PNB V.

CA; Material Alteration; Section 125, NIL

256 SCRA 491
FACTS:
DECS issued a check in favor of Abante Marketing containing a specific serial
number, drawn against PNB. The check was deposited by Abante in its account
with Capitol and the latter consequently deposited the same with its account
with PBCOM which later deposited it with petitioner for clearing. The check
was thereafter cleared. However, on a relevant date, petitioner PNB returned the
check on account that there had been a material alteration on it. Subsequent
debits were made but Capitol cannot debit the account of Abante any longer for the
latter had withdrawn all the money already from the account.
This prompted
Capitol to seek reclarification from PBCOM and demanded the recrediting of
its account. PBCOM followed suit by doing the same against PNB. Demands
unheeded, it filed an action against PBCOM and the latter filed a third-party
complaint against petitioner.
HELD:
An alteration is said to be material if it alters the effect of the instrument. It means
an unauthorized change in the 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 the 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 alleged material alteration was the alteration of the serial number
of the check in issuewhich is not an essential element of a negotiable
instrument under Section 1. PNB alleges that the alteration was material since it
is an accepted concept that a TCAA check by its very nature is the medium
of exchange of governments, instrumentalities and agencies. As a safety
measure, every government office or agency is assigned checks bearing
different serial numbers.
But this contention has to fail. The checks serial number is not the sole indicia of
its origin. The name of the government agency issuing the check is clearly stated
therein. Thus, the checks drawer is sufficiently identified, rendering redundant the
referral to its serial number.
Therefore, there being no material alteration in the check committed, PNB could not
return the check to PBCOM. It should pay the same.