Nego Digest

7/24/2019 Nego Digest

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PNB V. CA- Material Alteration256 SCRA 491FACTS:DECS i!e" a #$e#% in &a'or o& A(ante Mar%etin) #ontainin) a *e#i+# erialn!,(er "ran a)aint PNB. T$e #$e#% a "e*oite" (/ A(ante in it a##o!ntit$ Ca*itol an" t$e latter #one0!entl/ "e*oite" t$e a,e it$ it a##o!nt

it$ PBCM $i#$ later "e*oite" it it$ *etitioner &or#learin). T$e #$e#% a t$erea&ter #leare". oe'er on a rele'ant "ate *etitionerPNB ret!rne" t$e #$e#% on a##o!nt t$at t$ere $a" (een a ,aterial alterationon it. S!(e0!ent "e(it ere ,a"e (!t Ca*itol #annot "e(it t$e a##o!nt o& A(antean/ lon)er &or t$e latter $a" it$"ran all t$e ,one/ alrea"/ &ro, t$e a##o!nt.

T$i *ro,*te" Ca*itol to ee% re#lari+#ation &ro, PBCM an" "e,an"e" t$ere#re"itin) o& it a##o!nt. PBCM &olloe" !it (/ "oin) t$e a,e a)aint PNB.De,an" !n$ee"e"it +le" an a#tion a)aint PBCM an" t$e latter +le" a t$ir"-*art/ #o,*laint a)aint*etitioner.

E3D:

An alteration i ai" to (e ,aterial i& it alter t$e ee#t o& t$e intr!,ent. t ,eanan !na!t$orie" #$an)e in t$e intr!,ent t$at *!r*ort to ,o"i&/ in an/ re*e#tt$e o(li)ation o& a *art/ or an !na!t$orie" a""ition o& or" or n!,(er orot$er #$an)e to an in#o,*lete intr!,ent relatin) to t$e o(li)ation o& t$e *art/.n ot$er or" a ,aterial alteration i one $i#$ #$an)e t$e ite, $i#$ arere0!ire" to (e tate" !n"er Se#tion 1 o& t$e N3.

n t$i #ae t$e alle)e" ,aterial alteration a t$e alteration o& t$e erial n!,(ero& t$e #$e#% in i!e7$i#$ i not an eential ele,ent o& a ne)otia(leintr!,ent !n"er Se#tion 1. PNB alle)e t$at t$e alteration a ,aterial in#e iti an a##e*te" #on#e*t t$at a TCAA #$e#% (/ it 'er/nat!re i t$e ,e"i!, o& e8#$an)e o& )o'ern,ent intr!,entalitie an"a)en#ie. A a a&et/ ,ea!re e'er/ )o'ern,ent o#e or a)en#/ iai)ne" #$e#% (earin) "ierent erial n!,(er.

B!t t$i #ontention $a to &ail. T$e #$e#% erial n!,(er i not t$e ole in"i#ia o&it ori)in. T$e na,e o& t$e )o'ern,ent a)en#/ i!in) t$e #$e#% i #learl/ tate"t$erein. T$! t$e #$e#% "raer i !#ientl/ i"enti+e" ren"erin) re"!n"ant t$ere&erral to it erial n!,(er.

T$ere&ore t$ere (ein) no ,aterial alteration in t$e #$e#% #o,,itte" PNB #o!l" notret!rn t$e #$e#% to PBCM. t $o!l" *a/ t$e a,e.


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Re*!(li# o& t$e P$ili**ineS;PREME C;RT

Manila

TRD DVSN

NC. *etitioner'.C;RT F APPEA3S an" P3PPNE NATNA3 BAN> re*on"ent.

D E C S N

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T$e Cae

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A&ter 24 $o!r &ro, !(,iion o& t$e #$e#% to re*on"ent &or #learin) *etitioner*ai" t$e 'al!e o& t$e #$e#% an" alloe" t$e it$"raal o& t$e "e*oit. oe'eron 14 #to(er 191 re*on"ent ret!rne" all t$e #$e#% to *etitioner it$o!t#learin) t$e, on t$e )ro!n" t$at t$e/ ere ,ateriall/ altere". T$! *etitionerintit!te" an a#tion &or #olle#tion o& !, o& ,one/ a)aint re*on"ent to re#o'ert$e 'al!e o& t$e #$e#%.

T$e R!lin) o& t$e Trial Co!rt

T$e trial #o!rt r!le" t$at re*on"ent i e8*e#te" to !e reaona(le (!ine

*ra#ti#e in a##e*tin) an" *a/in) t$e #$e#% *reente" to it. T$! re*on"ent#annot (e &a!lte" &or t$e "ela/ in #learin) t$e #$e#% #oni"erin) t$e in)en!it/ in$i#$ t$e alteration ere ee#te". T$e trial #o!rt o(er'e" t$at t$ere a noatte,*t &ro, *etitioner to 'eri&/ t$e tat! o& t$e #$e#% (e&ore *etitioner *ai" t$e'al!e o& t$e #$e#% or alloe" it$"raal o& t$e "e*oit. A##or"in) to t$e trial#o!rt *etitioner a #olle#tin) (an% #o!l" $a'e in0!ire" (/ tele*$one &ro,re*on"ent a "raee (an% a(o!t t$e tat! o& t$e #$e#% (e&ore *a/in) t$eir'al!e. Sin#e t$e i,,e"iate #a!e o& *etitioner lo a t$e la#% o& #a!tion o& it*eronnel t$e trial #o!rt $el" t$at *etitioner i not entitle" to re#o'er t$e 'al!e o&t$e #$e#% &ro, re*on"ent.

T$e "i*oiti'e *ortion o& t$e trial #o!rt De#iion rea":

GEREFRE H!"),ent i $ere(/ ren"ere" "i,iin) (ot$ t$e #o,*laint an" t$e#o!nter#lai,. Cot $all $oe'er (e aee" a)aint t$e *lainti.

S RDERED.@

Petitioner a**eale" t$e trial #o!rt De#iion (e&ore t$e Co!rt o& A**eal.

T$e R!lin) o& t$e Co!rt o& A**eal

n it 1= #to(er 1991 De#iion t$e Co!rt o& A**eal re'ere" t$e trial #o!rtDe#iion. A**l/in) Se#tion 4# o& Central Ban% Cir#!lar No. 5= erie o& 19@@9t$e Co!rt o& A**eal $el" t$at #$e#% t$at $a'e (een ,ateriall/ altere" $all (eret!rne" it$in 24 $o!r a&ter "i#o'er/ o& t$e alteration. oe'er t$e Co!rt o&A**eal r!le" t$at e'en i& t$e "raee (an% ret!rn a #$e#% it$ ,aterial alterationa&ter "i#o'er/ o& t$e alteration t$e ret!rn o!l" not relie'e t$e "raee (an% &ro,an/ lia(ilit/ &or it &ail!re to ret!rn t$e #$e#% it$in t$e 24-$o!r #learin) *erio".

T$e Co!rt o& A**eal e8*laine":


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Doe t$i ,ean t$at a lon) a t$e "raee (an% ret!rn a #$e#% it$ ,aterialalteration it$in 24 $o!rIJ a&ter "i#o'er/ o& !#$ alteration !#$ ret!rn o!l"$a'e t$e ee#t o& relie'in) t$e (an% o& an/ lia(ilit/ $atoe'er "e*ite it &ail!re toret!rn t$e #$e#% it$in t$e 24- $o!r #learin) $o!e r!leK

Ge "o not t$in% o.

('io!l/ !#$ (an% #annot (e $el" lia(le &or it &ail!re to ret!rn t$e #$e#% in0!etion not later t$an t$e ne8t re)!lar #learin). oe'er t$i Co!rt i o& t$eo*inion an" o $ol" t$at it #o!l" till (e $el" lia(le i& it &ail to e8er#ie "!e"ili)en#e in 'eri&/in) t$e alteration ,a"e. n ot$er or" !#$ (an% o!l" till (ee8*e#te" na/ re0!ire" to ,a%e t$e *ro*er 'eri+#ation (e&ore t$e 24-$o!r re)!lar#learin) *erio" la*e or in #ae $ere !#$ la*e ,a/ (e "ee,e" ine'ita(let$at t$e re0!ire" 'eri+#ation $o!l" (e ,a"e it$in a reaona(le ti,e.

T$e i,*li#ation o& t$e r!le t$at a #$e#% $all (e ret!rne" it$in t$e 24-$o!r #learin)*erio" i t$at i& t$e #olle#tin) (an% *ai" t$e #$e#% (e&ore t$e en" o& t$e a&oreai"24-$o!r #learin) *erio" it o!l" (e re*oni(le t$ere&or !#$ t$at i& t$e ai" #$e#%

i "i$onore" an" ret!rne" it$in t$e 24-$o!r #learin) *erio" t$e "raee (an%#annot (e $el" lia(le. Go!l" !#$ an i,*li#ation a**l/ in t$e #ae o& ,ateriall/altere" #$e#% ret!rne" it$in 24 $o!r a&ter "i#o'er/K T$i Co!rt +n" not$in) int$e letter o& t$e a(o'e-#ite" C.B. Cir#!lar t$at o!l" H!ti&/ a ne)ati'e aner.Nonet$ele t$e "raee (an% #o!l" till (e $el" lia(le in #ertain intan#e. E'en i&t$e ret!rn o& t$e #$e#%L in 0!etion i "one it$in 24 $o!r a&ter "i#o'er/ i& it #an(e $on t$at t$e "raee (an% $a" (een *atentl/ ne)li)ent in t$e *er&or,an#e o&it 'eri+#ation &!n#tion t$i Co!rt +n" no reaon $/ t$e ai" (an% $o!l" (erelie'e" o& lia(ilit/.

