G.R. No. 174269 May 8, 2009
Pantaleon
POLO S. PANTALEON, Petitioner,
vs.
AMERICAN EXPRESS INTERNATIONAL, INC., Respondent.
DECISION
TINGA, J.:
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.
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.
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 letter7 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 ₱2,000,000.00, as
moral damages; ₱500,000.00, as exemplary damages;
₱100,000.00, as attorney’s fees; and ₱50,000.00 as litigation
expenses.12
On 5 August 1996, the Makati City RTC rendered a decision13 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.
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
decision16 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
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 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 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.
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
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
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.
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
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.
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 ₱5,000,000.00 for
moral damages is excessive under the circumstances, and the
amount awarded by the trial court of ₱500,000.00 in moral
damages more seemly.1avvphi1

Likewise, we deem exemplary damages available under the

circumstances, and the amount of ₱300,000.00 appropriate.
There is similarly no cause though to disturb the determined
award of ₱100,000.00 as attorney’s fees, and ₱85,233.01 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.

SO ORDERED.