PHILIPPINE NATIONAL BANK vs.

BENITO SEETO
G.R. No. L-4388 August 13, 1952
Ntu!" o# t$" %s"&
'(ts&
1. On March 13, 1948, respondent Benito Seeto
presented a check, No. A-21096, to hi!ippine
Nationa! Bank, petitioner herein, at S"ri#ao in
the a$o"nt o% &,000 dated at 'e(" on March
10, 1948, pa)a(!e to cash or (earer, and dra*n
() one +an ,ek -iao a#ainst the 'e(" (ranch o%
the hi!ippine Nationa! Bank o% 'o$$"nications.
2. Seeto $ade a #enera! and "n."a!i/ed
indorse$ent o% the check, and petitioner0s
a#enc) accepted it and paid respondent the
a$o"nt o% &,000 there%or.
3. 1he check *as )*+", to -"t*t*o."!/s %"0u
0!.($ o. 1!($ 22, 1948, and *as
-!"s".t", to t$" ,!3"" 0.4 #o! -5)".t
o. A-!*+ 9, 1948, ("t the check *as
dishonored %or 2ins"3cient %"nds.2
4. 1he check *as ret"rned to petitioner0s S"ri#ao
(ranch, and "pon receipt thereo% () it on Apri!
14, 1948, said (ranch i$$ediate!) sent a !etter
to the respondent herein de$andin# i$$ediate
re%"nd o% in the 4a!"e o% the check.
&. A second co$$"nication o% the sa$e tenor *as
sent on Apri! 26, 1948, to *hich respondent
ans*ered askin# that p!ainti50s conte$p!ated
s"it (e de%erred *hi!e he *as $akin# in."iries
a(o"t the reasons %or the dishonor o% the check.
6. 1herea%ter, respondent re%"sed to $ake the
re%"nd de$anded, c!ai$in# that at the ti$e o%
the ne#otiation o% the check the dra*er had
s"3cient %"nds in the dra*ee (ank, and that
had the petitioner0s S"ri#ao a#enc) not de!a)ed
to %or*ard the check "nti! the dra*er0s %"nds
*ere e6ha"sted, the sa$e *o"!d ha4e (een
paid.
7. 1here"pon petitioner presented a co$p!aint in
the 'o"rt o% 8irst 9nstance o% S"ri#ao, a!!e#in#
that respondent Benito Seeto #a4e ass"rance to
petitioner0s a#enc) in S"ri#ao that the dra*er o%
the check had s"3cient %"nds *ith the dra*ee
(ank, and that "pon these ass"rances
petitioner0s a#enc) de!i4ered the &,000 to the
respondent a%ter the !atter had $ade a #enera!
and "n."a!i/ed indorse$ent thereon.
a. :pon this iss"e petitioner s"($itted t*o
*itnesses *ho testi/ed that it *as not the
practice o% petitioner0s a#enc) to cash o"t
o% to*n checks, and that the check *as
cashed (eca"se o% the ass"rances #i4en
() the respondent that the dra*er had
s"3cient %"nds, and that he ;respondent<
*o"!d re%"nd the a$o"nt paid ()
petitioner0s a#enc) in case the check is
dishono"red.
8. 1he tria! co"rt %o"nd that the respondent $ade
an "ndertakin# to re%"nd the a$o"nt o% the
checks in the e4ent o% dishonor.
a. 9n s"pport o% this /ndin# it %o"nd that as
the dra*ee (ank is not in 'e(", it *as
i$possi(!e %or petitioner0s a#enc) to
$ake an independent 4eri/cation o% the
dra*er0s so!4enc), and $"st ha4e taken
preca"tions to protect itse!% a#ainst !oss
() re."irin# the respondent to #i4e
ass"rances that he *o"!d ret"rn the
a$o"nt o% the check in the case o%
nonpa)$ent.
(. 9t a!so %o"nd that there *as no
"nreasona(!e de!a) in the presentation o%
the check, and, there%ore, rendered
="d#$ent sentencin# respondent to
re%"nd the a$o"nt he had recei4ed %or
the check.
9. On appea! to the 'o"rt o% Appea!s, this co"rt
he!d that petitioner *as gu*+t5 o#
u.!"so.0+5 !"t*.*.g ., 3*t$-$o+,*.g
t$" ($"(4, and that the de!a) in the
present$ent %or pa)$ent 3s *."6(us0+", so
that respondent *as there() dischar#ed %ro$
!ia(i!it).
a. 9t a!so he!d that paro! e4idence is
inco$petent to sho* that one si#nin# o% a
check as indorser is $ere!) a s"ret) or
#"arantor, re=ectin# the e4idence
add"ced at the tria! co"rt a(o"t the
respondent0s ass"rance and pro$ise to
re%"nd.