Alt$o!)$ (an%in) *ra#ti#e $a it t$at t$e *re!,*tion o& #learan#e i #on#l!i'e$en it #o,e to t$e a**li#ation o& t$e 24-$o!r #learin) *erio" t$e a,e *rin#i*le,a/ not (e a**lie" to t$e 24-$o!r *erio" 'i-a-'i ,aterial alteration in t$e enet$at t$e "raee (an% $i#$ ret!rn ,ateriall/ altere" #$e#% it$in 24 $o!r a&ter"i#o'er/ o!l" (e #on#l!i'el/ relie'e" o& an/ lia(ilit/ t$ereon. T$i i (e#a!et$ere #o!l" ell (e 'ario! inter'enin) e'ent or &a#tor t$at #o!l" ae#t t$e ri)$tan" o(li)ation o& t$e *artie in #ae !#$ a t$e intant one in#l!"in) *atentne)li)en#e on t$e *art o& t$e "raee (an% re!ltin) in an !nreaona(le "ela/ in"ete#tin) t$e alteration. G$ile it i tr!e t$at t$e *ertinent *ro'io in C.B. Cir#!larNo. 5= allo t$e "raee (an% to ret!rn t$e altere" #$e#% it$in t$e *erio"*ro'i"e" (/ la &or +lin) a le)al a#tion t$i "oe not ,ean t$at t$i o!l" entitleor allo t$e "raee (an% to (e )rol/ ne)li)ent an" in*ite t$ereo& a'ail itel& o&t$e ,a8i,!, *erio" alloe" (/ t$e a(o'e-#ite" Cir#!lar. T$e "i#o'er/ ,!t (e,a"e it$in a reaona(le ti,e ta%in) into #oni"eration t$e &a#t an"#ir#!,tan#e o& t$e #ae. n ot$er or" t$e a&ore,entione" C.B. Cir#!lar "oenot *ro'i"e t$e "raee (an% t$e li#ene to (e )rol/ ne)li)ent on t$e one $an"nor "oe it *re#l!"e t$e #olle#tin) (an% &ro, raiin) a'aila(le "e&ene e'en i& t$e#$e#% i *ro*erl/ ret!rne" it$in t$e 24-$o!r *erio" a&ter "i#o'er/ o& t$e ,aterialalteration.1=

T$e Co!rt o& A**eal reHe#te" t$e trial #o!rt o*inion t$at *etitioner #o!l" $a'e'eri+e" t$e tat! o& t$e #$e#% (/ tele*$one #all in#e !#$ i,*oition i not


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re0!ire" !n"er Central Ban% r!le. T$e "i*oiti'e *ortion o& t$e 1= #to(er 1991De#iion rea":

PREMSES CNSDERED t$e "e#iion a**eale" &ro, i $ere(/ REVERSED an" t$e"e&en"ant-a**ellee P$ili**ine National Ban% i "e#lare" lia(le &or t$e 'al!e o& t$e+&teen #$e#% *e#i+e" an" en!,erate" in t$e "e#iion o& t$e trial #o!rt *a)e in

t$e a,o!nt o& P144@92=.==

S RDERED.11

Re*on"ent +le" a ,otion &or re#oni"eration o& t$e 1= #to(er 1991 De#iion. nit 9 A!)!t 1994 A,en"e" De#iion t$e Co!rt o& A**eal re'ere" itel& an"ar,e" t$e De#iion o& t$e trial #o!rt "i,iin) t$e #o,*laint.

n re'erin) itel& t$e Co!rt o& A**eal $el" t$at it 1= #to(er 1991 De#iion &aile"to a**re#iate t$at t$e r!le on t$e ret!rn o& altere" #$e#% it$in 24 $o!r &ro, t$e"i#o'er/ o& t$e alteration $a" (een "!l/ *ae" (/ t$e Central Ban% an" a##e*te"(/ t$e ,e,(er o& t$e (an%in) /te,. ;ntil t$e r!le i re*eale" or a,en"e" t$e

r!le $a to (e a**lie".

Petitioner ,o'e" &or t$e re#oni"eration o& t$e A,en"e" De#iion. n it 16 ?!l/199@ Reol!tion t$e Co!rt o& A**eal "enie" t$e ,otion &or la#% o& ,erit.

en#e t$e re#o!re to t$i Co!rt.

T$e !e

Petitioner raie t$e &olloin) i!e in it Me,oran"!,:

1. G$et$er t$e #$e#% ere ,ateriall/ altere"

2. G$et$er re*on"ent a ne)li)ent in &ailin) to re#o)nie it$in a reaona(le*erio" t$e altere" #$e#% an" in not ret!rnin) t$e #$e#% it$in t$e *erio" an"

. G$et$er t$e ,otion &or re#oni"eration +le" (/ re*on"ent a o!t o& ti,e t$!,a%in) t$e 1= #to(er 1991 De#iion +nal an" e8e#!tor/.12

T$e R!lin) o& T$i Co!rt

Filin) o& t$e Petition !n"er (ot$ R!le 45 an" 65

Re*on"ent aert t$at t$e *etition $o!l" (e "i,ie" o!tri)$t in#e *etitionera'aile" o& a ron) ,o"e o& a**eal. Re*on"ent #ite (aOe '. Co!rt o& A**eal1$ere t$e Co!rt r!le" t$at a *etition #annot (e !(!,e" i,!ltaneo!l/ !n"erR!le 45 an" R!le 65 o& t$e R!le o& Co!rt an" neit$er ,a/ *etitioner "ele)ate!*on t$e #o!rt t$e ta% o& "eter,inin) !n"er $i#$ r!le t$e *etition $o!l" &all.

T$e re,e"ie o& a**eal an" #ertiorari are ,!t!all/ e8#l!i'e an" not alternati'e or!##ei'e.14 oe'er t$i Co!rt ,a/ et ai"e te#$ni#alit/ &or H!ti+a(le reaon.

T$e *etition (e&ore t$e Co!rt i #learl/ ,eritorio!. F!rt$er t$e *etition a +le" on


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ti,e (ot$ !n"er R!le 45 an" 65.15 en#e in a##or"an#e it$ t$e li(eral *irit$i#$ *er'a"e t$e R!le o& Co!rt an" in t$e interet o& H!ti#e16 e ill treat t$e*etition a $a'in) (een +le" !n"er R!le 45.

Alteration o& Serial N!,(er Not Material

T$e alteration in t$e #$e#% ere ,a"e on t$eir erial n!,(er.

Se#tion 124 an" 125 o& A#t No. 2=1 ot$erie %non a t$e Ne)otia(lentr!,ent 3a *ro'i"e:

SEC. 124. Alteration o& intr!,ent ee#t o&. G$ere a ne)otia(le intr!,ent i,ateriall/ altere" it$o!t t$e aent o& all *artie lia(le t$ereon it i a'oi"e"e8#e*t a a)aint a *art/ $o $a $i,el& ,a"e a!t$orie" or aente" to t$ealteration an" !(e0!ent in"orer.

B!t $en an intr!,ent $a (een ,ateriall/ altere" an" i in t$e $an" o& a $ol"erin "!e #o!re not a *art/ to t$e alteration $e ,a/ en&or#e *a/,ent t$ereo&

a##or"in) to it ori)inal tenor.

SEC. 125. G$at #ontit!te a ,aterial alteration. An/ alteration $i#$ #$an)e:

a T$e "ate

( T$e !, *a/a(le eit$er &or *rin#i*al or interet

# T$e ti,e or *la#e o& *a/,ent

" T$e n!,(er or t$e relation o& t$e *artie

e T$e ,e"i!, or #!rren#/ in $i#$ *a/,ent i to (e ,a"e

or $i#$ a"" a *la#e o& *a/,ent $ere no *la#e o& *a/,ent i *e#i+e" or an/ot$er #$an)e or a""ition $i#$ alter t$e ee#t o& t$e intr!,ent in an/ re*e#t ia ,aterial alteration.

T$e 0!etion on $et$er an alteration o& t$e erial n!,(er o& a #$e#% i a ,aterialalteration !n"er t$e Ne)otia(le ntr!,ent 3a i alrea"/ a ettle" ,atter. nP$ili**ine National Ban% '. Co!rt o& A**eal t$i Co!rt r!le" t$at t$e alteration ont$e erial n!,(er o& a #$e#% i not a ,aterial alteration. T$!:

An alteration i ai" to (e ,aterial i& it alter t$e ee#t o& t$e intr!,ent. t ,eanan !na!t$orie" #$an)e in an intr!,ent t$at *!r*ort to ,o"i&/ in an/ re*e#t t$eo(li)ation o& a *art/ or an !na!t$orie" a""ition o& or" or n!,(er or ot$er#$an)e to an in#o,*lete intr!,ent relatin) to t$e o(li)ation o& a *art/. n ot$eror" a ,aterial alteration i one $i#$ #$an)e t$e ite, $i#$ are re0!ire" to(e tate" !n"er Se#tion 1 o& t$e Ne)otia(le ntr!,entIJ 3a.

Se#tion 1 o& t$e Ne)otia(le ntr!,ent 3a *ro'i"e:


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12/32

Ti,eline o& Filin) o& Re*on"ent Motion &or Re#oni"eration

Re*on"ent +le" it ,otion &or re#oni"eration o& t$e 1= #to(er 1991 De#iion on6 No'e,(er 1991. Re*on"ent ,otion &or re#oni"eration tate t$at it re#ei'e" a#o*/ o& t$e 1= #to(er 1991 De#iion on 22 #to(er 1991.1 T$! it a**ear t$at

t$e ,otion &or re#oni"eration a +le" on ti,e. oe'er t$e Re)itr/ Ret!rnRe#ei*t $o t$at #o!nel &or re*on"ent or $i a)ent re#ei'e" a #o*/ o& t$e 1=#to(er 1991 De#iion on 16 #to(er 199119 not on 22 #to(er 1991 are*on"ent #lai,e". en#e t$e Co!rt o& A**eal i #orre#t $en it note" t$at t$e,otion &or re#oni"eration a +le" late. De*ite it late +lin) t$e Co!rt o& A**ealreol'e" to a",it t$e ,otion &or re#oni"eration in t$e interet o& !(tantial

H!ti#e.2=

T$ere are intan#e $en r!le o& *ro#e"!re are rela8e" in t$e interet o& H!ti#e.oe'er in t$i #ae re*on"ent "i" not *roer an/ e8*lanation &or t$e late +lin)o& t$e ,otion &or re#oni"eration. ntea" t$ere a a "eli(erate atte,*t to"e#ei'e t$e Co!rt o& A**eal (/ #lai,in) t$at t$e #o*/ o& t$e 1= #to(er 1991

De#iion a re#ei'e" on 22 #to(er 1991 intea" o& on 16 #to(er 1991. Ge +n"no H!ti+#ation &or t$e *ot!re ta%en (/ t$e Co!rt o& A**eal in a",ittin) t$e,otion &or re#oni"eration. T$! t$e late +lin) o& t$e ,otion &or re#oni"erationren"ere" t$e 1= #to(er 1991 De#iion +nal an" e8e#!tor/.

