Rebadulla, Charl’s Micheal I.

SBENT-3S

Enrique P. Montinola vs. The Philippine National Bank, et al.

G.R. No. L-2861, 26 February 1951

Facts:

Ubaldo Laya, as Misamis Oriental's regional treasurer, granted Mariano Ramos a

P100,000.00 Philippine National Bank (PNB) check in May 1942. Ramos, as the US forces'
disbursing officer at the time, was to use the check for military purposes. For the intent of Ramos
was taken prisoner of war by the occupying Japanese forces before he could cash the check. When he
was finally released in December 1944, he needed money, so he went to a man named Enrique
Montinola and made plans.

Ramos wrote on the back of the check:

"Pay to the order of Enrique P. Montinola just P30,000." The balance is to be

deposited in M. V. Ramos' account at the Philippine National Bank.

Montinola agreed to pay 85,000 in Japanese banknotes in exchange.

He was only able to pay Ramos 45k in Japanese banknotes.

Then, Montinola attempted to get the check cashed, but PNB refused.
It appears that an insertion was made. The words "Agent, Philippine National Bank" were put under
Laya's signature, making it seem that Laya disbursed the funds. Check as a PNB agent, not as
Misamis Oriental's provincial treasurer.

The lawsuit against the PNB, the Provincial Treasurer of Misamis Oriental, was rejected by
the Manila Court of First Instance. As a result, Montinola has filed a direct appeal with the Supreme
Court.

Issue:

Is Montinola entitled to the importance that an altered instrument represents?

Ruling:

No. Inserting the terms "Agent, Phil. National Bank," which alters the bank's responsibility
by converting it from a mere drawer to a drawer, constitutes a material modification of the
instrument without the agreement of the parties liable thereon. The instrument is discharged under
Section 124 of the Negotiable Instruments Law. The check had not been legally settled under the
Negotiable Instruments Act. The same law states in section 32 that "The endorsement must be a
complete instrument endorsement. An endorsement that purports to pass only a portion of the
balance payable to the endorse is not considered a negotiation of the instrument." As a result,
Montinola cannot be considered an endorse. At most, he can be considered as a mere assignee of
Ramos' P30,000, in which case, as such assignee, he is entitled to all protections applicable to the
drawer Provincial Treasurer of Misamis Oriental and against Ramos. Montinola cannot even be
called a holder in due course because section 52 of said statute describes a holder in due course as a
holder who has taken the instrument under certain circumstances, one of which is that he became the
holder before the instrument was overdue. When it comes to the check was long overdue for
Montinola. Montinola is also not a holder since section 191 of the same law distinguishes a holder as
the payee or endorse of a bill or note, which Montinola is not. He is therefore not an endorse and, as
previously said, he may only be called an assignee. He himself could not be said to have accepted it
in good conscience.