15
minutes, the store manager informed Pantaleon that respondent had demanded bank
references. Pantaleon supplied the names of his depositary banks, then instructed his
daughter to return to the bus and apologize to the tour group for the delay. CAIaDT

At around 10:00 a.m., or around 45 minutes after Pantaleon had presented his
AmexCard, and 30 minutes after the tour group was supposed to have left the store,
Coster decided to release the items even without respondent's approval of the
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 purchase. The spouses Pantaleon returned to the bus. It is alleged that their offers of
apology were met by their tourmates with stony silence. 4 The tour group's 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, as they had to catch a
3:00 p.m. ferry at Calais, Belgium to London. 5 Mrs. Pantaleon ended up weeping, while
her husband had to take a tranquilizer to calm his nerves.
It later emerged that Pantaleon's purchase was rst transmitted for approval to
respondent's Amsterdam o ce at 9:20 a.m., Amsterdam time, then referred to
respondent's Manila o ce at 9:33 a.m., then nally approved at 10:19 a.m., Amsterdam
time. 6 The Approval Code was transmitted to respondent's Amsterdam o ce at 10:38
a.m., several minutes after petitioner had already left Coster, and 78 minutes from the
time the purchases were electronically transmitted by the jewelry store to respondent's
Amsterdam office.
After the star-crossed tour had ended, the Pantaleon family proceeded to the
United States before returning to Manila on 12 November 1992. 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. On 30 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.
On 4 March 1992, after coming back to Manila, Pantaleon sent a letter 7 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. 8 In response,
respondent sent a letter dated 24 March 1992, 9 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". 1 0 Since respondent refused to accede to Pantaleon's demand for an
apology, the aggrieved cardholder instituted an action for damages with the Regional
Trial Court (RTC) of Makati City, Branch 145. 1 1 Pantaleon prayed that he be awarded
P2,000,000.00, as moral damages; P500,000.00, as exemplary damages; P100,000.00,
as attorney's fees; and P50,000.00 as litigation expenses. 1 2
On 5 August 1996, the Makati City RTC rendered a decision 1 3 in favor of
Pantaleon, awarding him P500,000.00 as moral damages, P300,000.00 as exemplary
damages, P100,000.00 as attorney's fees, and P85,233.01 as expenses of litigation.
Respondent led a Notice of Appeal, while Pantaleon moved for partial reconsideration,
praying that the trial court award the increased amount of moral and exemplary
damages he had prayed for. 1 4 The RTC denied Pantaleon's motion for partial
reconsideration, and thereafter gave due course to respondent's Notice of Appeal. 1 5
On 18 August 2006, the Court of Appeals rendered a decision 1 6 reversing the
award of damages in favor of Pantaleon, holding that respondent had not breached its
obligations to petitioner. Hence, this petition.
The key question is whether respondent, in connection with the aforementioned
transactions, had committed a breach of its obligations to Pantaleon. In addition,
Pantaleon submits that even assuming that respondent had not been in breach of its
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 obligations, it still remained liable for damages under Article 21 of the Civil Code.
The RTC had concluded, based on the testimonial representations of Pantaleon
and respondent's credit authorizer, Edgardo Jaurigue, that the 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. As it appears, the Court of
Appeals conceded that there had been delay on the part of respondent in approving the
purchases. However, it made two critical conclusions in favor of respondent. First, the
appellate court ruled that the delay was not attended by bad faith, malice, or gross
negligence. Second, it ruled that 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, as exempli ed by the fact that at Coster, he was
"making his very rst single charge purchase of US$13,826", and "the record of
[petitioner]'s past spending with [respondent] at the time does not favorably support
his ability to pay for such purchase." 1 7
SHaIDE