T$e 24-o!r Clearin) Ti,e

T$e Co!rt ill not r!le on t$e *ro*er a**li#ation o& Central Ban% Cir#!lar No. 5= int$i #ae. Sin#e t$ere ere no ,aterial alteration on t$e #$e#% re*on"ent a"raee (an% $a no ri)$t to "i$onor t$e, an" ret!rn t$e, to *etitioner t$e#olle#tin) (an%.21 T$! re*on"ent i lia(le to *etitioner &or t$e 'al!e o& t$e#$e#% it$ le)al interet &ro, t$e ti,e o& +lin) o& t$e #o,*laint on 16 Mar#$ 192!ntil &!ll *a/,ent.22 F!rt$er #oni"erin) t$at re*on"ent ,otion &orre#oni"eration a +le" late t$e 1= #to(er 1991 De#iion $i#$ $el" re*on"entlia(le &or t$e 'al!e o& t$e #$e#% a,o!ntin) to P144@92= $a" (e#o,e +nal an"e8e#!tor/.

GEREFRE e SET ASDE t$e 9 A!)!t 1994 A,en"e" De#iion an" t$e 16 ?!l/199@ Reol!tion o& t$e Co!rt o& A**eal. Ge r!le t$at re*on"ent P$ili**ine NationalBan% i lia(le to *etitioner nternational Cor*orate Ban% n#. &or t$e 'al!e o& t$e#$e#% a,o!ntin) to P144@92= it$ le)al interet &ro, 16 Mar#$ 192 !ntil &!ll*a/,ent. Cot a)aint re*on"ent.

S RDERED.

Q!i!,(in) C$air*eron Car*io-Morale Tin)a Vela#o ?r. ?.?. #on#!r.


13/32

FRST DVSNBAN> F AMERCA NT SAPetitioner

-'er!-

P3PPNE RACN< C3;BRe*on"ent.


14/32

8-----------------------------------------------------------------------------------------8D E C S N3ENARD-DE CASTR ?.:

T$i i a *etition &or re'ie on #ertiorari !n"er R!le 45 o& t$e R!le o& Co!rt &ro,t$e De#iionI1J *ro,!l)ate" on ?!l/ 16 2==1 (/ t$e &or,er Se#on" Di'iion o& t$eCo!rt o& A**eal CA in CA-


15/32

ta%en le t$an ten 1= ,in!te. B!t t$i a not "one (/ BA. n'eti)ation#on"!#te" (/ *lainti-a**ellee #or*oration /iel"e" t$e &a#t t$at t$ere a notrana#tion in'ol'in) PRC t$at #all &or t$e *a/,ent o& P22====.== to an/one. T$e#$e#% a**eare" to $a'e #o,e into t$e $an" o& an e,*lo/ee o& PRC one ClaritaMeina $o a !(e0!entl/ #ri,inall/ #$ar)e" &or 0!ali+e" t$e&t $o e'ent!all/#o,*lete" it$o!t a!t$orit/ t$e entrie on t$e *re-i)ne" #$e#%. PRC "e,an" &or

"e&en"ant-a**ellant to *a/ &ell on "ea& ear. en#e t$e #o,*laint.I4JA&ter "!e *ro#ee"in) t$e trial #o!rt ren"ere" a De#iion in &a'or o& re*on"entt$e "i*oiti'e *ortion o& $i#$ rea":PREMSES CNSDERED H!"),ent i $ere(/ ren"ere" in &a'or o& *lainti an"a)aint t$e "e&en"ant an" t$e latter i or"ere" to *a/ *lainti:1 T$e !, o& To !n"re" Tent/ T$o!an" P22====.== Peo it$le)al interet to (e #o,*!te" &ro, "ate o& t$e +lin) o& t$e $erein #o,*laint2 T$e !, o& Tent/ T$o!an" P2====.== Peo (/ a/ o& attorne/&ee T$e !, o& Ten T$o!an" P1====.== Peo &or liti)ation e8*ene

an"4 To *a/ t$e #ot o& !it.S RDERED.I5JPetitioner a**eale" t$e a&oreai" trial #o!rt De#iion to t$e CA $i#$ $oe'erar,e" ai" "e#iion in toto in it ?!l/ 16 2==1 De#iion. Petitioner Motion &orRe#oni"eration o& t$e CA De#iion a !(e0!entl/ "enie" on Se*te,(er 22==1.Petitioner no #o,e (e&ore t$i Co!rt ar)!in) t$at:. T$e Co!rt o& A**eal )ra'el/ erre" in $ol"in) t$at t$e *ro8i,ate #a!eo& re*on"ent lo a *etitioner en#a$,ent o& t$e #$e#%.A. T$e Co!rt o& A**eal )ra'el/ erre" in $ol"in) t$at *etitioner a lia(le &or t$ea,o!nt o& t$e #$e#% "e*ite t$e &a#t t$at *etitioner a ,erel/ &!l+llin) ito(li)ation !n"er la an" #ontra#t.B. T$e Co!rt o& A**eal )ra'el/ erre" in $ol"in) t$at *etitioner $a" a "!t/ to'eri&/ t$e en#a$,ent "e*ite t$e a(en#e o& an/ o(li)ation to "o o.C. T$e Co!rt o& A**eal )ra'el/ erre" in not a**l/in) Se#tion 14 o& t$eNe)otia(le ntr!,ent 3a "e*ite it #lear a**li#a(ilit/ to t$i #ae. T$e Co!rt o& A**eal )ra'el/ erre" in not $ol"in) t$at t$e *ro8i,ate#a!e o& re*on"ent lo a it on )rol/ ne)li)ent *ra#ti#e o& *re-i)nin)#$e#% it$o!t *a/ee an" a,o!nt an" "eli'erin) t$ee *re-i)ne" #$e#% to ite,*lo/ee ot$er t$an t$eir i)natorie.. T$e Co!rt o& A**eal )ra'el/ erre" in ar,in) t$e trial #o!rt aar" o&attorne/ &ee "e*ite t$e a(en#e o& an/ a**li#a(le )ro!n" !n"er Arti#le 22= o&t$e Ci'il Co"e.


16/32

V. T$e Co!rt o& A**eal )ra'el/ erre" in not aar"in) attorne/ &ee ,oralan" e8e,*lar/ "a,a)e an" #ot o& !it in &a'or o& *etitioner $o #learl/"eer'e t$e,.I6JFro, t$e "i#!ion o& (ot$ *artie in t$eir *lea"in) t$e %e/ i!e to (e reol'e"in t$e *reent #ae i $et$er t$e *ro8i,ate #a!e o& t$e ron)&!l en#a$,ent o&

t$e #$e#% in 0!etion a "!e to a *etitioner &ail!re to ,a%e a 'eri+#ationre)ar"in) t$e ai" #$e#% it$ t$e re*on"ent in 'ie o& t$e ,i*la#e,ent o&entrie on t$e &a#e o& t$e #$e#% or ( t$e *ra#ti#e o& t$e re*on"ent o& *re-i)nin)(lan% #$e#% an" lea'in) t$e a,e it$ it e,*lo/ee.Petitioner init t$at it ,erel/ &!l+lle" it o(li)ation !n"er la an" #ontra#t $en iten#a$e" t$e a&oreai" #$e#%. n'o%in) Se#tion 126I@J an" 15IJ o& t$eNe)otia(le ntr!,ent 3a N3 *etitioner #lai, t$at it "!t/ a a "raee (an%to a "raer-#lient ,aintainin) a #$e#%in) a##o!nt it$ it i to *a/ or"er &or #$e#%(earin) t$e "raer-#lient )en!ine i)nat!re. T$e )en!ine i)nat!re o& t$e #lient"!l/ a!t$orie" i)natorie a8e" on t$e #$e#% i)ni&/ t$e or"er &or *a/,ent.

T$! *!r!ant to t$e ai" o(li)ation t$e "raee (an% $a t$e "!t/ to "eter,ine

$et$er t$e i)nat!re a**earin) on t$e #$e#% are t$e "raer-#lient or it "!l/a!t$orie" i)natorie. & t$e i)nat!re are )en!ine t$e (an% $a t$e !na'oi"a(lele)al an" #ontra#t!al "!t/ to *a/. & t$e i)nat!re are &or)e" an" &ali+e" t$e"raee (an% $a t$e #orollar/ (!t e0!all/ !na'oi"a(le le)al an" #ontra#t!al "!t/not to *a/.I9JF!rt$er,ore *etitioner ,aintain t$at t$ere e8it a "!t/ on t$e "raee (an% toin0!ire &ro, t$e "raer (e&ore en#a$in) a #$e#% onl/ $en t$e #$e#% (ear a,aterial alteration. A ,aterial alteration i "e+ne" in Se#tion 125 o& t$e N3 to (eone $i#$ #$an)e t$e "ate t$e !, *a/a(le t$e ti,e or *la#e o& *a/,ent t$en!,(er or relation o& t$e *artie t$e #!rren#/ in $i#$ *a/,ent i to (e ,a"e orone $i#$ a"" a *la#e o& *a/,ent $ere no *la#e o& *a/,ent i *e#i+e" or an/ot$er #$an)e or a""ition $i#$ alter t$e ee#t o& t$e intr!,ent in an/ re*e#t.Git$ re*e#t to t$e #$e#% at i!e *etitioner *oint o!t t$at t$e/ "o not #ontainan/ ,aterial alteration.I1=J T$i i a &a#t $i#$ a ar,e" (/ t$e trial #o!rt itel&.I11J

T$ere i no "i*!te t$at t$e i)nat!re a**earin) on t$e !(He#t #$e#% ere)en!ine i)nat!re o& t$e re*on"ent a!t$orie" Hoint i)natorie na,el/ AntoniaRe/e an"


17/32

t i ell-ettle" t$at (an% are en)a)e" in a (!ine i,*ree" it$ *!(li#interet an" it i t$eir "!t/ to *rote#t in ret!rn t$eir ,an/ #lient an" "e*oitor$o trana#t (!ine it$ t$e,. T$e/ $a'e t$e o(li)ation to treat t$eir #lienta##o!nt ,eti#!lo!l/ an" it$ t$e $i)$et "e)ree o& #are #oni"erin) t$e +"!#iar/nat!re o& t$eir relation$i*. T$e "ili)en#e re0!ire" o& (an% t$ere&ore i ,ore t$ant$at o& a )oo" &at$er o& a &a,il/.I12J

