PHILIPPINE NATIONAL BANK v.

CA 256 SCRA 491 complaint against petitioner PNB for reimbursement/indemnity with
respect to the claims of Capitol. Petitioner, on its part, filed a fourth-
1. Payment of check party complaint against F. Abante Marketing.
2. Check
3. Ministry of Education and Culture – drawer  RTC: complaint - in favor of Capitol.
F. Abante Marketing – payee
PNB – drawee  third-party complaint – in favor of PBCom.
4. Issue: WON alteration of the serial number is a material alteration
5. NIL, Sec. 1  fourth-party complaint – in favor of PNB

Facts:  CA: by ordering PNB to honor the check. After the check shall have
been honored by PNB, PBCom shall re-credit plaintiff-appellee's
 A check in the amount of P97,650.00 was issued by the Ministry of account with it with the amount.
Education and Culture (now Department of Education, Culture and
Sports [DECS]) payable to F. Abante Marketing. Issue: WON alteration of the serial number is a material alteration

 This check was drawn against Philippine National Bank (herein Held: NO. An alteration is said to be material if it alters the effect of
petitioner). the instrument. It means an unauthorized change in an instrument that
purports to modify in any respect the obligation of a party or an
 F. Abante Marketing, a client of Capitol City Development Bank unauthorized addition of words or numbers or other change to an
(Capitol), deposited the questioned check in its savings account with incomplete instrument relating to the obligation of a party. In other words,
said bank. In turn, Capitol deposited the same in its account with the a material alteration is one which changes the items which are required
Philippine Bank of Communications (PBCom) which, in turn, sent the to be stated under Section 1 of the Negotiable Instruments Law.
check to petitioner for clearing.
Section 1 of the Negotiable Instruments Law provides:
 Petitioner PNB cleared the check as good and, thereafter, PBCom
credited Capitol's account for the amount stated in the check. Sec. 1. — Form of negotiable instruments. An instrument to
be negotiable must conform to the following requirements:
 However, petitioner PNB returned the check to PBCom and debited (a) It must be in writing and signed by the maker or drawer;
PBCom's account for the amount covered by the check, the reason (b) Must contain an unconditional promise or order to pay a
being that there was a "material alteration" of the check number. sum certain in money;
(c) Must be payable on demand, or at a fixed or
 PBCom, as collecting agent of Capitol, then proceeded to debit the determinable future time;
latter's account for the same amount, and subsequently, sent the (d) Must be payable to order or to bearer; and
check back to petitioner PNB. (e) Where the instrument is addressed to a drawee, he must
be named or otherwise indicated therein with reasonable
 Petitioner PNB, however, returned the check to PBCom. certainty.

 Capitol could not, in turn, debit F. Abante Marketing's account since In his book entitled "Pandect of Commercial Law and Jurisprudence," Justice
the latter had already withdrawn the amount of the check. Jose C. Vitug opines that "an innocent alteration (generally, changes on
items other than those required to be stated under Sec. 1, N.I.L.) and
 Capitol sought clarification from PBCom and demanded the re- spoliation (alterations done by a stranger) will not avoid the instrument, but
crediting of the amount. PBCom followed suit by requesting an the holder may enforce it only according to its original tenor."
explanation and re-crediting from petitioner PNB.
Reproduced hereunder are some examples of material and immaterial
 Since the demands of Capitol were not heeded, it filed a civil suit alterations:
with the RTC against PBCom which, in turn, filed a third-party
A. Material Alterations:
(1) Substituting the words "or bearer" for "order." negotiability under Section 1 of the Negotiable Instruments Law. The
(2) Writing "protest waived" above blank indorsements. aforementioned alteration did not change the relations between the parties.
(3) A change in the date from which interest is to run. The name of the drawer and the drawee were not altered. The intended
(4) A check was originally drawn as follows: "Iron County Bank, Crystal Falls, payee was the same. The sum of money due to the payee remained the
Mich. Aug. 5, 1901. Pay to G.L. or order $9 fifty cents CTR" The insertion of same.
the figure 5 before the figure 9, the instrument being otherwise unchanged.
(5) Adding the words "with interest" with or without a fixed rate. Petitioner insists that office o(r) agency (is) assigned TCAA checks bearing
(6) An alteration in the maturity of a note, whether the time for payment is different number series. For fictitious payee to succeed in its malicious
thereby curtailed or extended. intentions to defraud the government, all it need do is to get hold of a TCAA
(7) An instrument was payable "First Nat'l Bank" the plaintiff added the word Check and have the serial numbers of portion (sic) thereof changed or
"Marion." altered to make it appear that the same was issued by the MEG.
(8) Plaintiff, without consent of the defendant, struck out the name of the
defendant as payee and inserted the name of the maker of the original note. Petitioner's arguments fail to convince. The check's serial number is not the
(9) Striking out the name of the payee and substituting that of the person who sole indication of its origin.. As succinctly found by the Court of Appeals, the
actually discounted the note. name of the government agency which issued the subject check was
(10) Substituting the address of the maker for the name of a co-maker. prominently printed therein. The check's issuer was therefore sufficiently
identified, rendering the referral to the serial number redundant and
inconsequential.
B. Immaterial Alterations:
(1) Changing "I promise to pay" to "We promise to pay", where there are two Petitioner PNB, thus cannot refuse to accept the check in question on the
makers. ground that the serial number was altered, the same being an immaterial or
(2) Adding the word "annual" after the interest clause. innocent one.
(3) Adding the date of maturity as a marginal notation.
(4) Filling in the date of actual delivery where the makers of a note gave it July 22,
with the date in blank, "July ____."
(5) An alteration of the marginal figures of a note where the sum stated in
words in the body remained unchanged.
(6) The insertion of the legal rate of interest where the note had a provision
for "interest at _______ per cent."
(7) A printed form of promissory note had on the margin the printed words,
"Extended to ________." The holder on or after maturity wrote in the blank
space the words "May 1, 1913," as a reference memorandum of a promise
made by him to the principal maker at the time the words were written to
extend the time of payment.
(8) Where there was a blank for the place of payment, filling in the blank with
the place desired.
(9) Adding to an indorsee's name the abbreviation "Cash" when it had been
agreed that the draft should be discounted by the trust company of which the
indorsee was cashier.
(10) The indorsement of a note by a stranger after its delivery to the payee at
the time the note was negotiated to the plaintiff.
(11) An extension of time given by the holder of a note to the principal maker,
without the consent of a surety co-maker.

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