Negotiable Instruments Case Digest: Metropolitan Bank and Trust Co. v. Cablizo (2006)

G.R. No. 154469             December 6, 2006
Lessons Applicable: Discharge of instrument and persons secondarily liable (Negotiable Instruments Law)

FACTS:
  • November 12,1994: Renato D. Cabilzo (Cabilzo) issued a Metrobank Check payable to "CASH" and postdated on November 24, 1994 in the amount of  P1,000 drawn against his Metrobank account to Mr. Marquez, as his sales commission
  • check was presented to Westmont Bank for payment who indorsed it to Metrobank for appropriate clearing
  • After the entries thereon were examined, including the availability of funds and the authenticity of the signature of the drawer, Metrobank cleared the check for encashment in accordance with the Philippine Clearing House Corporation (PCHC) Rules
  • November 16, 1994: Cabilzo’s representative was at Metrobank when he was asked by a bank personnel if Cabilzo had issued a check in the amount of P91K to which he replied in negative
  • That afternoon: Cabilzo called Metrobank to reiterate that he did not issue the check 
    • He later discovered that the check of P1K was altered to P91K and date was changed from Nov 24 to Nov 14.
    • Cabilzo demanded that Metrobank re-credit the amount of P91,000.00 to his account
  • June 30, 1995: Through counsel sent a letter-demand for the amount of P90K
  • CA affirmed RTC: Favored Cablizo
ISSUE: W/N Cablizo can recover from Metrobank
HELD: YES.  CA Affirmed
  • material alteration
    • changes the items which are required to be stated under Section 1 of the Negotiable Instruments Law
      • 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.
    • changes the effect of the instrument
  • Section 125. What constitutes material alteration. – Any alteration which changes:
(a) The date;
(b) The sum payable, either for principal or interest;
(c) The time or place of payment;
(d) The number or the relation of the parties;
(e) The medium or currency in which payment is to be made;
Or which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect is a material alteration.
  • 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.
  • Section 124. Alteration of instrument; effect of. – Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized,and assented to the alteration and subsequent indorsers.
    But when the instrument has been materially altered and is in the hands of a holder in due course not a party to the alteration, he may enforce the payment thereof according to its original tenor.  
  • 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.
  • bank must be a high degree of diligence, if not the utmost diligence
    •  Surprisingly, however, Metrobank failed to detect the above alterations which could not escape the attention of even an ordinary person
      • "NINETY" is also typed differently and with a lighter ink
      • only 2 asterisks were placed before the amount in figures, while 3 asterisks were placed after such amount 
      • "NINETY" are likewise a little bigger when compared with the letters of the words "ONE THOUSAND PESOS ONLY"
  • When the drawee bank pays a materially altered check, it violates the terms of the check, as well as its duty to charge its client’s account only for bona fide disbursements he had made.
  • The corollary liability of Westmont Ban's indorsement, if any, is separate and independent from the liability of Metrobank to Cabilzo.