Petitioner aert t$at it a not "!t/-(o!n" to 'eri&/ it$ t$e re*on"ent in#e t$ea,o!nt (elo t$e t/*eritten or" CAS e8*ree" in or" i t$e 'er/ a,ea,o!nt in"i#ate" in +)!re (/ ,ean o& a #$e#% riter on t$e a,o!nt *ortion o& t$e#$e#%. T$e a,o!nt tate" in or" i t$ere&ore a ,ere reiteration o& t$e a,o!nttate" in +)!re. Petitioner e,*$aie t$at a reiteration o& t$e a,o!nt in or" i,erel/ a re*etition an" t$at a re*etition i not an alteration $i#$ i& *reent an",aterial o!l" $a'e enHoine" it to #o,,en#e 'eri+#ation it$ re*on"ent.I1JGe "o not a)ree it$ *etitioner ,/o*i# 'ie an" #are&!ll/ #ra&te" "e&ene.Alt$o!)$ not in t$e tri#t ene ,aterial alteration t$e ,i*la#e,ent o& t$et/*eritten entrie &or t$e *a/ee an" t$e a,o!nt on t$e a,e (lan% an" t$e

re*etition o& t$e a,o!nt !in) a #$e#% riter ere )larin)l/ o('io! irre)!laritieon t$e &a#e o& t$e #$e#%. Clearl/ o,eone ,a"e a ,ita%e in +llin) !* t$e #$e#%an" t$e re*etition o& t$e entrie a *oi(l/ an atte,*t to re#ti&/ t$e ,ita%e.Alo i& t$e #$e#% $a" (een +lle" !* (/ t$e *eron $o #!to,aril/ a##o,*li$et$e #$e#% o& re*on"ent it $o!l" $a'e o##!rre" to *etitioner e,*lo/ee t$at ito!l" (e !nli%el/ !#$ ,ita%e o!l" (e ,a"e. All t$ee #ir#!,tan#e $o!l"$a'e alerte" t$e (an% to t$e *oi(ilit/ t$at t$e $ol"er or t$e *eron $o iatte,*tin) to en#a$ t$e #$e#% "i" not $a'e *ro*er title to t$e #$e#% or "i" not$a'e a!t$orit/ to +ll !* an" en#a$ t$e a,e. A note" (/ t$e CA *etitioner #o!l"$a'e ,a"e a i,*le *$one #all to it #lient to #lari&/ t$e irre)!laritie an" t$e loto re*on"ent "!e to t$e en#a$,ent o& t$e tolen #$e#% o!l" $a'e (een*re'ente".n t$e #ae at (ar e8traor"inar/ "ili)en#e "e,an" t$at *etitioner $o!l" $a'ea#ertaine" &ro, re*on"ent t$e a!t$enti#it/ o& t$e !(He#t #$e#% or t$e a##!ra#/o& t$e entrie t$erein not onl/ (e#a!e o& t$e *reen#e o& $i)$l/ irre)!lar entrie ont$e &a#e o& t$e #$e#% (!t alo o& t$e "e#i"e"l/ !n!!al #ir#!,tan#e !rro!n"in)t$eir en#a$,ent. Re*on"ent itne teti+e" t$at &or #$e#% in a,o!nt )reatert$an Tent/ T$o!an" Peo P2====.== it i t$e #o,*an/ *ra#ti#e to en!re t$att$e *a/ee i in"i#ate" (/ na,e in t$e #$e#%.I14J T$i a not re(!tte" (/*etitioner. n"ee" it i $i)$l/ !n#o,,on &or a #or*oration to ,a%e o!t #$e#%*a/a(le to CAS &or !(tantial a,o!nt !#$ a in t$i #ae. & ea#$ irre)!lar#ir#!,tan#e in t$i #ae ere ta%en in)l/ or iolate" t$e (an% e,*lo/ee ,i)$t$a'e (een H!ti+e" in i)norin) t$e,. oe'er t$e #on!en#e o& t$e irre)!laritieon t$e &a#e o& t$e #$e#% an" #ir#!,tan#e t$at "e*art &ro, t$e !!al (an%in)*ra#ti#e o& re*on"ent $o!l" $a'e *!t *etitioner e,*lo/ee on )!ar" t$at t$e#$e#% ere *oi(l/ not i!e" (/ t$e re*on"ent in "!e #o!re o& it (!ine.Petitioner !(tle o*$itr/ #annot e8#!l*ate it &ro, (e$a'ior t$at &ell e8tre,el/$ort o& t$e $i)$et "e)ree o& #are an" "ili)en#e re0!ire" o& it a a (an%in)intit!tion.


18/32

n"ee" ta%in) t$i it$ t$e teti,on/ o& *etitioner o*eration ,ana)er t$at in#ae o& an irre)!larit/ on t$e &a#e o& t$e #$e#% !#$ a $en (lan% ere not*ro*erl/ +lle" o!t t$e (an% ,a/ or ,a/ not #all t$e #lient "e*en"in) on $o (!/t$e (an% i on a *arti#!lar "a/I15J e are e'en ,ore #on'in#e" t$at *etitionera&e)!ar" to *rote#t #lient &ro, #$e#% &ra!" are ar(itrar/ an" !(He#ti'e. E'er/#lient $o!l" (e treate" e0!all/ (/ a (an%in) intit!tion re)ar"le o& t$e a,o!nt o&

$i "e*oit an" ea#$ #lient $a t$e ri)$t to e8*e#t t$at e'er/ #enta'o $e entr!tto a (an% o!l" (e $an"le" it$ t$e a,e "e)ree o& #are a t$e a##o!nt o& ot$er#lient. Per&or#e e +n" t$at *etitioner *lainl/ &aile" to a"$ere to t$e $i)$ tan"ar"o& "ili)en#e e8*e#te" o& it a a (an%in) intit!tion.n "e&ene o& it #a$ierLteller 0!etiona(le a#tion *etitioner init t$at *!r!antto Se#tion 14I16J an" 16I1@J o& t$e N3 it #o!l" 'ali"l/ *re!,e !*on*reentation o& t$e #$e#% t$at t$e *art/ $o +lle" !* t$e (lan% $a" a!t$orit/ an"t$at a 'ali" an" intentional "eli'er/ to t$e *art/ *reentin) t$e #$e#% $a" ta%en*la#e. T$! in *etitioner 'ie t$e ole (la,e &or t$i "e(a#le $o!l" (e $i&te" tore*on"ent &or $a'in) it i)natorie *re-i)n an" "eli'er t$e !(He#t #$e#%.I1JPetitioner ar)!e t$at t$ere a in"ee" "eli'er/ in t$i #ae (e#a!e &olloin)

A,eri#an H!ri*r!"en#e t$e )ro ne)li)en#e o& re*on"ent a##o!ntant ina&e%ee*in) t$e !(He#t #$e#% $i#$ re!lte" in t$eir t$e&t $o!l" (e treate" a a'ol!ntar/ "eli'er/ (/ t$e ,a%er $o i eto**e" &ro, #lai,in) non-"eli'er/ o& t$eintr!,ent.I19JPetitioner #ontention o!l" $a'e (een #orre#t i& t$e !(He#t #$e#% ere #orre#tl/an" *ro*erl/ +lle" o!t (/ t$e t$ie& an" *reente" to t$e (an% in )oo" or"er. n t$atintan#e t$ere o!l" (e not$in) to )i'e noti#e to t$e (an% o& an/ in+r,it/ in t$etitle o& t$e $ol"er o& t$e #$e#% an" it #o!l" 'ali"l/ *re!,e t$at t$ere a *ro*er"eli'er/ to t$e $ol"er. T$e (an% #o!l" not (e &a!lte" i& it en#a$e" t$e #$e#% !n"ert$oe #ir#!,tan#e. oe'er t$e !n"i*!te" &a#t *lainl/ $o t$at t$ere ere#ir#!,tan#e t$at $o!l" $a'e alerte" t$e (an% to t$e li%eli$oo" t$at t$e #$e#%ere not *ro*erl/ "eli'ere" to t$e *eron $o en#a$e" t$e a,e. n all e ee noreaon to "e*art &ro, t$e +n"in) in t$e aaile" CA De#iion t$at t$e !(He#t#$e#% are *ro*erl/ #$ara#terie" a in#o,*lete an" !n"eli'ere" intr!,ent t$!,a%in) Se#tion 15I2=J o& t$e N3 a**li#a(le in t$i #ae.oe'er e "o a)ree it$ *etitioner t$at re*on"ent o#er *ra#ti#e o& *re-i)nin) o& (lan% #$e#% $o!l" (e "ee,e" erio!l/ ne)li)ent (e$a'ior an" a $i)$l/ri%/ ,ean o& *!r*orte"l/ en!rin) t$e e#ient o*eration o& (!inee. t $o!l"$a'e o##!rre" to re*on"ent o#er an" ,ana)er t$at t$e *re-i)ne" (lan%#$e#% #o!l" &all into t$e ron) $an" a t$e/ "i" in t$i #ae $ere t$e ai"#$e#% ere tolen &ro, t$e #o,*an/ a##o!ntant to $o, t$e #$e#% ereentr!te".Ne'ert$ele e'en i& e a!,e t$at (ot$ *artie ere )!ilt/ o& ne)li)ent a#t t$atle" to t$e lo *etitioner ill till e,er)e a t$e *art/ &ore,ot lia(le in t$i #ae. nintan#e $ere (ot$ *artie are at &a!lt t$i Co!rt $a #onitentl/ a**lie" t$e"o#trine o& lat #lear #$an#e in or"er to ai)n lia(ilit/.n Get,ont Ban% '. n)I21J e r!le":


