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METROPOLITAN BANK v. CA

FACTS:

The Rural Bank of Padre Garcia, Inc. (RBPG) and Metropolitan Bank and Trust Company (MBTC) were involved in a dispute regarding a credit memorandum issued by the Central Bank in favor of RBPG. Isabel Katigbak, the president and director of RBPG, issued checks against its account with MBTC based on the credit memo. Two of the checks were payable to Dr. Felipe C. Roque and Mrs. Eliza Roque. However, when the checks were presented for payment, they were returned by MBTC due to insufficient funds and the lack of advice from the Central Bank. Dr. Felipe Roque allegedly went to the office of an RBPG officer to complain about the bounced checks, which led RBPG to pay him cash in order to replace the checks. Additionally, Isabel Katigbak received overseas phone calls informing her about Mr. Rizal Dungo, an assistant cashier of MBTC, berating her about the bounced checks. Mrs. Katigbak requested MBTC to verify the records regarding the Central Bank credit memo, but Mr. Dungo dismissed her request. The incident caused the Katigbak family to cut short their trip and return to Manila. MBTC not only dishonored the checks but also issued debit memos for service and penalty charges. As a result, RBPG and Isabel Katigbak filed a case for damages against MBTC. The defendant MBTC claimed that their messenger failed to deliver the credit advice to the department in charge of processing it, resulting in the checks being dishonored. They apologized to the plaintiffs and attributed the incident to negligence and improper handling by their messenger and Mr. Dungo.

ISSUES:

  1. Whether or not Metropolitan Bank and Trust Company (MBTC) can be held liable for damages to Rural Bank of Padre Garcia, Inc. (RBPG) and Isabel Katigbak.

  2. Whether or not MBTC's negligence caused the dishonor of the checks issued by RBPG.

RULING:

  1. Yes. The Court of Appeals affirmed the decision of the Regional Trial Court holding MBTC liable for damages to RBPG and Isabel Katigbak.

  2. Yes. MBTC's negligence in misrouting the credit advice from the Central Bank and failing to deliver it to the department in charge of processing resulted in the dishonor of the checks issued by RBPG.

PRINCIPLES:

  • A bank can be held liable for damages for negligence in the performance of its obligations as a depository or collecting bank.

  • A bank's negligence can be established by showing that it failed to exercise the required degree of diligence in handling the accounts and transactions of its clients.

  • The dishonor of checks due to the bank's negligence can give rise to a claim for damages for injury suffered by the drawer of the checks.

  • The drawee bank has the duty to promptly inform the drawer of a dishonored check and to provide the reason for the dishonor.