G.R. No. L-4388 August 13, 1952
PHILIPPINE NATIONAL BANK, petitioner, vs. BENITO SEETO, respondent.

FACTS

On March 13, 1948, respondent Benito Seeto presented a check for P5,000 at the Surigao branch of the Philippine National Bank (PNB). The check, dated March 10, 1948, was payable to cash or bearer and drawn by Gan Yek Kiao against the Cebu branch of the Philippine National Bank of Communications. Seeto made a general and unqualified indorsement, and PNB’s Surigao agency paid him the amount. The check was mailed to PNB’s Cebu branch on March 20, 1948, and presented for payment on April 9, 1948, but was dishonored for “insufficient funds.” PNB’s Surigao agency demanded a refund from Seeto, who refused, claiming the drawer had sufficient funds when the check was negotiated and that PNB’s delay in forwarding the check caused the dishonor. PNB sued, alleging Seeto assured the bank of the drawer’s sufficiency and promised to refund if dishonored. The trial court found for PNB, ruling Seeto made such an undertaking. The Court of Appeals reversed, holding PNB guilty of unreasonable delay in presentment, discharging Seeto as indorser, and rejecting parol evidence on the alleged assurances. PNB appealed, contending the Court of Appeals erred in applying provisions on presentment for acceptance and in not admitting parol evidence.

ISSUE

1. Whether unreasonable delay in presenting the check for payment discharged respondent Seeto from liability as an indorser. 2. Whether parol evidence was admissible to prove respondent’s oral assurances to refund the check’s value if dishonored.

RULING

1. Yes, unreasonable delay in presentment discharged the indorser. Sections 143 and 144 of the Negotiable Instruments Law on presentment for acceptance are inapplicable to checks. However, Section 84 (on liability upon dishonor) applies subject to Section 186, which requires a check to be presented for payment within a reasonable time after its issue. While Section 186 expressly discharges the drawer only to the extent of loss caused by delay, the indorser, as a party secondarily liable under Section 84, is wholly discharged by unreasonable delay, irrespective of actual loss or injury, as the law presumes prejudice. The check was issued March 10, cashed March 13, mailed March 20, and presented April 9. No excuse was given for the delays of seven days before mailing and ten days after reaching Cebu before presentment. This constituted unreasonable delay, discharging Seeto as indorser. 2. The parol evidence issue became immaterial. While parol evidence may be admissible to prove a collateral agreement (e.g., that a signer acted as surety), the alleged assurances here—that the drawer had funds and Seeto would refund if dishonored—were precisely the ordinary obligations of a general indorser under Section 66 of the Negotiable Instruments Law. Since these legal obligations were discharged by the unreasonable delay in presentment, any error in excluding the parol evidence was harmless. The Court of Appeals’ judgment dismissing the complaint was affirmed.