Castro, Ernest T.Mallari, John Patrick S.Vizcarra, William Atty. Justino M. Marquez

Facts: On October 10, 2002, a check was presented for deposit and accepted at petitioner Allied Banking Corporations Kawit branch in the amount of P1,000,000.00 payable to a certain Mateo Management Group International herein referred as MMGI. Subsequently, as the check was post-dated on October 9, 2003, it was withdrawn against the account of Marciano Silva Jr. with respondent Bank of the Philippine Islands Bel-Air Branch. Upon receipt, petitioner sent the check for clearing to respondent through the Philippine Clearing House Corporation.

Thereafter, the check was cleared by respondent and petitioner credited the account of MMGI with P1,000,000.00. Sometime in October 2002, MMGIs account was closed and all the funds in such account were withdrawn. A month later, it was discovered by Silva that there was a debit of P1,000,000.00 from his account resulting to Silvas complaint wherein respondent credited his account with the aforesaid sum.

Allied Banking Corporation vs. Bank of the Philippine IslandsG.R. No. 188363, February 27, 2013

A complaint before the Arbitration Committee was filed by the petitioner in which it asserts that respondent should solely bear the entire face value of the check value due to its negligence in failing to return the check to petitioner within the 24-hour reglamentary period as provided in Section 20.1 of the Clearing House Rules and Regulations of 2000. In its Answer with Counterclaims, respondent charged petitioner with gross negligence for accepting the post-dated check in the first place. In addition, it contended that petitioners admitted negligence was the sole and proximate cause of the loss suffered by Marciano Silva Jr.Issues:(1) What does the Doctrine of Last Clear Chance enunciate?(2) Whether such doctrine will be applicable to the present case?

Held: On the first issue, the Doctrine of Last Clear Chance is that the negligence of the plaintiff does not preclude a recovery for the negligence of the defendant where it appears that the defendant, by exercising reasonable care and prudence, might have avoided injurious consequences to the plaintiff notwithstanding the plaintiffs negligence. The doctrine necessarily assumes negligence on the part of the defendant and contributory negligence on the part of the plaintiff, and does not apply except upon that assumption. Stated differently, the antecedent negligence of the plaintiff does not preclude him from recovering damages caused by the supervening negligence of the defendant, who had the last fair chance to prevent the impending harm by the exercise of due diligence. Moreover, in situations where the doctrine has been applied, it was defendants failure to exercise such ordinary care, having the last clear chance to avoid loss or injury, which was the proximate cause of the occurrence of such loss or injury.

As for the second issue, the Doctrine of Last Clear Chance should be applicable to the present case. The evidence clearly shows that the proximate cause of the unwarranted encashment of the subject check was the negligence of respondent who cleared a post-dated check sent to it thru the PCHC clearing facility without observing its own verification procedure. As correctly found by the PCHC and upheld by the RTC, if only respondent exercised ordinary care in the clearing process, it could have easily noticed the glaring defect upon seeing the date written on the face of the check "Oct. 9, 2003". Respondent could have then promptly returned the check and with the check thus dishonored, petitioner would have not credited the amount thereof to the payees account. Thus, notwithstanding the antecedent negligence of the petitioner in accepting the post-dated check for deposit, it can seek reimbursement from respondent the amount credited to the payees account covering the check.

METROPOLITAN BANK AND TRUST COMPANY vs. RENATO D. CABILZOG.R. No. 154469 December 6, 2006Facts: Cablizo maintained an account with petitioner. It drew a check payable to cash and paid to Mr. Marquez, for the latters sales commission. The checkwassubsequentlydepositedin Westmont bankandthelatter submitted it with Metrobank for clearing. The check was cleared. Thereafter, the banks representative asked Cablizo if he issued a check for P91,000. The answer was in the negative. This prompted Cablizo to call Metrobank and ask for the re-crediting of P90,000 but petitioner failed to re-credit the amount prompting Cablizo to file an action against it. Metrobank argued that as the collecting bank and last indorser, Westmont Bank shall bear the loss occasioned by the fraudulent alteration of the check. Metrobank maintained that by reason of its unqualified indorsement, Westmont Bank warranted that the check in question is genuine, valid and subsisting and that upon presentment the check shall be accepted according to its tenor.

Even more, Metrobank argued that in clearing the check, it was not remiss in the performance of its duty as the drawee bank, but rather, it exercised the highest degree of diligence in accordance with the generally accepted banking practice. It further insisted that the entries in the check were regular and authentic and alteration could not be determined even upon close examination. In addition, Metrobank claimed that Cabilzo was partly responsible in leaving spaces on the check, which made the fraudulent insertion of the amount and figures thereon, possible. On account of his negligence in the preparation and issuance of the check, which according to Metrobank, was the proximate cause of the loss, Cabilzo cannot thereafter claim indemnity by virtue of the doctrine of equitable estoppel.Issue: Whether Metro bank is liable for the alteration on the subject check bearing the authentic signature of the drawer thereof.

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 Negotiable Instrument Law. The check in issue was materially altered when its amount was increased from P1000 to P91000. Cablizo was not the one who authorized or made such increase. There is no showing that he was negligent in exercising what was due in a prudent man which could have otherwise prevented the loss. Cablizo was never remiss in the preparation and issuance of the check.

The doctrine of equitable estoppel is inapplicable against Cablizo. This doctrine states that when one of the two innocent person, each guiltiness of an intentional or moral wrong, must suffer a loss, it must be borne by the one whose erroneous conduct, either by omission or commission, was the cause of the injury. Negligence is never presumed. Metrobank was actually the one remiss in its duties. The CA took into consideration that the alterations were actually visible in the eye and yet the bank allowed someone not acquainted with the examination of checks to do the same. Furthermore, it cannot rely on the endorsement of Westmont Bank of the check. It should have exercised meticulous care in handling the affairs of its clients especially if the clients money is involved.