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Negotiable Instruments Case Digest: Travel-On v. CA (1992)

G.R. No. L-56169 June 26, 1992
Lessons Applicable: Consideration and Accomodation Party (Negotiable Instruments)

  • Arturo S. Miranda 
    • had a revolving credit line with Travel-On. Inc. (Travel-On), a travel agency selling airline tickets on commission basis for and in behalf of different airline companies
    • procured tickets from Travel-On on behalf of airline passengers and derived commissions therefrom.
  • June 14 1972: Travel-On filed bef. the CFI to collect 6 checks issued by Miranda totaling P115,000.00
  • August 5 1969 - January 16 1970:  Travel-On sold and delivered airline tickets to Miranda w/ total price of P278,201.57
    • paid in cash and 6 checks = P115,000 - all dishonored by the drawee banks
    • March 1972: paid P10,000.00 reducing his debts to P105,000
  • Miranda: checks were issued for to "accommodate" Travel-On's General Manager to show the BOD of Travel-On that their receivables were still good
    • Travel-On's witness, Elita Montilla: related to situations where its passengers needed money in Hongkong, and upon request of Travel-On, Miranda would contact his friends in Hongkong to advance Hongkong money to the passenger
  • CA affirmed CFI: ordered Travel-On to pay Miranda P8,894.91 representing net overpayments by private respondent, moral damages of P10,000.00 (later increased to P50,000 by CFI and reduced by CA to P20,000) for the wrongful issuance of the writ of attachment and for the filing of this case, P5,000.00 for attorney's fees and the costs of the suit - decision was because Travel-On did not show that Miranda had an outstanding balance of P115,000.00 
ISSUE: W/N Miranda is liable for the 6 dishonored checks because there was no accomodation

HELD: YES. GRANT due course to the Petition for Review on Certiorari and to REVERSE and SET ASIDE the Decision of the CA and trial court
  •  failed to give due importance the checks themselves as evidence of the debt
    • check which is regular on its face is deemed prima facie to have been issued for a valuable consideration and every person whose signature appears thereon is deemed to have become a party thereto for value.
    • negotiable instrument is presumed to have been given or indorsed for a sufficient consideration unless otherwise contradicted and overcome by other competent evidence
    • Those checks in themselves constituted evidence of indebtedness of Miranda, evidence not successfully overturned or rebutted by private respondent.
  • While the Negotiable Instruments Law does refer to accommodation transactions, no such transaction was here shown
    • Sec. 29. Liability of accommodation party. — An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of taking the instrument, knew him to be only an accommodation party.
    • Having issued or indorsed the check, the accommodating party has warranted to the holder in due course that he will pay the same according to its tenor. 
    • Travel-On obviously was not an accommodated party; it realized no value on the checks which bounced.