19/32

IJt i *etitioner I(an%J $i#$ $a" t$e lat #lear #$an#e to to* t$e &ra!"!lenten#a$,ent o& t$e !(He#t #$e#% $a" it e8er#ie" "!e "ili)en#e an" &olloe" t$e*ro*er an" re)!lar (an%in) *ro#e"!re in #learin) #$e#%. A e $a" earlier r!le"t$e one $o $a" a lat #lear o**ort!nit/ to a'oi" t$e i,*en"in) $ar, (!t &aile" to"o o i #$ar)ea(le it$ t$e #one0!en#e t$ereo&.I22J e,*$ai o!r

n t$e #ae at (ar *etitioner #annot e'a"e re*oni(ilit/ &or t$e lo (/ attri(!tin)ne)li)en#e on t$e *art o& re*on"ent (e#a!e e'en i& e #on#!r t$at t$e latter ain"ee" ne)li)ent in *re-i)nin) (lan% #$e#% t$e &or,er $a" t$e lat #lear #$an#eto a'oi" t$e lo. To reiterate *etitioner on o*eration ,ana)er a",itte" t$att$e/ #o!l" $a'e #alle" !* t$e #lient &or 'eri+#ation or #on+r,ation (e&ore $onorin)t$e "!(io! #$e#%. Veril/ *etitioner $a" t$e +nal o**ort!nit/ to a'ert t$e inH!r/t$at (e&ell t$e re*on"ent. Failin) to ,a%e t$e ne#ear/ 'eri+#ation "!e to t$e'ol!,e o& (an%in) trana#tion on t$at *arti#!lar "a/ i a i,/ an" !na##e*ta(lee8#!e #oni"erin) t$at t$e (an%in) (!ine i o i,*ree" it$ *!(li# interet$ere t$e tr!t an" #on+"en#e o& t$e *!(li# in )eneral i o& *ara,o!nt i,*ortan#e!#$ t$at t$e a**ro*riate tan"ar" o& "ili)en#e ,!t (e a $i)$ "e)ree o& "ili)en#ei& not t$e !t,ot "ili)en#e.I2J Petitioner ne)li)en#e $a (een !n"o!(te"l/

eta(li$e" an" t$! *!r!ant to Art. 11@= o& t$e NCCI24J it ,!t !er t$e#one0!en#e o& ai" ne)li)en#e.n t$e interet o& &airne $oe'er e (elie'e it i *ro*er to #oni"er re*on"enton ne)li)en#e to ,iti)ate *etitioner lia(ilit/. Arti#le 21@9 o& t$e Ci'il Co"e*ro'i"e:Art. 21@9. G$en t$e *lainti on ne)li)en#e a t$e i,,e"iate an" *ro8i,ate#a!e o& $i inH!r/ $e #annot re#o'er "a,a)e. B!t i& $i ne)li)en#e a onl/#ontri(!tor/ t$e i,,e"iate an" *ro8i,ate #a!e o& t$e inH!r/ (ein) t$e "e&en"antla#% o& "!e #are t$e *lainti ,a/ re#o'er "a,a)e (!t t$e #o!rt $all ,iti)atet$e "a,a)e to (e aar"e".E8*lainin) t$i *ro'iion in 3a,(ert '. eir o& Ra/ CatillonI25J t$e Co!rt $el":

T$e !n"erl/in) *re#e*t on #ontri(!tor/ ne)li)en#e i t$at a *lainti $o i *artl/re*oni(le &or $i on inH!r/ $o!l" not (e entitle" to re#o'er "a,a)e in &!ll (!t,!t (ear t$e #one0!en#e o& $i on ne)li)en#e. T$e "e&en"ant ,!t t$! (e$el" lia(le onl/ &or t$e "a,a)e a#t!all/ #a!e" (/ $i ne)li)en#e. 888 888 888A e *re'io!l/ tate" re*on"ent *ra#ti#e o& i)nin) #$e#% in (lan% $ene'erit a!t$orie" (an% i)natorie o!l" tra'el a(roa" a a "an)ero! *oli#/e*e#iall/ #oni"erin) t$e la#% o& e'i"en#e on re#or" t$at re*on"ent $a"a**ro*riate a&e)!ar" or internal #ontrol to *re'ent t$e *re-i)ne" (lan% #$e#%&ro, &allin) into t$e $an" o& !n#r!*!lo! in"i'i"!al an" (ein) !e" to #o,,it a&ra!" a)aint t$e #o,*an/. Ge #annot (elie'e t$at t$ere a no ot$er e#!re an"reaona(le a/ to )!arantee t$e non-"ir!*tion o& re*on"ent (!ine. Ateti+e" to (/ *etitioner e8*ert itne ot$er #or*oration o!l" or"inaril/ $a'eanot$er et o& a!t$orie" (an% i)natorie $o o!l" (e a(le to i)n #$e#% in t$ea(en#e o& t$e *re&erre" i)natorie.I26J n"ee" i& not &or t$e &ort!nate$a**entan#e t$at t$e t$ie& &aile" to *ro*erl/ +ll !* t$e !(He#t #$e#% re*on"ento!l" e8*e#te"l/ ta%e t$e (la,e &or t$e entire lo in#e t$e "e&ene o& &or)er/ o& a


20/32

"raer i)nat!re o!l" (e !na'aila(le to it. Coni"erin) t$at re*on"ent%noin)l/ too% t$e ri% t$at t$e *re-i)ne" (lan% #$e#% ,i)$t &all into t$e $an" o&ron)"oer it i (!t H!t t$at re*on"ent $are in t$e re*oni(ilit/ &or t$e lo.Ge alo #annot i)nore t$e &a#t t$at t$e *eron $o tole t$e *re-i)ne" #$e#%!(He#t o& t$i #ae &ro, re*on"ent a##o!ntant t!rne" o!t to (e anot$er

e,*lo/ee *!r*orte"l/ a #ler% in re*on"ent a##o!ntin) "e*art,ent. A t$ee,*lo/er o& t$e t$ie& re*on"ent !**oe"l/ $a" #ontrol an" !*er'iion o'er iton e,*lo/ee. T$i )i'e t$e Co!rt ,ore reaon to allo#ate *art o& t$e lo tore*on"ent.Folloin) eta(li$e" H!ri*r!"ential *re#e"entI2@J e (elie'e t$e allo#ation o&i8t/ *er#ent 6= o& t$e a#t!al "a,a)e in'ol'e" in t$i #ae re*reente" (/ t$ea,o!nt o& t$e #$e#% it$ le)al interet to *etitioner i *ro*er !n"er t$e *re,ie.Re*on"ent $o!l" in li)$t o& it #ontri(!tor/ ne)li)en#e (ear &ort/ *er#ent 4=o& it on lo.Finall/ e +n" t$at t$e aar" o& attorne/ &ee an" liti)ation e8*ene in &a'or o&

re*on"ent are not H!ti+e" !n"er t$e #ir#!,tan#e an" t$! ,!t (e "elete".T$e *oer o& t$e #o!rt to aar" attorne/ &ee an" liti)ation e8*ene !n"er Arti#le22= o& t$e NCCI2J "e,an" &a#t!al le)al an" e0!ita(le H!ti+#ation.An a"'ere "e#iion "oe not i*o &a#to H!ti&/ an aar" o& attorne/ &ee to t$einnin) *art/.I29J E'en $en a #lai,ant i #o,*elle" to liti)ate it$ t$ir" *eronor to in#!r e8*ene to *rote#t $i ri)$t till attorne/ &ee ,a/ not (e aar"e"$ere no !#ient $oin) o& (a" &ait$ #o!l" (e ree#te" in a *art/ *eriten#e ina #ae ot$er t$an an erroneo! #on'i#tion o& t$e ri)$teo!ne o& $i #a!e.I=JGEREFRE t$e De#iion o& t$e Co!rt o& A**eal "ate" ?!l/ 16 2==1 an" itReol!tion "ate" Se*te,(er 2 2==1 are AFFRMED it$ t$e &olloin)MDFCATNS: a *etitioner Ban% o& A,eri#a NT SA $all *a/ to re*on"entP$ili**ine Ra#in) Cl!( i8t/ *er#ent 6= o& t$e !, o& To !n"re" Tent/

T$o!an" Peo P22====.== it$ le)al interet a aar"e" (/ t$e trial #o!rt an"( t$e aar" o& attorne/ &ee an" liti)ation e8*ene in &a'or o& re*on"ent are"elete".


21/32

FRST DVSN


22/32

$an"Poten#iano #o!ntere" t$at $e a *re'aile" !*on to a##e*t t$e #$e#% (/ a/o& a##o,,o"ation o& *etitioner $o ere 'al!e" #lient o& t$e Ban%.5

n Ma/ 2=== *etitioner "e*oite" t$e ai" #$e#% in t$eir a'in) a##o!nt it$t$e Ban%. T$e Ban% int!rn "e*oite" t$e #$e#% it$ it "e*oitar/ (an%E0!ita(le-PC Ban% in BiOan3a)!na. E0!ita(le-PC Ban% *reente" t$e #$e#% to

t$e "raee t$e P$ili**ine Veteran Ban% $i#$ $onore" t$e #$e#%.

n 6 Ma/ 2=== Poten#iano in&or,e"*etitioner t$at t$e #$e#% t$e/ "e*oite" it$t$e Ban% ere$onore". e alle)e"l/ arne" *etitioner t$at t$e #learin) o& t$e#$e#% *ertaine" onl/ to t$e a'aila(ilit/ o& &!n" an" "i" not ,ean t$at t$e #$e#%ere not in+r,e".6 T$! t$e entire a,o!nt o& P1=====.== a #re"ite" to*etitioner a'in) a##o!nt. Bae" on t$i in&or,ation *etitioner releae" t$e to#ar to t$e (!/er.

So,eti,e in ?!l/ 2=== t$e !(He#t#$e#% ere ret!rne" (/ PVA to t$e "raee ont$e )ro!n" t$at t$e a,o!nt on t$e &a#e o& t$e #$e#% a altere" &ro, t$e ori)inala,o!nt o& P4===.== to P2=====.==. T$e "raee ret!rne" t$e #$e#% to E0!ita(le-

PC Ban% (/ a/ o& S*e#ial Clearin) Re#ei*t. n A!)!t 2=== t$e Ban% ain&or,e" (/ E0!ita(le-PC Ban% t$at t$e "raee "i$onore" t$e #$e#% ont$e)ro!n" o& ,aterial alteration. E0!ita(le-PC Ban% initiall/ +le" a *rotet it$ t$eP$ili**ine Clearin) o!e. n Fe(r!ar/ 2==1 t$e latter r!le" in &a'or o& t$e "raeeP$ili**ine Veteran Ban%. E0!ita(le-PC Ban% in t!rn "e(ite" t$e "e*oit a##o!nt o&t$e Ban% in t$e a,o!nt o& P1=====.==.

