American Express v. Cordero
REITERATIONFacts
The Antecedents: Petitioner American Express International, Inc. (Amex) issued a charge card to Nilda Cordero, and an extension card to her husband, respondent Noel Cordero. On November 30, 1991, while in Hong Kong, respondent attempted to use his Amex extension card at a Watson's Chemist Shop. The sales clerk contacted Amex for verification. Amex's representative requested to speak with respondent to verify his identity as per their 'Inspect Airwarn Support System' procedure, which was implemented due to a prior attempted fraudulent use of a card with the same number. Respondent refused to speak with the representative. Consequently, the store manager confiscated and cut respondent's card in half, causing him embarrassment. Procedural History: Respondent filed a complaint for damages against Amex, alleging humiliation and embarrassment. The Regional Trial Court (RTC) ruled in favor of respondent, finding Amex's failure to inform respondent of the prior incident as the proximate cause of the card's confiscation and the resulting humiliation. The RTC awarded moral damages, exemplary damages, and attorney's fees. The Court of Appeals (CA) affirmed the RTC's decision but reduced the awarded damages. The Petition: Amex filed a petition for review on certiorari, questioning the CA's attribution of public humiliation to Amex and its holding Amex liable for damages.
Issue(s)
Whether the lower courts gravely erred in attributing the 'public humiliation' allegedly suffered by Cordero to Amex and holding Amex liable for damages.
Ruling
The petition is GRANTED. The assailed Decision of the Court of Appeals is REVERSED. The Supreme Court found no negligence on the part of petitioner Amex and thus, it cannot be held liable to respondent for damages.
Ratio Decidendi
On the issue of whether the lower courts gravely erred in attributing the 'public humiliation' allegedly suffered by Cordero to Amex and holding Amex liable for damages: The Supreme Court held that while a tort liability may arise even under a contract if the act constitutes a breach of contract, the fault or negligence must be the proximate cause of the damage. In this case, the RTC concluded that Amex's failure to inform respondent of the November 1, 1991 incident was the proximate cause of the card's confiscation and the resulting humiliation. However, the Supreme Court disagreed with this conclusion. According to the testimony of Amex's representative, Johnny Chen, respondent could have used his card if he had spoken to Amex's representative to verify his identity. The refusal of respondent to talk to Amex's representative prevented the latter from establishing that respondent was the true cardholder. Therefore, the proximate cause of respondent's humiliation and embarrassment was his own refusal to cooperate with the verification process. The Court reiterated that under paragraph 16 of the Cardmember Agreement, Amex could revoke the card without notice. The confiscation and cutting of the card would not have occurred had respondent identified himself as the genuine cardholder. Consequently, no negligence attributable to Amex that breached the contract was established, and Amex could not be held liable for damages.
Main Doctrine
A foreign corporation issuing charge cards can be held liable for damages arising from a quasi-delict, even if a contract exists, if the tortious act breaches the contract. However, liability for quasi-delict requires the fault or negligence to be the proximate cause of the damage. In this case, the cardholder's refusal to verify his identity, rather than the issuer's actions, was the proximate cause of the card's confiscation and the alleged humiliation.