G.R. No. 56169 - Travel-On, Inc. vs. Court of Appeals

Petitioner Travel-On Inc. is a travel agency engaged in selling airline tickets on a commission basis for various airline companies.
Respondent Arturo S. Miranda maintained a revolving credit line with Travel-On and procured tickets through the agency for airline passengers, earning commissions in the process.

Between 5 August 1969 and 16 January 1970, Travel-On sold and delivered various airline tickets to Miranda amounting to a total price of P278,201.57.
To settle his account, Miranda made several payments in cash and in kind and subsequently issued six (6) postdated checks with a total face amount of P115,000.00.

On 14 June 1972, Travel-On filed a suit before the Court of First Instance (CFI) of Manila demanding payment on the six postdated checks, along with a prayer for the issuance of a writ of preliminary attachment and the award of attorney’s fees.
The writ of attachment was granted by the court a quo based on the alleged indebtedness.

Miranda admitted having transacted with Travel-On during the period specified by the complaint but contended he had already fully paid and even overpaid his obligations.
He claimed that the postdated checks were issued solely for accommodation purposes—specifically, to allow Travel-On’s General Manager to present evidence of good accounts receivable to the company’s Board of Directors.
Miranda argued that several tickets allegedly debited to his account were in error and that refunds, along with litigation expenses and damages, should be granted due to the allegedly improper attachment of his properties.

Miranda testified that the checks were issued as an accommodation favor to Travel-On’s General Manager, thereby implying no intention to bind himself to the debt.
In contrast, Travel-On’s witness, General Manager Elita Montilla, clarified that the “accommodation” referred to assistance provided to passengers—specifically, facilitating the advance of Hong Kong funds in peculiar circumstances—not to exempt Miranda from payment obligations.

Although Travel-On presented various statements of account showing Miranda’s transactions, inconsistencies were noted between figures in the “Schedule of Outstanding Account” (dated 31 January 1970) and those in subsequent statements (e.g., the 7 April 1972 statement).
The Court noted that these variations were attributable to the running or open nature of the account and that the checks themselves remained the key evidence of indebtedness.

The trial court ruled that Miranda’s indebtedness was not satisfactorily established and found that the checks were issued for accommodation rather than for encashment.
The trial court awarded Miranda moral damages, attorney’s fees, and costs, even increasing the moral damages upon a subsequent motion for reconsideration.
The Court of Appeals later affirmed the trial court’s decision, although with a reduction in the award of moral damages.

In the petition for review, Travel-On argued that the postdated checks are per se evidence of indebtedness and that, as a holder for value, it is entitled to payment regardless of any purported accommodation.
Both the trial and appellate courts had previously rejected the checks as evidence of indebtedness on the grounds that the prepared statements failed to prove an outstanding balance of P115,000.00.
However, the Supreme Court scrutinized the evidence and emphasized that the postdated checks themselves were paramount and clearly established Miranda’s indebtedness.

The decision reiterated the presumption under the Negotiable Instruments Law that a check, if regular on its face, is deemed to have been issued for valuable consideration.
The doctrine that every person whose signature appears on a negotiable instrument becomes a party for value underpins this presumption.
The concept of an “accommodation party” was also discussed, with the Court clarifying its limited applicability in the present case.

The uncontradicted evidence—the postdated checks—demonstrated that Miranda indeed incurred a liability to Travel-On.
The Supreme Court held that any discrepancies in the statement of account did not negate the prima facie evidence provided by the checks.

Whether the six postdated checks issued by Miranda are sufficient, as prima facie evidence, to establish his liability for the amount claimed by Travel-On.
Whether the claim that the checks were issued for accommodation purposes can legally exempt Miranda from his payment obligations.
Whether the discrepancies in the various statements of account undermine the evidentiary value of the checks as proof of Miranda’s indebtedness.
Whether it was proper for the lower courts to shift the burden of proving the existence of valuable consideration onto Travel-On instead of Miranda.