On the premise that there was an obligation on the part of respondent "to
approve or disapprove with dispatch the charge purchase", petitioner argues that the
failure to timely approve or disapprove the purchase constituted mora solvendi on the
part of respondent in the performance of its obligation. For its part, respondent
characterizes the depiction by petitioner of its obligation to him as "to approve
purchases instantaneously or in a matter of seconds."
Petitioner correctly cites that under mora solvendi, the three requisites for a
nding of default are that the obligation is demandable and liquidated; the debtor
delays performance; and the creditor judicially or extrajudicially requires the debtor's
performance. 1 8 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. 1 9 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, 2 0 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. 2 1 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, petitioner's 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 debtor's
obligation (i.e., the repayment of the debt), but it would be delay in the extension of the
credit in the rst 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
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 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 rst recognize that there was indeed an obligation on the part of respondent to
act on petitioner's purchases with "timely dispatch", or for the purposes of this case,
within a period signi cantly less than the one hour it apparently took before the
purchase at Coster was finally approved.
The ndings of the trial court, to our mind, amply established that the tardiness
on the part of respondent in acting on petitioner's purchase at Coster did constitute
culpable delay on its part in complying with its obligation to act promptly on its
customer's purchase request, whether such action be favorable or unfavorable. We
quote the trial court, thus:
As to the rst issue, both parties have testi ed that normal approval time
for purchases was a matter of seconds.
Plaintiff testi ed that his personal experience with the use of the card was
that except for the three charge purchases subject of this case, approvals of his
charge purchases were always obtained in a matter of seconds. cDCIHT

Defendant's credit authorizer Edgardo Jaurique likewise testified:

Q. You also testi ed that on normal occasions, the normal
approval time for charges would be 3 to 4 seconds?

A. Yes, Ma'am.
Both parties likewise 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".

Plaintiff testi ed that he presented his AmexCard to the sales clerk at

Coster, at 9:15 a.m. and by the time he had to leave the store at 10:05 a.m., no
approval had yet been received. In fact, the Credit Authorization System (CAS)
record of defendant at Phoenix Amex shows that defendant's Amsterdam o ce
received the request to approve plaintiff's charge purchase at 9:20 a.m.,
Amsterdam time or 01:20, Phoenix time, and that the defendant relayed its
approval to Coster at 10:38 a.m., Amsterdam time, or 2:38, Phoenix time, or a total
time lapse of one hour and [18] minutes. And even then, the approval was
conditional as it directed in computerese [sic] "Positive Identi cation of Card
holder necessary further charges require bank information due to high exposure.
By Jack Manila".
The delay in the processing is apparent to be undue as shown from the
frantic successive queries of Amexco Amsterdam which reads: "US$13,826.
Cardmember buying jewels. ID seen. Advise how long will this take?" They were
sent at 01:33, 01:37, 01:40, 01:45, 01:52 and 02:08, all times Phoenix. Manila
Amexco could be unaware of the need for speed in resolving the charge purchase
referred to it, yet it sat on its hand, unconcerned.
xxx xxx xxx

To repeat, the Credit Authorization System (CAS) record on the Amsterdam

transaction shows how Amexco Netherlands viewed the delay as unusually
frustrating. In sequence expressed in Phoenix time from 01:20 when the charge
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 purchased was referred for authorization, defendants own record shows:
01:22 — the authorization is referred to Manila Amexco
01:32 — Netherlands gives information that the identi cation of the
cardmember has been presented and he is buying jewelries worth
US $13,826.

01:33 — Netherlands asks "How long will this take?"

02:08 — Netherlands is still asking "How long will this take?"

The Court is convinced that defendants delay constitute[s] breach of its

contractual obligation to act on his use of the card abroad "with special
handling". 2 2 (Citations omitted)
xxx xxx xxx

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 customer's
purchase, much less one speci cally contracted upon by the parties. Yet 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 to approve or disapprove a credit
card purchase. It is long enough time for the customer to walk to a bank a kilometer
away, withdraw money over the counter, and return to the store. cIaHDA