T$e Ban% inite" t$at t$e/ in&or,e" *etitioner o& ai" "e'elo*,ent in A!)!t2=== (/ &!rni$in) t$e, #o*ie o& t$e "o#!,ent )i'en (/ it "e*oitar/ (an%.@ nt$e ot$er $an" *etitioner ,aintaine" t$at t$e Ban% ne'er in&or,e" t$e, o& t$ee"e'elo*,ent.

n 9 Mar#$ 2==1 *etitioner i!e" a #$e#% in t$e a,o!nt o& P5=====.==. Sai"#$e#% a "i$onore" (/ t$e Ban% &or t$e reaon De*oit ;n"er ol". A##or"in)to*etitioner t$e Ban% !nilaterall/ an" !nla&!ll/ *!t t$eir a##o!nt it$ t$e Ban%on $ol". n 22 Mar#$ 2==1 *etitioner #o!nel ent a "e,an" letter a%in) t$eBan% to $onor t$eir #$e#%. T$e Ban% re&!e" to $ee" t$eir re0!et an" intea"#loe" t$e S*e#ial Sa'in) A##o!nt o& t$e *etitioner it$ a (alan#e o&[email protected] an" tran&erre" ai" a,o!nt to t$eir a'in) a##o!nt. T$e Ban% t$enit$"re t$e a,o!nt o& P1=====.==re*reentin) t$e ret!rne" #$e#% &ro,*etitioner a'in) a##o!nt.

A#tin) on t$e alle)e" ar(itrar/ an" )ro!n"le "i$onorin) o& t$eir #$e#% an" t$e!nla&!l an" !nilateral it$"raal &ro, t$eir a'in) a##o!nt *etitioner +le" aCo,*laint &or S!, o& Mone/ it$ Da,a)e a)aint t$e Ban% an" Poten#iano it$t$e RTC o& Cala,(a.

n 15 ?an!ar/ 2==4 t$e RTC t$ro!)$ ?!")e Antonio S. Poa r!le" in &a'or o&*etitioner. T$e "i*oiti'e *ortion o& t$e De#iion rea":


23/32

GEREFRE t$e &ore)oin) #oni"ere" t$e Co!rt or"er t$at H!"),ent (e ren"ere"in &a'or o& *lainti an" a)aint t$e "e&en"ant Hointl/ an" e'erall/ to *a/ *laintia &ollo to it:

1. P1=====.== re*reentin) t$e a,o!nt !nla&!ll/ it$"ran (/ t$e "e&en"ant&ro, t$e a##o!nt o& *lainti

2. P5=====.== a ,oral "a,a)e an"

. P=====.== a attorne/ &ee.

T$e trial #o!rt re"!#e" t$e i!e to $et$er or not t$e ri)$t o& *etitioner ere'iolate" (/ re*on"ent $en t$e "e*oit o& t$e &or,er ere "e(ite" (/re*on"ent it$o!t an/ #o!rt or"er an" it$o!t t$eir %nole")e an" #onent.A##or"in) to t$e trial #o!rt it i t$e "e*oitar/ (an% $i#$ $o!l" a&e)!ar" t$eri)$t o&t$e "e*oitor o'er t$eir ,one/. n'o%in) Arti#le 19@@ o& t$e Ci'il Co"e t$etrial #o!rt tate" t$at t$e "e*oitar/ #annot ,a%e !e o& t$e t$in) "e*oite"it$o!t t$e e8*re *er,iion o& t$e "e*oitor. T$e trial #o!rt alo $el" t$at

re*on"ent $o!l" $a'e o(er'e" t$e 24-$o!r #learin) $o!e r!le t$at #$e#%$o!l" (e ret!rne" it$in 24-$o!r a&ter "i#o'er/ o& t$e &or)er/ (!t in no e'ent(e/on" t$e *erio" +8e" (/ la &or +lin) a le)al a#tion. n t$i #ae *etitioner"e*oite" t$e #$e#% in Ma/ 2=== an" re*on"ent noti+e" t$e, o& t$e *ro(le,on t$e #$e#% t$ree ,ont$ later or in A!)!t 2===. n !, t$e trial #o!rt#$ara#terie" ai" a#t o& re*on"ent a atten"e" it$ (a" &ait$ $en t$e/"e(ite" t$e a,o!nt o& P1=====.== &ro, t$e a##o!nt o& *etitioner.

Re*on"ent +le" a ,otion &or re#oni"eration $ile *etitioner +le" a ,otion &ore8e#!tion &ro, t$e De#iion o& t$e RTC on t$e )ro!n" t$at re*on"ent ,otion &orre#oni"eration "i" not #on&or, it$ Se#tion 5 R!le 16 o& t$e R!le o& Co!rt $en#eit a a ,ere #ra* o& *a*er t$at "i" not toll t$e r!nnin) o& t$e *erio" to a**eal.

n 22 A*ril 2==4 t$e RTC t$ro!)$ Pairin) ?!")e Ro,eo C. De 3eon )rante" t$e,otion &or re#oni"eration et ai"e t$e Poa De#iion an" "i,ie" t$e#o,*laint. T$e trial #o!rt aar"e" re*on"ent t$eir #o!nter#lai, o& ,oral an"e8e,*lar/ "a,a)e o& P1=====.== ea#$. T$e trial #o!rt +rt a**lie" t$e *rin#i*leo& li(eralit/ $en it "ire)ar"e" t$e alle)e" a(en#e o& a noti#e o& $earin) inre*on"ent ,otion &or re#oni"eration. n t$e ,erit t$e trial #o!rt #oni"ere"t$e relation$i* o& t$e Ban% an" *etitioner it$ re*e#t to t$eir a'in) a##o!nt"e*oit a a #ontra#t o& loan it$ t$e (an% a t$e "e(tor an" *etitioner a#re"itor. A !#$ Arti#le 19@@ o& t$e Ci'il Co"e *ro$i(itin) t$e "e*oitor/ &ro,,a%in) !e o& t$e t$in) "e*oite" it$o!t t$e e8*re *er,iion o& t$e "e*oitori not a**li#a(le. ntea" t$e trial #o!rt a**lie" Arti#le 19= $i#$ *ro'i"e t$at+8e" a'in) an" #!rrent "e*oit o&,one/ in (an% an" i,ilar intit!tion $all(e )o'erne" (/ t$e *ro'iion )o'ernin) i,*le loan. T$e trial #o!rt t$en o*ine"t$att$e Ban% $a" all t$e ri)$t to et-o a)aint *etitioner a'in) "e*oit t$e'al!e o& t$eir nine #$e#% t$at ere ret!rne".

n a**eal t$e Co!rt o& A**eal ar,e" t$e r!lin) o& t$e trial #o!rt (!t "elete" t$eaar" o& "a,a)e. T$e a**ellate #o!rt ,a"e t$e &olloin) ratio#ination:


24/32

An/ ar)!,ent a to t$e noti#e o& $earin) $a (een reol'e" $en t$e *airin) H!")ei!e" t$e or"er on Fe(r!ar/ 24 2==4 ettin) t$e $earin) on Mar#$ 26 2==4. A*er!al o& t$e noti#e o& $earin) $o t$at re0!et a a""ree" to t$e Cler% o&Co!rt an" *lainti #o!nel &or $earin) to (e et on Mar#$ 26 2==4.

T$e #ore i!e in t$i #ae re'ol'e on $et$er t$e a**ellee (an% $a" t$e ri)$t to

"e(it t$e a,o!nt o& P1=====.== &ro, t$e a**ellant a##o!nt an" $et$er t$e(an% a#t o& "e(itin) a "one it$o!t t$e *lainti %nole")e.

Ge +n" t$at t$e ele,ent o& le)al #o,*enation are all *reent in t$e #ae at (ar.en#e a**l/in) t$e #ae o& t$e Ban% o& t$e P$ili**ine lan" '. Co!rt o& A**ealt$e o(li)or (o!n" *rin#i*all/ are at t$e a,e ti,e #re"itor o& ea#$ ot$er. A**ellee(an% tan" a a "e(tor o& a**ellant a "e*oitor. At t$e a,e ti,e ai" (an% i t$e#re"itor o& t$e a**ellant it$ re*e#t to t$e "i$onore" trea!r/ arrant #$e#%$i#$ a,o!nt ere alrea"/ #re"ite" to t$e a##o!nt o& a**ellant. G$en t$ea**ellant $a" it$"ran t$e a,o!nt o& t$e #$e#% t$e/ "e*oite" an" later onai" #$e#% ere ret!rne" t$e/ (e#a,e in"e(te" to t$e a**ellee (an% &or t$e#orre*on"in) a,o!nt.

t $o!l" (e note" t$at I


25/32

Se#tion 5 R!le 15 o& t$e R!le o& Co!rt tate:

Se#tion 5. Noti#e o& $earin). W T$e noti#e o& $earin) $all (e a""ree" to all *artie#on#erne" an" $all *e#i&/ t$e ti,e an" "ate o& t$e $earin) $i#$ ,!t not (elater t$an ten 1= "a/ a&ter t$e +lin) o& t$e ,otion.

Petitioner #lai, t$at t$e noti#e o& $earin) a a""ree" to t$e Cler% o& Co!rt an"not to t$e a"'ere *art/ a t$e r!le re0!ire. Petitioner a"" t$at t$e $earin) on t$e,otion &or re#oni"eration a #$e"!le" (e/on" 1= "a/ &ro, t$e "ate o& +lin).

A $el" in Mat!ran '. Ara!la11 t$e r!le re0!irin) t$at t$e noti#e (e a""ree" tot$e a"'ere *art/ $a (een!(tantiall/ #o,*lie" it$ $en a #o*/ o& t$e ,otion&or re#oni"eration a &!rni$e" to t$e #o!nel o& t$e a"'ere *art/ #o!*le" it$t$e &a#t t$at t$e trial #o!rt a#te" on ai" noti#e o& $earin) an" a *ra/e" &ori!e" an or"er12 ettin) t$e $earin) o& t$e ,otion on 26 Mar#$ 2==4.

Ge o!l" reiterate later t$at t$ere i !(tantial #o,*lian#e it$ t$e &ore)oin) R!le

i& a #o*/ o& t$e ai" ,otion &or re#oni"eration a &!rni$e" to t$e #o!nel o& t$ea"'ere *art/.1

No to t$e !(tanti'e i!e to $i#$ *ro#e"!ral i,*er&e#tion ,!t in t$i #ae)i'e a/.

T$e #entral i!e i $et$er t$e Ban% $a" t$e ri)$t to "e(it P1=====.== &ro,*etitioner a##o!nt.

n 6 Ma/ 2=== t$e Ban% in&or,e" *etitioner t$at t$e !(He#t #$e#% $a" (een$onore". T$! t$e a,o!nto& P1=====.== a a##or"in)l/ #re"ite" to *etitionera##o!nt *ro,*tin) t$e, to releae t$e *!r#$ae" #ar to t$e (!/er.

