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Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 174269 May 8, 2009

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. 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 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.

DANTE O. TINGA
Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES*

Associate Justice
Acting Chairperson

PRESBITERO J. VELASCO, JR. TERESITA LEONARDO DE CASTRO**

Associate Justice Associate Justice

ARTURO D. BRION
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

CONCHITA CARPIO MORALES

Associate Justice
Acting Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes
*
Acting Chairperson.
**
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

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.

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.

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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