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$$"nications.
2. Seeto $ade a #enera! and "n."a!i%ied indorse$ent o%
the check, and petitioner/s a#enc) accepted it and paid
respondent the a$o"nt o% &,000 there%or.
3. 0he check *as )*+", to -"t*t*o."!/s %"0u 0!.($
o. 1!($ 22, 1948, and *as -!"s".t", to t$"
,!3"" 0.4 #o! -5)".t o. A-!*+ 9, 1948, ("t the
check *as dishonored %or 1ins"%%icient %"nds.1
4. 0he check *as ret"rned to petitioner/s S"ri#ao (ranch,
and "pon receipt thereo% () it on Apri! 14, 1948, said
(ranch i$$ediate!) sent a !etter to the respondent
herein de$andin# i$$ediate re%"nd o% in the 2a!"e o%
the check.
&. A second co$$"nication o% the sa$e tenor *as sent
on Apri! 26, 1948, to *hich respondent ans*ered
askin# that p!ainti%%/s conte$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. 0herea%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"%%icient %"nds in the
dra*ee (ank, and that had the petitioner/s S"ri#ao
a#enc) not de!a)ed to %or*ard the check "nti! the
dra*er/s %"nds *ere e3ha"sted, the sa$e *o"!d ha2e
(een paid.
4. 0here"pon petitioner presented a co$p!aint in the
'o"rt o% 5irst 6nstance o% S"ri#ao, a!!e#in# that
respondent Benito Seeto #a2e ass"rance to petitioner/s
a#enc) in S"ri#ao that the dra*er o% the check had
s"%%icient %"nds *ith the dra*ee (ank, and that "pon
these ass"rances petitioner/s a#enc) de!i2ered the
&,000 to the respondent a%ter the !atter had $ade a
#enera! and "n."a!i%ied indorse$ent thereon.
a. 7pon this iss"e petitioner s"($itted t*o
*itnesses *ho testi%ied that it *as not the
practice o% petitioner/s a#enc) to cash o"t o%
to*n checks, and that the check *as cashed
(eca"se o% the ass"rances #i2en () the
respondent that the dra*er had s"%%icient %"nds,
and that he 8respondent9 *o"!d re%"nd the
a$o"nt paid () petitioner/s a#enc) in case the
check is dishono"red.
8. 0he tria! co"rt %o"nd that the respondent $ade an
"ndertakin# to re%"nd the a$o"nt o% the checks in the
e2ent o% dishonor.
a. 6n s"pport o% this %indin# it %o"nd that as the
dra*ee (ank is not in 'e(", it *as i$possi(!e
%or petitioner/s a#enc) to $ake an independent
2eri%ication o% the dra*er/s so!2enc), and $"st
ha2e taken preca"tions to protect itse!% a#ainst
!oss () re."irin# the respondent to #i2e
ass"rances that he *o"!d ret"rn the a$o"nt o%
the check in the case o% nonpa)$ent.
(. 6t a!so %o"nd that there *as no "nreasona(!e
de!a) in the presentation o% the check, and,
there%ore, rendered :"d#$ent sentencin#
respondent to re%"nd the a$o"nt he had
recei2ed %or the check.
9. On appea! to the 'o"rt o% Appea!s, this co"rt he!d that
petitioner *as gu*+t5 o# u.!"so.0+5 !"t*.*.g .,
3*t$-$o+,*.g t$" ($"(4, and that the de!a) in the
present$ent %or pa)$ent 3s *."6(us0+", so that
respondent *as there() dischar#ed %ro$ !ia(i!it).
a. 6t a!so he!d that paro! e2idence is inco$petent
to sho* that one si#nin# o% a check as indorser
is $ere!) a s"ret) or #"arantor, re:ectin# the
e2idence add"ced at the tria! co"rt a(o"t the
respondent/s ass"rance and pro$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 6nstr"$ents <a*=
2. ;id the 'A err in dec!arin# respondent Benito Seeto
dischar#ed o% his !ia(i!it) as indorser o% the check=
3. ;id the 'A err in not ad$ittin# paro! e2idence to sho*
that respondent $ade ora! ass"rances to re%"nd the
2a!"e o% the check in case o% dishono"r=
H"+,&
Issu" 71& 8ES9
1. 6t is tr"e that Section 143 and 144 o% the !a* are not
app!ica(!e, (eca"se these are pro2isions ha2in# to do
*ith the presentation o% a (i!! o% e3chan#e %or
acceptance, and !" .ot --+*(0+" to ($"(4, as to
*hich present$ent %or acceptance is not re."ired.
2. 6t is a!so tr"e that Section 84 is app!ica(!e, ("t its
app!ication is s"(:ect to the condition i$posed ()
Section 186, to the e%%ect 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 e3tent o% the !oss ca"sed ()
the de!a).
3. 'o"nse! %or the petitioner, ho*e2er, ar#"es that
inas$"ch as the a(o2e section e3press!) pro2ides %or
the dischar#e o% the dra*er %ro$ !ia(i!it) to the e3tent
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$" g"."!+ -!*.(*-+" *.(+us*o
u.*us "st "6(+us*o. +t"!*us.