;n%non to *etitioner t$e Ban% "e*oite" t$e #$e#% in it "e*oitar/ (an%E0!ita(le-PC Ban%. T$ree ,ont$ $a" *ae" $en t$e Ban% a in&or,e" (/ it"e*oitar/ (an% t$at t$e "raee $a" "i$onore" t$e #$e#% on t$e )ro!n" o&,aterial alteration.

T$e ret!rn o& t$e #$e#% #reate" a #$ain o& "e(itin) o& a##o!nt t$e lat loe'ent!all/ &allin) !*on t$e a'in) a##o!nt o& *etitioner it$ re*on"ent (an%. T$etrial #o!rt init re#oni"ere" "e#iion an" t$e a**ellate #o!rt ere one in "e#larin)t$at *etitioner $o!l" (ear t$e lo.

Ge re'ere.

T$e &a#t t$at ,aterial alteration #a!e" t$e e'ent!al "i$onor o& t$e #$e#% i!e"(/ PVA i !n"i*!te". n t$i #ae (e&ore t$e alteration a "i#o'ere" t$e#$e#% ere alrea"/ #leare" (/ t$e "raee (an% t$e P$ili**ine Veteran Ban%.

T$ree ,ont$ $a" la*e" (e&ore t$e "raee "i$onore" t$e #$e#% an" ret!rne"t$e, to E0!ita(le-PC Ban% t$e re*on"ent "e*oitar/ (an%. An" ita not !ntil1= ,ont$ later $en *etitioner a##o!nt ere "e(ite". A 0!etion t$! arie:


26/32

G$at are t$e lia(ilitie o& t$e "raee t$e inter,e"iar/ (an% an" t$e *etitioner&or t$e altere" #$e#%K

3AB3T F TE DRAGEE

Se#tion 6 o& A#t No. 2=1 ort$e Ne)otia(le ntr!,ent 3a *ro'i"e t$at t$e

a##e*tor (/ a##e*tin) t$e intr!,ent en)a)e t$at $e ill *a/ it a##or"in) to t$etenor o& $i a##e*tan#e. T$e a##e*tor i a "raee $o a##e*t t$e (ill. n P$ili**ineNational Ban% '. Co!rt o& A**eal14 t$e *a/,ent o& t$e a,o!nt o& a #$e#% i,*lienot onl/ a##e*tan#e (!t alo #o,*lian#e it$ t$e "raee o(li)ation.

n #ae t$e ne)otia(le intr!,ent ialtere" (e&ore a##e*tan#e i t$e "raee lia(le&or t$e ori)inal or t$e altere" tenor o& a##e*tan#eK T$ere are to "i'er)entinte*retation *roere" (/ le)al anal/t.15 T$e +rt 'ie i !**orte" (/ t$elea"in) #ae o& National Cit/ Ban% o&C$i#a)o '. Ban% o& t$e Re*!(li#.16 n ai" #aea #ertain An"re Mannin) tole a "ra&t an" !(tit!te" $i na,e &or t$at o& t$eori)inal *a/ee. e oere" it a *a/,ent to a Heeler in e8#$an)e &or #ertain Heelr/.

T$e Heeler "e*oite" t$e "ra&t to t$e "e&en"ant (an% $i#$ #olle#te"t$e

e0!i'alent a,o!nt &ro, t$e "raee. ;*on learnin) o& t$e alteration t$e "raeeo!)$t to re#o'er &ro, t$e "e&en"ant (an% t$e a,o!nt o& t$e "ra&t a ,one/ *ai"(/ ,ita%e. T$e #o!rt "enie" re#o'er/ on t$e )ro!n" t$at t$e "raee (/ a##e*tin)a",itte" t$e e8iten#e o& t$e *a/ee an" $i #a*a#it/ to en"ore.1@ Still in GellFar)o Ban% ;nion Tr!t Co. '. Ban% o& tal/1 t$e #o!rt e#$oe" t$e #o!rtinter*retation in National Cit/ Ban% o& C$i#a)o in t$i ie:

Ge t$in% t$e #ontr!#tion *la#e" !*on t$e e#tion (/ t$e llinoi #o!rt i #orre#t an"t$at it a not t$e le)ilati'e intent t$at t$e o(li)ation o& t$e a##e*tor $o!l" (eli,ite" to t$e tenoro& t$e intr!,ent a "ran (/ t$e ,a%er a a t$e r!le at#o,,on la(!t t$at it $o!l" (e en&or#ea(le in &a'or o& a $ol"er in "!e #o!rea)aint t$e a##e*tor a##or"in) to it tenor at t$e ti,e o& it a##e*tan#e or#erti+#ation.

T$e &ore)oin) o*inion an" t$e llinoi "e#iion $i#$ it &ollo )i'e ee#t to t$eliteral or" o& t$e Ne)otia(le ntr!,ent 3a. A tate" in t$e llinoi #ae: T$e#o!rt ,!t ta%e t$e a#t a it i ritten an" $o!l" )i'e to t$e or" t$eir nat!ralan" #o,,on ,eanin) . . . i&t$e lan)!a)e o& t$e a#t #oni#t it$ tat!te or"e#iion in &or#e (e&ore it ena#t,ent t$e #o!rt $o!l" not )i'e t$e a#t a traine"#ontr!#tion in or"er to ,a%e it $ar,onie it$ earlier tat!te or "e#iion. T$eor"in) o& t$e a#t !))et t$at a #$an)e in t$e #o,,on la a inten"e". A#are&!l rea"in) t$ereo& in"e*en"ent o& an/ #o,,on-la in!en#e re0!ire t$att$e or" a##or"in) to t$e tenor o& $i a##e*tan#e (e #ontr!e" a re&errin) tot$e intr!,ent a it a at t$e ti,e it #a,e into t$e $an" o& t$e a##e*tor &ora##e*tan#e &or $e a##e*t no ot$er intr!,ent t$an t$e one *reente" to $i, 7t$e altere" &or, 7 an" it alone $e en)a)e to *a/. T$i #on#l!ion i in $ar,on/it$ t$e la o& En)lan" an" t$e #ontinental #o!ntrie. t ,a%e &or t$e !e&!lnean" #!rren#/ o& ne)otia(le *a*er it$o!t erio!l/ en"an)erin) a##e*te" (an%in)*ra#ti#e &or (an%in) intit!tion #an rea"il/ *rote#t t$e,el'e a)aint lia(ilit/ onaltere" intr!,ent eit$er (/ 0!ali&/in) t$eir a##e*tan#e or #erti+#ation or (/rel/in) on &or)er/ in!ran#e an" *e#ial*a*er $i#$ ill ,a%e alteration o('io!.All o& t$e ar)!,ent a"'an#e" a)aint t$e #on#l!ion $erein anno!n#e" ee,


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$i)$l/ te#$ni#al in t$e &a#e o& t$e *ra#ti#al &a#t t$at t$e "raee (an% $aa!t$enti#ate" an intr!,ent in a #ertain &or, an" t$at #o,,er#ial *oli#/ &a'ort$e *rote#tion o& an/one $o in "!e #o!re #$an)e $i *oition on t$e &ait$ o&t$at a!t$enti#ation.19

T$e e#on" 'ie i t$at t$e a##e*torL"raee "e*ite t$e tenor o& $i a##e*tan#e i

lia(le onl/ to t$e e8tent o& t$e (ill *rior to alteration.2= T$i 'ie a**ear to (e in#ononan#e it$ Se#tion 124 o& t$e Ne)otia(le ntr!,ent 3a $i#$ tatet$at a,aterial alteration a'oi" an intr!,ent e8#e*t a a)aint an aentin) *art/ an"!(e0!ent in"orer (!t a $ol"er in "!e #o!re ,a/ en&or#e *a/,ent a##or"in) toit ori)inal tenor. T$! $en t$e "raee (an% *a/ a ,ateriall/ altere" #$e#% it'iolate t$e ter, o& t$e #$e#% a ell a it "!t/ to#$ar)e it #lient a##o!nt onl/&or (ona +"e "i(!re,ent $e $a" ,a"e. & t$e "raee "i" not *a/ a##or"in) tot$e ori)inal tenor o& t$e intr!,ent a "ire#te" (/ t$e "raer t$en it $a no ri)$tto #lai, rei,(!re,ent &ro, t$e "raer ,!#$ le t$e ri)$t to "e"!#t t$eerroneo! *a/,ent it ,a"e &ro, t$e "raer a##o!nt $i#$ it a e8*e#te" totreat it$ !t,ot +"elit/.21 T$e "raee $oe'er till $a re#o!re to re#o'er itlo. t ,a/ *a t$e lia(ilit/ (a#% to t$e #olle#tin) (an% $i#$ i $at t$e "raee

(an% e8a#tl/ "i" in t$i #ae. t "e(ite" t$e a##o!nt o& E0!ita(le-PC Ban% &or t$ealtere" a,o!nt o& t$e #$e#%.

3AB3T F DEPSTAR BAN> AND C33ECTN< BAN>

A "e*oitar/ (an% i t$e +rt (an% to ta%e an ite, e'en t$o!)$ it i alo t$e *a/or(an% !nle t$e ite, i *reente" &or i,,e"iate *a/,ent o'er t$e #o!nter.22 t ialo t$e (an% to $i#$ a #$e#% i tran&erre" &or "e*oit in an a##o!nt at !#$ (an%e'eni& t$e #$e#% i *$/i#all/ re#ei'e" an" in"ore" +rt (/ anot$er (an%.2 A#olle#tin) (an% i "e+ne" a an/ (an% $an"lin) an ite, &or #olle#tion e8#e*t t$e(an% on $i#$ t$e #$e#% i "ran.24

G$en *etitioner "e*oite" t$e #$e#% it$ t$e Ban% t$e/ ere "ei)natin) t$elatter a t$e #olle#tin) (an%. T$i i in #ononan#e it$ t$e r!le t$at a ne)otia(leintr!,ent !#$ a a #$e#% $et$er a ,ana)erX #$e#% or or"inar/ #$e#% i notle)al ten"er. A !#$ a&ter re#ei'in) t$e "e*oit !n"er it on r!le t$e Ban% $all#re"it t$e a,o!nt in *etitioner a##o!nt or in&!e 'al!e t$ereon onl/ a&ter t$e"raee (an% $all $a'e *ai" t$e a,o!nt o& t$e #$e#% or t$e #$e#% $a (een #leare"&or "e*oit.25

T$e Ban% an" E0!ita(le-PC Ban% are (ot$ "e*oitar/ an" #olle#tin) (an%.

