88 PHIL 178


Ramos, as a disbursing officer of an army division of the USAFE, made cash advancements  w/  the  Provincial  Treasurer  of  Lanao.  In  exchange,  the Prov’l Treasurer of Lanao gave him a P500,000 check.  Thereafter, Ramos presented  the  check  to  Laya  for  encashment.    Laya  in  his  capacity  as Provincial  Treasurer  of  Misamis  Oriental  as  drawer,  issued  a  check  to Ramos in the sum of P100000, on the Philippines National Bank as drawee; the P400000 value of the check was paid in military notes.  

Ramos  was  unable  to  encash  the  said  check  for  he  was  captured  by  the Japanese.  But after his release, he sold P30000 of the check to Montinola for P90000 Japanese Military notes, of which only P45000 was paid by the latter.  The  writing  made  by  Ramos  at  the  back  of  the  check  was  to  the effect that he was assigning only P30000 of the value of the document with an instruction to the bank to pay P30000 to Montinola and to deposit the balance  to  Ramos's  credit.  This  writing  was,  however,  mysteriously obliterated and in its place, a supposed indorsement appearing on the back of the check was made for the whole amount of the check. At the time of the  transfer  of  this  check  to  Montinola,  the  check  was  long  overdue  by about 2-1/2 years.

Montinola instituted an action against the PNB and the Provincial Treasurer of  Misamis  Oriental  to  collect  the  sum  of  P100,000,  the  amount  of  the aforesaid check.  There now appears on the face of said check the words in parenthesis  "Agent,  Phil.  National  Bank"  under  the  signature  of  Laya purportedly showing that Laya issued the check as agent of the Philippine National Bank.


The words "Agent, Phil. National Bank" now appearing on  the face of the check  were  added  or  placed  in  the  instrument  after  it  was  issued  by  the Provincial  Treasurer  Laya  to  Ramos.  The  check  was  issued  by  only  as Provincial Treasurer and as an official of the Government, which was under obligation  to  provide  the  USAFE  with  advance  funds,  and not  as  agent  of the bank, which had no such obligation.  The addition of those words was made  after  the  check  had  been  transferred  by  Ramos  to  Montinola.  The insertion  of  the  words  "Agent,  Phil.  National  Bank,"  which  converts  the bank from a mere drawee to a drawer and therefore  changes its liability, constitutes  a  material  alteration  of  the  instrument  without  the  consent  of the parties liable thereon, and so discharges the instrument