Issu"s&
1. >id the 'o"rt o% Appea!s err in app!)in# sections
143 and 144 o% the Ne#otia(!e 9nstr"$ents ?a*@
2. >id the 'A err in dec!arin# respondent Benito
Seeto dischar#ed o% his !ia(i!it) as indorser o%
the check@
3. >id the 'A err in not ad$ittin# paro! e4idence to
sho* that respondent $ade ora! ass"rances to
re%"nd the 4a!"e o% the check in case o%
dishono"r@
H"+,&
Issu" 71& 8ES9
1. 9t is tr"e that Section 143 and 144 o% the !a* are
not app!ica(!e, (eca"se these are pro4isions
ha4in# to do *ith the presentation o% a (i!! o%
e6chan#e %or acceptance, and !" .ot
--+*(0+" to ($"(4, as to *hich
present$ent %or acceptance is not re."ired.
2. 9t is a!so tr"e that Section 84 is app!ica(!e, ("t
its app!ication is s"(=ect to the condition
i$posed () Section 186, to the e5ect that t$"
($"(4 )ust 0" -!"s".t", #o! -5)".t
3*t$*. !"so.0+" t*)" #t"! *ts *ssu",
other*ise the dra*er *i!! (e dischar#ed %ro$
!ia(i!it) thereon to the e6tent o% the !oss ca"sed
() the de!a).
3. 'o"nse! %or the petitioner, ho*e4er, ar#"es that
inas$"ch as the a(o4e section e6press!)
pro4ides %or the dischar#e o% the dra*er %ro$
!ia(i!it) to the e6tent o% the !oss ca"sed () the
de!a), and, on the other hand, it is si!ent as to
the !ia(i!it) o% the indorser, t$" +tt"! )5 .ot
0" (o.s*,"!", ,*s($!g", #!o) +*0*+*t5 05
!"so. o# t$" ,"+5 *. t$" -!"s".t)".t o#
-5)".t u.,"! t$" g"."!+ -!*.(*-+"
*.(+us*o u.*us "st "6(+us*o. +t"!*us.
. :E 'IN; NO REASON NOR 1ERIT IN
THE ARG<1ENT.
0. 1he si!ence o% Section 186 as to the
indorser is d"e to the %act that his
dischar#e is a!read) e6press!) co4ered ()
the pro4ision o% Section 84, the indorser
(ein# a person secondari!) !ia(!e on the
instr"$ent.
(. 1he reason %or the di5erence (et*een the
!ia(i!it) o% the indorser and that o% the
dra*er in case o% dishonor is that the
dra*er is not pro(a(!) or necessari!)
pre="diced there(), *hi!e an indorser is,
act"a!!) or () !e#a! pres"$ption.
Issu" 72& NO9
1. 1he proposition $aintained in the reported case
;N"A"$ 4s. Sheppard< that the indorser o% a
check, "n!ike the dra*er, is re!ie4ed o% !ia(i!it)
thereon () an "nreasona(!e de!a) in presentin#
the sa$e %or pa)$ent, *hether or not he is
in="red () the de!a), is s"pported () the #reat
*ei#ht o% a"thorit).
a. 1he 'o"rt, in +o"#h 4. Staats ;N.,.< s"pra,
sa)sB 2:pon the ."estion o% d"e di!i#ence
to char#e an indorser, *hether he has
(een pre="diced or not () the de!a) is
per%ect!) i$$ateria!. 9t is not in."ired
into. T$" +3 -!"su)"s $" $s 0"".
-!"=u,*(",.2
(. Accordin# to the 'o"rt in 'aro!! 4. S*eet
;1891< 128 N.,. 19, 13 ?.C.A. 43, 27 N.D.
763, 2present$ent to d"e ti$e as /6ed
() the !a* $erchant *as a condition
"pon per%or$ance o% *hich the !ia(i!it) o%
the de%endant, as indorser, depended,
and this de!a) *as not e6c"sed, a!tho"#h
the dra*er o% the check had no %"nds, or
*as inso!4ent, or (eca"se present$ent
*o"!d not (een "na4ai!in# as a $eans o%
proc"rin# pa)$ent.2
i. O.+5 3$"!" t$"!" *s >!)t*v"
-!oo# t$t t$" *.,o!s"! 4."3
3$". $" (s$", t$" ($"(4 t$t
t$"!" 3ou+, 0" .o #u.,s *. t$"
0.4 to )""t *t (. t$" !u+" 0"
vo*,",. Start 4. 1"pper ;Et.<
s"pra. ;11 A.?.C. Annotation, pp.
1028-1029.<
2. Fe ha4e (een "na(!e to /nd an) a"thorit)
s"stainin# the proposition that an indorser o% a
check is not dischar#ed %ro$ !ia(i!it) %or an
"nreasona(!e de!a) in presentation %or pa)$ent.
