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Upon appeal, 8 March 2002, the Court of Appeals affirmed with modification the
Decision of the court a quo, similarly finding Metrobank liable for the amount of the
check.
Issue:
1. Whether or not the Court of Appeals erred in finding Metrobank is liable.
Rulings
No, the Court of Appeals was correct.
An alteration is said to be material if it changes the effect of the instrument. It means
that 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.
Section 1 of the Negotiable Instruments Law provides:
Section 1. Form of negotiable instruments. - An instrument to be negotiable must
conform to the following requirements:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in
money;
(c) Must be payable on demand or at a fixed determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.
In the case at bar, the check was altered so that the amount was increased
from P1,000.00 to P91,000.00 and the date was changed from 24 November 1994 to 14
November 1994. Apparently, since the entries altered were among those enumerated
under Section 1 and 125, namely, the sum of money payable and the date of the check,
the instant controversy therefore squarely falls within the purview of material alteration.
In the present case, it is obvious that Metrobank was remiss in that duty and violated
that relationship. As observed by the Court of Appeals, there are material alterations on
the check that are visible to the naked eye. Thus:
x x x The number "1" in the date is clearly imposed on a white figure in the shape
of the number "2". The appellants employees who examined the said check
should have likewise been put on guard as to why at the end of the amount in
words, i.e., after the word "ONLY", there are 4 asterisks, while at the beginning of
the line or before said phrase, there is none, even as 4 asterisks have been
placed before and after the word "CASH" in the space for payee. In addition, the
4 asterisks before the words "ONE THOUSAND PESOS ONLY" have noticeably
been erased with typing correction paper, leaving white marks, over which the
word "NINETY" was superimposed. The same can be said of the numeral "9" in
the amount "91,000", which is superimposed over a whitish mark, obviously an
erasure, in lieu of the asterisk which was deleted to insert the said figure. The
appellants employees should have again noticed why only 2 asterisks were
placed before the amount in figures, while 3 asterisks were placed after such
amount. The word "NINETY" is also typed differently and with a lighter ink, when
compared with the words "ONE THOUSAND PESOS ONLY." The letters of the
word "NINETY" are likewise a little bigger when compared with the letters of the
words "ONE THOUSAND PESOS ONLY".28
Surprisingly, however, Metrobank failed to detect the above alterations which could not
escape the attention of even an ordinary person
The two (2) checks had similar entries with similar infirmities and irregularities. On the
space where the name of the payee should be indicated (Pay To The Order Of) the
following 2-line entries were instead typewritten: on the upper line was the word "CASH"
while the lower line had the following typewritten words, "ONE HUNDRED TEN
THOUSAND PESOS ONLY." Despite the highly irregular entries on the face of the
checks, defendant-appellant bank, without as much as verifying and/or confirming the
legitimacy of the checks considering the substantial amount involved and the obvious
infirmity/defect of the checks on their faces, encashed said checks. A verification
process, even by was of a telephone call to PRCI office, would have taken less than ten
(10) minutes. But this was not done by BA. Investigation conducted by plaintiff-appellee
corporation yielded the fact that there was no transaction involving PRCI that call for the
payment of P220,000.00 to anyone. The checks appeared to have come into the hands
of an employee of PRCI (one Clarita Mesina who was subsequently criminally charged
for qualified theft) who eventually completed without authority the entries on the presigned checks. PRCIs demand for defendant-appellant to pay fell on deaf ears.
Issue:
1. Whether or not the Court of Appeals gravely erred in not applying Section 14 of
the Negotiable Instruments Law, despite its clear applicability to this case.
Rulings:
No, The Court of Appeals did not err on making the decision
In defense of its cashier/tellers questionable action, petitioner insists that pursuant to
Sections 14 and 16 of the NIL, it could validly presume, upon presentation of the
checks, that the party who filled up the blanks had authority and that a valid and
intentional delivery to the party presenting the checks had taken place. Thus, in
petitioners view, the sole blame for this debacle should be shifted to respondent for
having its signatories pre-sign and deliver the subject checks. Petitioner argues that
there was indeed delivery in this case because, following American jurisprudence, the