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G.R. No. 154469, December 6, 2006


Renato D. Cabilzo issued a check payable to "CASH" and postdated on 24 November 1994 in
the amount of P1, 000.00. The check was drawn against Cabilzos Account with Metrobank
Pasong Tamo and was paid by Cabilzo to a certain Mr. Marquez, as his sales commission.
Subsequently, the check was presented to Westmont Bank for payment. Westmont Bank, in
turn, indorsed the check to Metrobank for appropriate clearing. Later, Cabilzo discovered
that the check was altered to P91, 000.00 and the date 24 November 1994 was changed to
14 November 1994. Hence, he demanded that Metrobank re-credit the amount of P91,
000.00 to his account. Metrobank, however, refused reasoning that it has to refer the
matter first to its Legal Division for appropriate action. Metrobank failed or refused to
comply with its obligation. Consequently, Cabilzo instituted a civil action for damages
against Metrobank. Metrobank claimed that as a collecting bank and the last indorser,
Westmont Bankshould be held liable for the value of the check, and that Cabilzo leaving
spaces on the check, was partly responsible for the fraudulent insertion of the amount and
figures thereon. The RTC favored Cabilzo and the CA affirmed the decision; hence, this
petition for review by Metrobankon the ground that the CA erred in holding the drawee
bank as liable for the altered check.


Whether or not Metrobank is liable for the altered check.


Yes. An alteration is said to be material if it changes the effect of the instrument. 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. 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. Under Section 124, Cabilzo was
not the one who made nor authorized the alteration. Neither did he assent to the
alteration by his express or implied acts. There is no showing that he failed to exercise
such reasonable degree of diligence required of a prudent man which could have
otherwise prevented the loss. When the drawee bank pays a materially altered check, it
violates the terms of the check, as well as its duty to charge its clients account only for
bona fide disbursements he had made. Since the drawee bank, in the instant case, did not
pay according to the original tenor of the instrument, as directed by the drawer, then it
has no right to claim reimbursement from the drawer, much less, the right to deduct the
erroneous payment it made from the drawers account which it was expected to treat
with utmost fidelity.