Facts:

This case, G.R. No. 128899, revolves around the petition for review on certiorari filed by American Express International, Inc. (AMEXCO), challenging the decision of the Court of Appeals rendered on April 17, 1997, in favor of M R Travel Services, Inc. (M R TRAVEL). AMEXCO is a foreign corporation providing a credit card system known as the American Express Card Service. On July 10, 1986, AMEXCO entered into a "Travel Agreement" with M R TRAVEL, a local travel agency, enabling AMEXCO cardholders to charge travel-related purchases. The agreement stipulated that the cards should be presented before expiration, not canceled, and must bear the cardholder's signature. Moreover, AMEXCO's liabilities were capped at $100 unless prior authorization for a higher amount was obtained. M R TRAVEL was tasked with sending completed charge records to AMEXCO weekly, with a ten-day window for recording charges.

On December 14, 1987, M R TRAVEL submitted five charge records for t

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Facts:

Formation and Terms of the Agreement

• On July 10, 1986, petitioner American Express International, Inc. (AMEXCO), a foreign corporation operating a credit system in the Philippines, entered into a "Travel Agreement" with respondent M R Travel Services, Inc. (M R TRAVEL), a domestic travel agency.
• Under the "Travel Agreement":
• AMEXCO cardholders were allowed to charge purchases of travel services from M R TRAVEL.
• Several conditions were stipulated, including:

- The card must be presented before its expiration and without any notification of cancellation. - The card must bear the signature matching that on the charge record form. - AMEXCO’s liability was limited to $100.00 per transaction unless prior authorization was given for higher amounts.

Presentation of Charge Record Forms and Dispute over Transactions

• On December 14, 1987, M R TRAVEL sent AMEXCO five (5) charge record forms corresponding to transactions by various cardholders.
• The submitted forms included the names of cardholders, amounts, and some approval codes.
• Critical information such as the transaction dates was omitted, and certain forms showed discrepancies like missing approval codes.
• AMEXCO refused to honor these charge accounts on the grounds that:
• The forms did not indicate the dates the transactions were incurred.
• The charges were confirmed by the cardholders as having been fraudulently made.
• Specific allegations included a forged signature on one form and an absent approval code on another.

Termination of the Agreement and Subsequent Litigation

• On January 4, 1988, AMEXCO unilaterally terminated the "Travel Agreement."
• M R TRAVEL filed a suit for collection and damages against AMEXCO.
• At trial, the court found:
• M R TRAVEL failed to secure prior authorization for charges exceeding $100.00.
• The charge record forms were defective owing to the absence of critical details, such as the transaction dates.
• M R TRAVEL did not verify the identities of the cardholders properly, noting that the airplane tickets bought on credit did not have the names of the respective AMEXCO cardholders.
• The signatures on the charge forms were dubious, with indications that the cards had been previously reported as lost or stolen.
• The trial court concluded that M R TRAVEL had violated the provisions of the Agreement, justifying AMEXCO’s refusal to pay.

Appeal and Certiorari

• M R TRAVEL appealed to the Court of Appeals.
• The appellate court reversed the trial court’s decision, determining that:
• The trial court’s findings and conclusions lacked support.
• M R TRAVEL had substantially complied with the conditions of the "Travel Agreement."
• AMEXCO petitioned for review on certiorari under Rule 45 challenging the Court of Appeals’ decision.

Contentions Raised by AMEXCO in the Petition

• AMEXCO argued that the testimony of its fraud analyst, Miguel Licarte, was conclusive.
• Licarte testified that upon verifying, the cardholders denied using their cards as they were reportedly out of the Philippines at the time the transactions were allegedly made.
• Based on his testimony, AMEXCO deduced that the cards had been stolen or lost and that the charges bore forged signatures.
• AMEXCO maintained that the failure of M R TRAVEL to indicate dates in the charge record forms was a breach of their Agreement.
• It also contended that, since the travel agency was negligent in verifying cardholders’ identities and securing proper authorization, it alone should bear the loss from the fraudulent transactions.

Issue:

Whether M R TRAVEL substantially complied with the conditions set forth in the "Travel Agreement," specifically regarding the omission of the transaction dates on the charge record forms.

• Was the absence of dates a material breach or merely an incidental omission?

Whether the testimony of AMEXCO’s fraud analyst, Miguel Licarte, should be given evidentiary weight in establishing that the transactions were fraudulent.

• Does Licarte’s testimony suffice to prove that the cards were lost or stolen and that forgery occurred?

Whether the proper performance and notification requirements under the Agreement were met by M R TRAVEL.

• Did the non-indication of dates and other discrepancies in the forms effectively relieve AMEXCO of its obligations?

Whether negligence on the part of M R TRAVEL can be attributed for the failure to detect fraud.

• Was the agency’s standard operating procedure adequate for verifying the authenticity of the transactions?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)