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Facts: - On August 25, 1964, a check payable for P50,000 to CASH drawn by Joaquin Cunanan and Co.

on First National City Bank (FNCB) was deposited with the Metrobank by a certain Salvador Sales. - The check was cleared by FNCB the same day and the amount credited to his deposit with Metrobank. - Sales withdrew with total deposit with Metrobank and the withdrawal of the balance was allowed only when FNCB, upon verification made by Metrobank of the regularity and genuineness of the check deposit, assured Metrobank that the fact movement of the account was Not Unusual. - Subsequently, FNCB returned the cancelled check to drawer Joaquin Cunanan and Co., and the company notified FNCB that the check had been altered, the actual amount of P50.00having been raised to P50,000 and name of the payee, Manila Polo Club, having been superimposed with the word CASH. - FNCB notified Metrobbank of the alteration on September, 4, 1964. - When Metrobank refused to reimburse FNCB for the amount of P50, 000, it filed an action for recovery of the amount with the Court of First Instance of Manila. - After trial, the Trial Court rendered judgment ordering Metrobank to reimburse FNCB the amount of P50, 000. On appeal, the Court of Appeals affirmed the decision.

Issue: - Which bank is liable for the payment of the altered check, the drawee bank (FNCB) or the ceollecting bank (Metrobank)?

Ruling: The drawee bank. Under Central Bank Circular No.9 as amended by Circular No. 138 and Circular No. 169, the drawee bank receiving the check for clearing from the Central Bank Clearing House must return the check to the collecting bank within the 24 hour period if the check is defective for any reason. In this case, the check was not returned to Metrobank in accordance with the 24 hour clearing house period, but was cleared by FNCB, failure of FNCB,

therefore, to call the attention of Metrobank to the alteration of the check in question until after the lapse of nine days, negates whatever right it might have had against Metrobank, in the light of the said Central Bank Circular. Its remedy lies not against Metrobank, but against the party responsible for the changing the name of the payee and the amount on the face of the check.

University of San Jose Recoletos College of Commerce Accountancy and Finance Department CASE DIGEST In LAW 2

Submitted by: Cruiz, Jesriel G. Dalapo, Rexel Kent A. Velez, Johnri I.

Submitted to: Atty. Diana A. Velasco