3. Ne#otia(!e 9nstr"$ents are s"pposed to (e
passed on *ith pro$ptness in the ordinar)
co"rse o% ("siness transactionsG not to (e
retained or kept %or s"ch ti$e as the ho!der $a)
*ant, other*ise the s$ooth Ho* o% co$$ercia!
transactions *o"!d (e hindered.
4. 1here see$s to (e an inti$ation in the decision
appea!ed %ro$ that inas$"ch as the check *as
dra*n pa)a(!e e!se*here than at the p!ace o%
("siness o% the dra*er, it $"st (e presented %or
acceptance or ne#otia(!e *ithin a reasona(!e
ti$e, and "pon %ai!"re to do so the dra*er and
a!! indorsers thereo% are dischar#ed p"rs"ant to
Section 144 o% the !a*.
a. Io*e4er, there is no e4idence at a!! as to
the p!ace *here the check *as dra*n.
(. Fe ha4e a!read) pointed o"t a(o4e that
neither Section 143 nor Section 144 is
app!ica(!e.
&. >ra*er had eno"#h %"nds *hen he iss"ed the
check (eca"se his s"(se."ent checks dra*n
a#ainst the sa$e (ank had (een encashed.
a. Iad it not (een %or the "nreasona(!e
de!a) in its presentation %or pa)$ent, the
petitioner herein *o"!d ha4e (een a(!e to
recei4e pa)$ent there%or.
Issu" 73& 8ES, 0ut B.4 st*++ +oss"s9
1. etitioner ar#"es that the 4er(a! ass"rances
#i4en () the respondent to the e$p!o)ees o%
the (ank that he *as read) to re%"nd the
a$o"nt i% the check sho"!d (e dishonored ()
the dra*ee (ank is a co!!atera! a#ree$ent,
separate and distinct %ro$ the indorse$ent, ()
4irt"e o% *hich petitioner herein *as ind"ced to
cash the check, and, there%ore, ad$issi(!e as an
e6ception that the paro! e4idence r"!e.
a. etitioners contention in this respect is
not entire!) "n%o"nded.
(. Eario"s cases sa)s that paro! e4idence
$a) (e "sed to pro4e e6trinsic
a#ree$ents *hich cannot (e e$(odied in
the instr"$ent *itho"t i$pairin# its
credit.
2. 9%, there%ore, the s"pposed ass"rances that the
dra*er had %"nds and that the respondent
herein *o"!d re%"nd the a$o"nt o% the check i%
the dra*er had no %"nds, 3"!" t$"
(o.s*,"!t*o.s o! !"so.s t$t *.,u(", the
(ranch a#enc) o% the petitioners to #o o"t o% its
ordinar) practice o% not cashin# o"t o% to*n
checks and accept the check and to pa) its %ace
4a!"e, the sa$e *o"!d (e pro4a(!e () paro!,
pro4ided, o% co"rse, that the ass"rances or
ind"ce$ents o5ered *o"!d not 4ar), a!ter, or
destro) the o(!i#ations attached () !a* to the
indorse$ent.
3. Fe /nd, ho*e4er, that the s"pposed ass"rances
o% re%"nd in case o% dishonor o% the check !"
-!"(*s"+5 t$" o!,*.!5 o0+*gt*o.s o# .
*.,o!s"!, and these o(!i#ations are, "nder the
!a*, (o.s*,"!", ,*s($!g", 05 .
u.!"so.0+" ,"+5 *. t$" -!"s".tt*o. o#
t$" ($"(4 #o! -5)".t ;(asis is Sec. 66 o% the
N9?<.
4. 1here *as no e6press o(!i#ation ass"$ed () the
respondent herein that the dra*er *o"!d a!*a)s
ha4e %"nds, or that he ;the indorser< *o"!d
re%"nd the a$o"nt o% the check e4en i% there
*as de!a) in its presentation, so that *hi!e the
'o"rt o% Appea!s $a) ha4e co$$itted an error
in disre#ardin# the e4idence s"($itted ()
petitioner at the tria! o% the ass"rances $ade ()
respondent herein at the ti$e o% the ne#otiation
o% the check, s"ch error *as *itho"t pre="dice,
(eca"se t$" su--os", ssu!.("s g*v".
3"!" -!t o# $*s o0+*gt*o.s s . *.,o!s"!,
3$*($ 3"!" ,*s($!g", 05 t$"
u.!"so.0+" ,"+5 *. t$" -!"s".tt*o. o#
t$" ($"(4 #o! -5)".t.
1he ="d#$ent appea!ed %ro$ is, there%ore, a3r$ed,
*ith costs a#ainst the petitioner.