G.R. No. 107508 - Philippine National Bank vs. Court of Appeals

A check with serial number 7-3666-223-3, dated August 7, 1981, amounting to ₱97,650.00, was issued by the Ministry of Education and Culture (MEC, now Department of Education, Culture and Sports) payable to F. Abante Marketing.
The check was drawn against the Philippine National Bank (PNB), the petitioner.
On August 11, 1981, F. Abante Marketing, a client of Capitol City Development Bank (Capitol), deposited the check in its savings account with Capitol.
Capitol then deposited the check in its account with the Philippine Bank of Communications (PBCom), which sent it to PNB for clearing.

PNB initially cleared the check as good; PBCom credited Capitol’s account for ₱97,650.00.
On October 19, 1981, PNB returned the check to PBCom and debited PBCom’s account due to a "material alteration" of the check number (serial number).
PBCom debited Capitol’s account and returned the check to PNB. PNB again returned it to PBCom.
Capitol could not debit F. Abante Marketing’s account because the latter had withdrawn the funds as of October 15, 1981.
Capitol demanded re-crediting from PBCom; PBCom requested explanation and re-crediting from PNB, which did not respond favorably.

Capitol filed a civil suit against PBCom before the Regional Trial Court (RTC) of Manila.
PBCom filed a third-party complaint against PNB for reimbursement/indemnity.
PNB filed a fourth-party complaint against F. Abante Marketing to reimburse/indemnify it for any amounts paid to PBCom.

PBCom ordered to reimburse Capitol ₱97,650.00 plus 12% interest from October 19, 1981 until fully paid.
PNB ordered to indemnify PBCom for amount PBCom pays Capitol.
F. Abante Marketing ordered to reimburse PNB for any amount PNB pays PBCom.
PBCom ordered to pay Capitol attorney’s fees of ₱10,000; the same amount to be reimbursed by PNB and in turn reimbursed or indemnified by F. Abante Marketing.
Counterclaims by PBCom and PNB dismissed.
No pronouncement as to costs.

Modified RTC ruling by exempting PBCom from liability for attorney’s fees.
Ordered PNB to honor the check with interest and pay Capitol attorney’s fees of ₱10,000.
PBCom to re-credit Capitol’s account after PNB honors the check.
Motion for reconsideration by PNB denied (September 16, 1992).

Issues raised involve material alteration of the check’s serial number, evidentiary weight of MEC’s certification, liability of drawee bank for failure to return check within 24-hour clearing period, and liability for attorney’s fees.

Whether the alteration of the serial number of a check constitutes a material alteration under the Negotiable Instruments Law (NIL).
Whether the certification issued by the Ministry of Education and Culture can be given weight as evidence.
Whether a drawee bank which failed to return a check within the 24-hour clearing period may recover the value from the collecting bank.
Whether, in the absence of malice or ill will, PNB may be held liable for attorney’s fees.