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 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. 6The 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, Pantaleonused 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, 9stating 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

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
accipiendiare: 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 ofmora 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. 21Petitioner 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 in mora

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

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 [sic] "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

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 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
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

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. 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.

*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