PHILIPPINE NATIONAL BANK, Petitioner,
vs.
COURT OF APPEALS, CAPITOL CITY DEVELOPMENT BANK,
PHILIPPINE BANK OF COMMUNICATIONS, and F. ABANTE
MARKETING, Respondents.
G.R. No. 107508; April 25, 1996
Facts:
DECS issued a check in favor of Abante Marketing containing a specific serial
number, drawn against PNB. The check was deposited by Abante in its account
with Capitol and the latter consequently deposited the same with its account with
PBCOM which later deposited it with petitioner for clearing. The check was
thereafter cleared. However, on a date, petitioner PNB returned the check on
account that there had been a material alteration on it.
Subsequent debits were made but Capitol cannot debit the account of Abante any
longer for the latter had withdrawn all the money already from the account. This
prompted Capitol to seek reclarification from PBCOM and demanded the
recrediting of its account. PBCOM followed suit by doing the same against PNB.
Demands unheeded, it filed an action against PBCOM and the latter filed a third-
party complaint against petitioner.
Issue:
WON there is material alteration on the check?
Ruling: No.
An alteration is said to be material if it alters the effect of the instrument. It means
an unauthorized change in an instrument that purports to modify in any respect the
obligation of a party or an unauthorized addition of words or numbers or other
change to an incomplete instrument relating to the obligation of a party. In other
words, a material alteration is one which changes the items which are required to
be stated under Section 1 of the Negotiable Instruments Law.
The case at bench is unique in the sense that what was altered is the serial number
of the check in question, an item which, it can readily be observed, is not an
essential requisite for negotiability under Section 1 of the Negotiable
Instruments Law. The aforementioned alteration did not change the relations
between the parties. The name of the drawer and the drawee were not altered. The
intended payee was the same. The sum of money due to the payee remained the
same. The check’s serial number is not the sole indication of its origin. As
succinctly found by the Court of Appeals, the name of the government agency
which issued the subject check was prominently printed therein. The check’s issuer
was therefore sufficiently identified, rendering the referral to the serial number
redundant and inconsequential. Petitioner, thus cannot refuse to accept the check in
question on the ground that the serial number was altered, the same being an
immaterial or innocent one.
Doctrine:
An alteration is said to be material if it alters the effect of the instrument. It means
an unauthorized change in an instrument that purports to modify in any respect the
obligation of a party or an unauthorized addition of words or numbers or other
change to an incomplete instrument relating to the obligation of a party. In other
words, a material alteration is one which changes the items which are required
to be stated under Section 1 of the Negotiable Instruments Law.