A "e*oitar/L#olle#tin) (an% $ere a #$e#% i "e*oite" an" $i#$ en"ore t$e#$e#% !*on *reent,ent it$ t$e "raee (an% i an en"orer. ;n"er Se#tion 66 o&t$e Ne)otia(le ntr!,ent 3a an en"orer arrant t$at t$e intr!,ent i)en!ine an" in all re*e#t $at it *!r*ort to (e t$at $e $a )oo" title to it t$atall *rior *artie $a" #a*a#it/ to #ontra#t an" t$at t$e intr!,ent i at t$e ti,e o&$i en"ore,ent 'ali" an" !(itin). t $a (een re*eate"l/ $el" t$at in #$e#%trana#tion t$e "e*oitar/L#olle#tin) (an% or lat en"orer )enerall/ !er t$elo (e#a!e it $a t$e "!t/ to a#ertain t$e )en!inene o& all *rior en"ore,ent#oni"erin) t$at t$e a#t o& *reentin) t$e #$e#% &or *a/,ent to t$e "raee i anaertion t$at t$e *art/ ,a%in) t$e *reent,ent $a "one it "!t/ to a#ertain t$e


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)en!inene o& t$e en"ore,ent.26 & an/ o& t$e arrantie ,a"e (/ t$e"e*oitar/L#olle#tin) (an% t!rn o!t to (e &ale t$en t$e "raee (an% ,a/ re#o'er&ro, it !* to t$e a,o!nt o& t$e #$e#%.2@

T$e la i,*oe a "!t/ o& "ili)en#e on t$e #olle#tin) (an% to #r!tinie #$e#%"e*oite" it$ it &or t$e *!r*oe o& "eter,inin) t$eir )en!inene an" re)!larit/.

T$e #olle#tin) (an% (ein) *ri,aril/ en)a)e" in (an%in) $ol" itel& o!t to t$e *!(li#a t$e e8*ert an" t$e la $ol" it to a $i)$ tan"ar" o& #on"!#t.2

A #olle#tin) (an% t$e Ban% an" E0!ita(le-PC Ban% are (ot$ lia(le &or t$e a,o!nto& t$e ,ateriall/ altere" #$e#%. Sin#e E0!ita(le-PC Ban% i not a *art/ to t$i #aean" t$e Ban% alloe" it a##o!nt it$ E0!ita(lePC Ban% to (e "e(ite" it $a t$eo*tion toee% re#o!re a)aint t$e latter in anot$er &or!,.

24-;R C3EARN< R;3E

Petitioner &a!lte" t$e "raee (an% &or not &olloin) t$e 24-$o!r #learin) *erio"(e#a!e it a onl/ in A!)!t 2=== t$at t$e "raee (an% noti+e" E0!ita(le-PC t$at

t$ere ere ,aterial alteration in t$e #$e#%.

Ge "o not !(#ri(e to t$e *oition ta%en (/ *etitioner t$at t$e "raee (an% aat &a!lt (e#a!e it "i" not &ollo t$e 24-$o!r #learin) *erio" $i#$ *ro'i"e t$at$en a "raee (an% &ail to ret!rn a &or)e" or altere" #$e#% to t$e #olle#tin) (an%it$in t$e 24-$o!r #learin) *erio" t$e #olle#tin) (an% i a(ol'e" &ro, lia(ilit/.

Se#tion 21 o& t$e P$ili**ine Clearin) o!e R!le an" Re)!lation *ro'i"e: Se#. 21.S*e#ial Ret!rn te, Be/on" T$e Re)le,entar/ Clearin) Perio".- te, $i#$ $a'e(een t$e !(He#t o& ,aterial alteration or ite, (earin) &or)e" en"ore,ent $en!#$ en"ore,ent i ne#ear/ &or ne)otiation $all (e ret!rne" (/ "ire#t*reentation or "e,an" to t$e Preentin) Ban% an" not t$ro!)$ t$e re)!lar #learin)$o!e &a#ilitie it$in t$e *erio" *re#ri(e" (/ la &or t$e +lin) o& a le)al a#tion (/t$e ret!rnin) (an%L(ran#$ intit!tion or entit/ en"in) t$e a,e.

Antonio Vira/ in $i (oo% an"(oo% on Ban% De*oit el!#i"ate":

t i #lear t$at t$e o-#alle" 24-$o!r r!le $a (een ,o"i+e". n t$e #ae o&on)%on) S$an)$ai '. Peo*le Ban% reiterate" in Metro*olitan Ban% an" Tr!tCo. '. FNCB t$e S!*re,e Co!rt tri#tl/ en&or#e" t$e 24-$o!r r!le !n"er $i#$ t$e"raee (an% &ore'er loe t$e ri)$t to #lai, a)aint *reentin)L#olle#tin) (an% i&t$e #$e#% i not ret!rne" at t$e ne8t #learin) "a/ orit$in 24 $o!r. A**arentl/ t$e#o,,er#ial (an% &elt tri#t en&or#e,ent o& t$e 24-$o!r r!le i too $ar$ an"t$ere&ore ,a"e re*reentation an" o(taine" ,o"i+#ation o& t$e r!le $i#$,o"i+#ation i no in#or*orate" in t$e Man!al o& Re)!lation. Sin#e t$e a,e#o,,er#ial (an% #ontrolle" t$e P$ili**ine Clearin) o!e Cor*orationin#or*oratin) t$e a,en"e" r!le in t$e PCC R!le nat!rall/ &olloe".

A t$e r!le no tan" t$e 24-$o!r r!le i till in &or#e t$at i an/ #$e#% $i#$$o!l" (e re&!e" (/ t$e "raee (an% in a##or"an#e it$ lon) tan"in) an"a##e*te" (an%in) *ra#ti#e $all (e ret!rne" t$ro!)$ t$e PCCLlo#al #learin) o#ea t$e #ae ,a/ (e not later t$an t$e ne8t re)!lar #learin) 24-$o!r. T$e


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,o"i+#ation $oe'er i t$at ite, $i#$ $a'e (een t$e !(He#t o& ,aterialalteration or (earin) &or)e" en"ore,ent ,a/ (e ret!rne" e'en (e/on" 24 $o!r olon) t$at t$e a,e i ret!rne" it$in t$e *re#ri*ti'e *erio" +8e" (/ la. T$e#onen! a,on) la/er i t$at t$e *re#ri*ti'e*erio" i ten 1=/ear (e#a!e a#$e#% or t$e en"ore,ent t$ereon i a ritten #ontra#t. Moreo'er t$e ite, nee"not (e ret!rne" t$ro!)$ t$e #learin) $o!e (!t (/ "ire#t *reentation to t$e

*reentin) (an%.29

n $ort t$e 24-$o!r #learin) r!le"oe not a**l/ to altere" #$e#%.

3AB3T F PETTNERS

T$e 2== #ae o& Far Eat Ban% Tr!t Co,*an/ '.


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ret!rnin) t$e a,o!nt to t$e "raee (an% a alrea"/ a#tin) on it on an" $o!l"no (e re*oni(le &or it on a#tion. 8 8 8 3i%eie Far Eat #annot in'o%e t$earrant/ o& t$e *a/eeL"e*oitor $o in"ore" t$e intr!,ent &or #olle#tion to $i&tt$e (!r"en it (ro!)$t !*on itel&. T$i i *re#iel/ (e#a!e t$e ai" in"ore,ent ionl/ &or *!r*oe o& #olle#tion $i#$ !n"er Se#tion 6 o& t$e N3 i a retri#ti'ein"ore,ent. t "i" not in an/ a/ tran&er t$e title o& t$e intr!,ent to t$e

#olle#tin) (an%. Far Eat "i" not on t$e "ra&t it ,erel/ *reente" it &or *a/,ent.Coni"erin) t$at t$e arrantie o& a )eneral in"orer a *ro'i"e" in Se#tion 66 o&t$e N3 are (ae" !*on a tran&er o& title an" are a'aila(le onl/ to $ol"er in "!e#o!re t$ee arrantie "i" not atta#$ to t$e in"ore,ent &or "e*oit an"#olle#tion ,a"e (/


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T$at t$e to "e(t (e "!e

4 T$at t$e/ (e li0!i"ate" an" "e,an"a(le

5 T$at o'er neit$er o& t$e, t$ere (e an/ retention or #ontro'er/ #o,,en#e" (/t$ir" *eron an" #o,,!ni#ate" in "!e ti,e to t$e "e(tor.

t i ell-ettle" t$at t$e relation$i* o& t$e "e*oitor an" t$e Ban% or i,ilarintit!tion i t$at o& #re"itor-"e(tor. Arti#le 19= o& t$e Ne Ci'il Co"e *ro'i"e t$at+8e" a'in) an" #!rrent "e*oit o& ,one/ in (an% an" i,ilar intit!tion $all(e )o'erne" (/ t$e *ro'iion #on#ernin) i,*le loan. T$e (an% i t$e "e(toran"t$e "e*oitor i t$e #re"itor. T$e "e*oitor len" t$e (an% ,one/ an" t$e (an%a)ree to *a/ t$e "e*oitor on "e,an". T$e a'in) "e*oit a)ree,ent (eteent$e (an% an" t$e "e*oitor i t$e #ontra#t t$at "eter,ine t$e ri)$t an"o(li)ation o& t$e *artie.

B!t a *re'io!l/ "i#!e" *etitioner are not lia(le &or t$e "e*oit o& t$e altere"#$e#%. T$e Ban% at$e "e*oitar/ an" #olle#tin) (an% !lti,atel/ (ear t$e lo.

T$! t$ere (ein) no in"e(te"ne to t$e Ban% on t$e *art o& *etitioner le)al#o,*enation #annot ta%e *la#e. DAMA


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ne)li)en#e on t$e *art o& t$e *etitioner $i#$ !(tantiall/ #ontri(!te" to t$e lo&ro, alteration.

Bae" on t$e &ore)oin) e ar, t$e Poa"e#iion onl/ ino&ar a it or"ere"re*on"ent to Hointl/ an" e'erall/ *a/ *etitioner P1=====.== re*reentin) t$ea,o!nt it$"ran &ro, t$e latter a##o!nt. Ge "o not #on&or, it$ ai" r!lin)

re)ar"in) t$e +n"in) o& (a" &ait$ on t$e *art o& re*on"ent a ell a it &ail!retoo(er'e t$e 24-$o!r #learin) r!le.

GEREFRE t$e *etition i

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