. :E 'IN; NO REASON NOR 1ERIT IN THE
ARG<1ENT.
(. 0he si!ence o% Section 186 as to the indorser is
d"e to the %act that his dischar#e is a!read)
e3press!) co2ered () the pro2ision o% Section
84, the indorser (ein# a person secondari!)
!ia(!e on the instr"$ent.
c. 0he reason %or the di%%erence (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. 0he proposition $aintained in the reported case
8N">"$ 2s. Sheppard9 that the indorser o% a check,
"n!ike the dra*er, is re!ie2ed 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. 0he 'o"rt, in +o"#h 2. Staats 8N.,.9 s"pra,
sa)s? 17pon 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$$ateria!. 6t is not in."ired into. T$" +3
-!"su)"s $" $s 0"". -!"=u,*(",.1
(. Accordin# to the 'o"rt in 'aro!! 2. S*eet 818919
128 N.,. 19, 13 <.@.A. 43, 24 N.A. 463,
1present$ent to d"e ti$e as %i3ed () the !a*
$erchant *as a condition "pon per%or$ance o%
*hich the !ia(i!it) o% the de%endant, as indorser,
depended, and this de!a) *as not e3c"sed,
a!tho"#h the dra*er o% the check had no %"nds,
or *as inso!2ent, or (eca"se present$ent
*o"!d not (een "na2ai!in# as a $eans o%
proc"rin# pa)$ent.1
i. O.+5 3$"!" t$"!" *s ##*!)t*v" -!oo#
t$t t$" *.,o!s"! 4."3 3$". $"
(s$", t$" ($"(4 t$t t$"!" 3ou+, 0"
.o #u.,s *. t$" 0.4 to )""t *t (.
t$" !u+" 0" vo*,",. Start 2. 0"pper
8Bt.9 s"pra. 811 A.<.@. Annotation, pp.
1028-1029.9
2. Ce ha2e (een "na(!e to %ind an) a"thorit) s"stainin#
the proposition that an indorser o% a check is not
dischar#ed %ro$ !ia(i!it) %or an "nreasona(!e de!a) in
presentation %or pa)$ent.
3. Ne#otia(!e 6nstr"$ents are s"pposed to (e passed on
*ith pro$ptness in the ordinar) co"rse o% ("siness
transactionsD not to (e retained or kept %or s"ch ti$e as
the ho!der $a) *ant, other*ise the s$ooth %!o* o%
co$$ercia! transactions *o"!d (e hindered.
4. 0here 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. Eo*e2er, there is no e2idence at a!! as to the
p!ace *here the check *as dra*n.
(. Ce ha2e a!read) pointed o"t a(o2e 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$e (ank had (een encashed.
a. Ead it not (een %or the "nreasona(!e de!a) in its
presentation %or pa)$ent, the petitioner herein
*o"!d ha2e (een a(!e to recei2e pa)$ent
there%or.
Issu" 73& 8ES, 0ut B.4 st*++ +oss"s9
1. etitioner ar#"es that the 2er(a! ass"rances #i2en ()
the respondent to the e$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$ent, () 2irt"e o% *hich petitioner herein *as
ind"ced to cash the check, and, there%ore, ad$issi(!e
as an e3ception that the paro! e2idence r"!e.
a. etitioners contention in this respect is not
entire!) "n%o"nded.
(. Bario"s cases sa)s that paro! e2idence $a) (e
"sed to pro2e e3trinsic a#ree$ents *hich
cannot (e e$(odied in the instr"$ent *itho"t
i$pairin# its credit.
2. 6%, there%ore, the s"pposed ass"rances that the dra*er
had %"nds and that the respondent herein *o"!d re%"nd
the a$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 2a!"e, the sa$e
*o"!d (e pro2a(!e () paro!, pro2ided, o% co"rse, that
the ass"rances or ind"ce$ents o%%ered *o"!d not 2ar),
a!ter, or destro) the o(!i#ations attached () !a* to the
indorse$ent.
3. Ce %ind, ho*e2er, that the s"pposed ass"rances o%
re%"nd in case o% dishonor o% the check !" -!"(*s"+5
t$" 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 8(asis is Sec.
66 o% the N6<9.
4. 0here *as no e3press o(!i#ation ass"$ed () the
respondent herein that the dra*er *o"!d a!*a)s ha2e
%"nds, or that he 8the indorser9 *o"!d re%"nd the
a$o"nt o% the check e2en i% there *as de!a) in its
presentation, so that *hi!e the 'o"rt o% Appea!s $a)
ha2e co$$itted an error in disre#ardin# the e2idence
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$"
-!"s".tt*o. o# t$" ($"(4 #o! -5)".t.
0he :"d#$ent appea!ed %ro$ is, there%ore, a%%ir$ed, *ith costs
a#ainst the petitioner.