INTERNATIONAL CORPORATE BANK VS CA

SEPT 5, 2004

FACTS:

The Ministry of Education and Culture issued 15 checks in the amount of P1,447,920.00 drawn
against the respondent PNB which the petitioner international Corporate Bank accepted for deposit on
various dates. After 24 hours from submission of the checks to respondent for clearing, petitioner paid
the value of the checks and allowed withdrawals of the deposits. Later, respondent returned the checks
to petitioner due to material alteration.

The petitioner filed an action for collection of sum of money against the respondent PNB with
the RTC Manila. The RTC ruled in favor of the respondent and dismissed the complaint. On appeal, the
CA reversed the RTC’s decision and declared the respondent bank liable for not returning the altered
checks within a reasonable period of time. Respondent filed a motion for reconsideration to which the
CA reversed itself and affirmed the RTC’s decision. Petitioner moved for reconsideration which was
denied hence, this petition for review before the Supreme Court.

ISSUE:

Whether or not there is material alteration that can be used as a defense by the respondent.

RULING:

No, there is no material alteration that can be used as a defense by the respondent. 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 NIL. In this case, the alteration on the serial number of a check is not a
material alteration. Thus, the SC set aside the Ca’s decision and declared PNB liable to petitioner.