Case Summary (G.R. No. 142262)
Facts Surrounding the Incident
On November 30, 1991, respondent and family visited Watson’s Chemist Shop in Kowloon, Hong Kong. Respondent attempted to use his American Express extension card to pay for purchases. The sales clerk contacted the American Express Hong Kong Office, resulting in the store manager confiscating and cutting respondent’s card on-site, causing respondent embarrassment. The primary cardholder, Nilda, had to pay with her own card instead.
Background on Card Security Measures
Prior to this incident, on November 1, 1991, an attempted fraudulent use of a card bearing respondent’s card number occurred in Hong Kong. American Express Hong Kong placed respondent’s card under the “Inspect Airwarn Support System,” a fraud detection mechanism requiring identity verification before charges are approved. Failure to verify identity results in revocation or confiscation of the card.
Respondent’s Refusal to Cooperate
When the Watson’s sales clerk reached out to American Express, their representative requested to talk with respondent to verify his identity, a mandatory step under the fraud prevention system. Respondent refused to converse with the representative, leading to inability to establish his identity and subsequent confiscation of the card.
Trial Court Proceedings and Decision
Respondent filed a complaint for damages before the Regional Trial Court of Manila alleging public humiliation and seeking moral, exemplary damages, and attorney’s fees. The trial court ruled that American Express was liable due to its failure to inform respondent of the November 1 incident, which the court found was the proximate cause of the card’s confiscation and cutting, thus causing respondent’s public humiliation.
Court of Appeals Ruling
The Court of Appeals affirmed the trial court’s ruling but reduced the awarded damages. It upheld that American Express’s failure to notify respondent was a culpable omission, warranting liability for moral and exemplary damages.
Issues on Petition for Review
American Express raised two main issues:
A) Whether the lower courts erred in attributing the public humiliation to American Express; and
B) Whether the courts erred in holding American Express liable for moral damages, exemplary damages, and attorney’s fees.
Respondent’s Comment and Reviewability of the Case
Respondent argued that the Court of Appeals’ findings on factual matters are not within the Supreme Court’s power to revisit except where specific exceptions apply. The Supreme Court recognized these exceptions, including instances of grave abuse of discretion or findings grounded on speculation.
Legal Principles on Quasi-Delict and Proximate Cause
The Court analyzed Article 2176 of the Civil Code on quasi-delict, discussing that liability arises from fault or negligence without contractual relation, but recognizing exceptions where tortuous acts breach contractual obligations. Proximate cause is central—it must be the natural, continuous sequence producing the injury without interruption.
Examination of Negligence and Causation
The trial court attributed negligence to American Express for failing to inform respondent, causing the card’s confiscation and public embarrassment. The Supreme Court rejected this, noting that if respondent had complied with verification procedures by cooperating with American Express’s representative, the card need not have been confiscated. The humiliation was thus th
...continue readingCase Syllabus (G.R. No. 142262)
Case Background and Parties Involved
- The petitioner, American Express International, Inc. ("American Express" or "petitioner"), is a foreign corporation that issues charge cards to customers for purchasing goods and services worldwide at accredited merchants.
- Respondent, Noel Cordero, was issued an extension American Express charge card, which he signed and used as a cardholder.
- Respondent’s wife, Nilda Cordero, was the original cardholder and had been issued the main American Express charge card along with the Cardmember Agreement.
- The case arose from an incident on November 30, 1991, when respondent’s extension card was confiscated and cut in half by the manager of Watson’s Chemist Shop in Hong Kong, causing respondent alleged embarrassment and humiliation.
Factual Circumstances Leading to the Case
- On November 29, 1991, respondent traveled with his family to Hong Kong.
- While shopping at Watson’s Chemist Shop, respondent attempted to pay with his American Express extension card.
- The store clerk verified the card by calling the American Express Office in Hong Kong. Following verification, the store manager confiscated and cut the card.
- Respondent claimed public embarrassment resulting from the confiscation done openly in front of family and other customers.
- Respondent’s wife had to pay for items with her own American Express charge card.
American Express’s "Inspect Airwarn Support System" and Card Verification Procedure
- American Express Hong Kong revealed that on November 1, 1991, an attempt had been made to use a card with the same number as respondent’s card.
- In response, respondent’s card was placed under the "Inspect Airwarn Support System" to protect against fraudulent use.
- Under the system, the identity of the cardholder must be verified by the merchant or company representative before charges are approved.
- The petitioner’s representative requested to speak directly with respondent to verify identity, but respondent refused.
- Due to respondent’s failure to verify, the merchant was authorized to confiscate the card.
Procedural History in the Lower Courts
- On March 31, 1992, respondent filed a complaint for damages before the Regional Trial Court (RTC), alleging moral and exemplary damages for public humiliation caused by the card confiscation.
- The RTC ruled in favor of respondent, citing petitioner’s inexcusable failure to in