PNB V. CA- Material Alteration
256 SCRA 491
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 Subsequent debits were made but Capitol cannot debit the account of Abante any longer for the latter had withdrawn all the money already from the account.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.
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 issue—which 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 check’s 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 check’s 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.