G.R. No. L-70766 November 9, 1988
AMERICAN EXPRESS INTERNATIONAL, INC., petitioner, vs. INTERMEDIATE APPELLATE COURT and JOSE M. ALEJANDRINO, respondents.

FACTS

Jose M. Alejandrino applied for an American Express credit card in Hong Kong in 1979. After initially requesting income verification, American Express waived this requirement and approved his application, sending a letter of acceptance and the card. A critical factual dispute arose: American Express claimed it also sent a standard form agreement outlining cardholder terms, while Alejandrino swore he received only the letter and card. Alejandrino later experienced a humiliating incident in Seattle where his card was dishonored despite sufficient funds, leading him to sue for damages. The trial court awarded him substantial moral and exemplary damages. The Intermediate Appellate Court initially reduced these amounts but later reinstated the trial court’s higher awards upon reconsideration.

ISSUE

The core legal issue is whether a valid contract, incorporating the terms in the form agreement (Exhibit “2”), was perfected between the parties, thereby limiting American Express’s liability for the Seattle incident as per its stipulated terms.

RULING

The Supreme Court ruled that no such contract was perfected. The legal logic hinges on the burden of proof and the principles of contract formation. American Express, asserting the existence of a contract containing limiting terms, bore the burden of proving that Alejandrino received and assented to the form agreement. The Court found this burden was not discharged. The testimonies of American Express’s witnesses were deemed insufficient as they were based on standard office procedure and assumption, not on personal knowledge of the specific mailing to Alejandrino. The Court noted the possibility of human error or even deliberate omission to secure his patronage. In contrast, Alejandrino’s positive assertion under oath that he did not receive the form agreement stood uncontradicted by credible evidence. Consequently, the meeting of minds necessary to form a contract incorporating Exhibit “2” did not occur. The agreement was limited to the basic approval of card membership. Therefore, American Express could not invoke the limiting conditions to shield itself from liability for the wrongful dishonor of the card, which constituted a breach of the fundamental agreement to extend credit. The Court, however, found the reinstated damages excessive and reduced the moral damages to P100,000.00. On procedural matters, the Court held the petition was seasonably filed under Rule 45 and emphasized that litigation is not a game of technicalities but a search for justice on the merits.