Notably, petitioner frames the obligation of respondent as "to approve or

disapprove" the purchase "in timely dispatch", and not "to approve the purchase
instantaneously or within seconds". Certainly, had respondent disapproved petitioner's
purchase "within seconds" or within a timely manner, this particular action would have
never seen the light of day. Petitioner and his family would have returned to the bus
without delay — internally humiliated perhaps over the rejection of his card — yet spared
the shame of being held accountable by newly-made friends for making them miss the
chance to tour the city of Amsterdam.
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 petitioner's purchase, but the more elemental failure to timely act on the same,
whether favorably or unfavorably. Even assuming that respondent's credit authorizers
did not have su cient 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. The ndings of the trial court are ample in establishing the bad faith
and unjusti ed neglect of respondent, attributable in particular to the "dilly-dallying" of
respondent's Manila credit authorizer, Edgardo Jaurique. 2 3 Wrote the trial court:
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 While it is true that the Cardmembership Agreement, which defendant
prepared, is silent as to the amount of time it should take defendant to grant
authorization for a charge purchase, defendant acknowledged that the normal
time for approval should only be three to four seconds. Specially so with cards
used abroad which requires "special handling", meaning with priority. Otherwise,
the object of credit or charge cards would be lost; it would be so inconvenient to
use that buyers and consumers would be better off carrying bundles of currency
or traveller's checks, which can be delivered and accepted quickly. Such right was
not accorded to plaintiff in the instances complained off * for reasons known
only to defendant at that time. This, to the Court's mind, amounts to a
wanton and deliberate refusal to comply with its contractual obligations, or
at least abuse of its rights, under the contract. 2 4
xxx xxx xxx
The delay committed by defendant was clearly attended by unjusti ed
neglect and bad faith, since it alleges to have consumed more than one hour to
simply go over plaintiff's 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. This Court also takes note of the fact that
there is nothing in plaintiff's billing history that would warrant the imprudent
suspension of action by defendant in processing the purchase. Defendant's
witness Jaurique admits:
Q. But did you discover that he did not have any outstanding account?

A. Nothing in arrears at that time.

Q. You were well aware of this fact on this very date?
A. Yes, sir. HaTISE

Mr. Jaurique further testi ed that there were no "delinquencies" in

plaintiff's account. 2 5

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. 2 6 Moral damages do not avail
to soothe the plaints of the simply impatient, so this decision should not be cause for
relief for those who time the length of their credit card transactions with a stopwatch.
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
sustained by the petitioner, as concluded by the RTC. 2 7 Those circumstances are fairly
unusual, and should not give rise to a general entitlement for damages under a more
mundane set of facts.
We sustain the amount of moral damages awarded to petitioner by the RTC.
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. 2 8 Petitioner's 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.
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 Likewise, we deem exemplary damages available under the circumstances, and
the amount of P300,000.00 appropriate. There is similarly no cause though to disturb
the determined award of P100,000.00 as attorney's fees, and P85,233.01 as expenses
of litigation.
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. TCIDSa

SO ORDERED .
Carpio Morales, Velasco, Jr., Leonardo-de Castro * and Brion, JJ., concur.

Footnotes
* Per Special Order No. 619, Justice Teresita J. Leonardo-de Castro is hereby designated as
additional member of the Second Division in lieu of Justice Leonardo A. Quisumbing,
who is on official leave. CEASaT

1. Id. at 747.
2. Id. at 748-749.
3. Id. at 750.
4. Id. at 20.
5. Id. at 20-21.
6. Id. at 21-22; citing defendant's Exhibit "9-G", "9-H" and "9-I".
7. Id. at 330-331.
8. Id. at 331.
9. Id. at 332-333.
10. Id. at 332. aTIEcA

11. Docketed as Civil Case No. 92-1665. Id. at 335-340.

12. Id. at 339.
13. Penned by Judge Francisco Donato Villanueva; id. at 92-110.
14. Id. at 348-351.
15. Id. at 360-362.
16. Decision penned by Court of Appeals Associate Justice E.J. Asuncion, concurred by
Associate Justices J. Mendoza and A. Tayag.
17. Rollo, p. 80.
18. See, e.g., Selegna Management v. UCPB, G.R. No. 165662, 3 May 2006.
19. A. TOLENTINO, IV CIVIL CODE OF THE PHILIPPINES (1991 ed.), at 108.
20. See, e.g., Pacific Banking Corp. v. IAC, G.R. No. 72275, 13 November 1991, 203 SCRA
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 496; Molino v. Security Diners International Corp., G.R. No. 136780, 16 August 2001, 358
SCRA 363. ACETID

21. See, e.g., Citibank, N.A. v. Cabamongan, G.R. No. 146918, 2 May 2006, 488 SCRA 517.
22. Rollo, pp. 97-99.
23. Id. at 101.
24. Id. at 105-106.
25. Id. at 104.
26. "Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shocks, * social humiliation, and
similar injury. Though incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendant's wrongful act or
omission."
27. See rollo, p. 107.

28. Mercury Drug v. Baking, G.R. No. 156037, May 25, 2007, 523 SCRA 184, 191.

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