G.R. No. L-55079, 19 November 1982, 118 SCRA 537


A check payable to cash, drawn by Joaquin Cunanan & Company on First National City Bank (FNCB) was deposited with Metropolitan Bank and Trust Company (Metro Bank) by a certain Salvador Sales. Earlier that day, Sales had opened a current account with Metro Bank depositing P500.00 in cash. Metro Bank immediately sent the cash check to the Clearing House of the Central Bank. The check was cleared the same day. Private respondent paid petitioner through clearing the amount of P50,000.00, and Sales was credited with the said amount in his deposit with Metro Bank.

Sales made his first withdrawal of P480.00 from his current account, then withdrew P32,100.00 and then eventually withdrew the balance of P17,920.00 and closed his account with Metro Bank. Nine days later, FNCB returned cancelled check to drawer Joaquin Cunanan & Company, together with the monthly statement of the company’s account with FNCB. That same day, the company notified FNCB that the check had been altered. The actual amount of P50.00 was raised to P50,000.00, and over the name of the payee, Manila Polo Club, was superimposed the word CASH.

FNCB notified Metro Bank of the alteration by telephone, confirming it the same day with a letter, which was received by Metro Bank on the following day. FNCB wrote Metro Bank asking for reimbursement, the latter did not oblige, so that FNCB reiterated its request. Metro Bank was adamant in its refusal. FNCB filed in the RTC against Metro Bank for recovery of the amount of P50,000.00. The Trial Court rendered its Decision in favor of FNCB to which the petitioner appealed. The CA affirmed in toto the judgment of the Trial Court.


Which bank is liable for the payment of the altered check, the drawee bank (FNCB) or the collecting bank (Metro Bank)?



The transaction occurred during the effectivity of Central Bank Circular No. 9 (February 17, 1949) as amended by Circular No. 138 (January 30, 1962), and Circular No. 169 (March 30, 1964). Section 4 of said Circular, as amended.

The validity of the 24-hour clearing house regulation has been upheld by this Court in Republic vs. Equitable Banking Corporation, 10 SCRA 8 (1964). As held therein, since both parties are part of our banking system, and both are subject to the regulations of the Central Bank, they are bound by the 24-hour clearing house rule of the Central Bank.

In this case, the check was not returned to Metro Bank in accordance with the 24-hour clearing house period, but was cleared by FNCB. Failure of FNCB, therefore, to call the attention of Metro Bank to the alteration of the check in question until after the lapse of nine days, negates whatever right it might have had against Metro Bank in the light of the said Central Bank Circular. Its remedy lies not against Metro Bank, but against the party responsible for the changing the name of the payee and the amount on the face of the check.

FNCB contends that the stamp reading, made by Metro Bank is an unqualified representation that the endorsement on the check was that of the true payee, and that the amount thereon was the correct amount. In that connection, this Court in the Hongkong & Shanghai Bank case, supra, ruled:

.. But Plaintiff Bank insists that Defendant Bank is liable on its indorsement during clearing house operations. The indorsement, itself, is very clear when it begins with words ‘For clearance, clearing office **** In other words, such an indorsement must be read together with the 24-hour regulation on clearing House Operations of the Central Bank. Once that 24- hour period is over, the liability on such an indorsement has ceased. This being so, Plaintiff Bank has not made out a case for relief. 7

Consistent with this ruling, Metro Bank cannot be held liable for the payment of the altered check.

Moreover, FNCB did not deny the allegation of Metro Bank that before it allowed the withdrawal of the balance of P17,920.00 by Salvador Sales, Metro Bank withheld payment and first verified, through its Assistant Cashier Federico Uy, the regularity and genuineness of the check deposit from Marcelo Mirasol, Department Officer of FNCB, because its (Metro Bank) attention was called by the fast movement of the account. Only upon being assured that the same is not unusual’ did Metro Bank allow the withdrawal of the balance.

*Case digest by Nikki P. Ebillo, JD-4, Andres Bonifacio Law School, SY 2019-2020