FACTS:

Petitioner Travel-On Inc., a travel agency, filed a suit to collect on six checks issued by private respondent Arturo S. Miranda, which were dishonored by the drawee banks. Travel-On alleged that it sold and delivered various airline tickets to respondent, who derived commissions from them. Private respondent admitted having transactions with Travel-On but claimed to have fully paid and even overpaid his obligations, seeking reimbursement for alleged overpayments. He argued that the postdated checks were issued for accommodation purposes. Private respondent testified that the checks were issued to show Travel-On's General Manager that the company's accounts receivable were still good, and that the checks were later returned to him after the accommodation purpose was fulfilled. Travel-On's witness explained that the "accommodation" was related to situations where a passenger needed money in Hongkong and respondent's friends there advanced the money, which the passenger would then pay Travel-On upon returning to Manila. The trial court ruled in favor of private respondent, finding that his indebtedness was not satisfactorily established and that the checks were issued for accommodation purposes. The Court of Appeals affirmed the decision but reduced the award of moral damages. Petitioner argues that the checks are per se evidence of liability and that private respondent is still liable even if the checks were for accommodation. The trial and appellate courts rejected the checks as evidence of indebtedness due to inconsistencies in the statements of account and the lack of a satisfactory explanation regarding the outstanding indebtedness. However, upon examination of the record, it was found that the 7 April 1972 Statement of Account had not been updated, and deducting the subsequent payments made by private respondent from the figure as of 31 January 1970 resulted in the correct outstanding amount.

ISSUES:

1. Whether the postdated checks issued by the private respondent are evidence of his liability to the petitioner.

RULING:

1. The postdated checks issued by the private respondent are not evidence of his liability to the petitioner. The trial and appellate courts rejected the checks as evidence of indebtedness because the statements of account prepared by the petitioner did not satisfactorily establish the amount of outstanding indebtedness of the private respondent. The figures in the various exhibits provided by the petitioner did not tally with each other, and there was no satisfactory explanation as to why there were discrepancies in the amount of the outstanding account. Therefore, the checks cannot be considered as valid evidence of the private respondent's liability to the petitioner.

PRINCIPLES:

• Postdated checks are not considered as prima facie evidence of liability if there are inconsistencies and discrepancies in the statements of account provided by the creditor.

• The creditor has the burden of proving the existence and amount of the debtor's outstanding indebtedness.