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 office 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
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 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 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 first transmitted for
approval to respondent's Amsterdam office at 9:20 a.m., Amsterdam time,
then referred to respondent's Manila office at 9:33 a.m., then finally
approved at 10:19 a.m., Amsterdam time. 6 The Approval Code was
transmitted to respondent's Amsterdam office 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". 10 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. 11 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. 12

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 On 5 August 1996, the Makati City RTC rendered a decision 13 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 filed 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. 14
The RTC denied Pantaleon's motion for partial reconsideration, and
thereafter gave due course to respondent's Notice of Appeal. 15
On 18 August 2006, the Court of Appeals rendered a decision 16
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 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 exemplified by the fact that at Coster, he was "making his very first 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." 17 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 finding 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. 18 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
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 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, 20 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, 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 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 inmora
solvendi, we will have to first 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 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 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 first issue, both parties have testified that normal
approval time for purchases was a matter of seconds.
Plaintiff testified 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

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 Defendant's credit authorizer Edgardo Jaurique likewise testified:
Q. You also testified 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 testified 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 office 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 [ s i c ] "Positive
Identification 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 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 identification 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". 22 (Citations omitted)

xxx xxx xxx

Notwithstanding the popular notion that credit card purchases are

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 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 specifically
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 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. The findings of the trial
court are ample in establishing the bad faith and unjustified neglect of
respondent, attributable in particular to the "dilly-dallying" of respondent's
Manila credit authorizer, Edgardo Jaurique. 23 Wrote the trial court:
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
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 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. 24
xxx xxx xxx
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 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 testified that there were no "delinquencies"

in plaintiff's account. 25

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. 26 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. 27 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. 28 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.
Likewise, we deem exemplary damages available under the
circumstances, and the amount of P300,000.00 appropriate. There is
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 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 496; Molino v. Security Diners International Corp., G.R. No.
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 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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