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METROPOLITAN BANK v. CA

FACTS:

Metropolitan Bank and Trust Co. (Metrobank) is a commercial bank operating in the Philippines and abroad. Golden Savings and Loan Association (Golden Savings) is a savings and loan association operating in Calapan, Mindoro, with the other private respondents as its principal officers.

In January 1979, Eduardo Gomez opened an account with Golden Savings and deposited 38 treasury warrants worth a total of P1,755,228.37 over a period of two months. These warrants were all drawn by the Philippine Fish Marketing Authority and signed by its General Manager and Auditor. Some of the warrants were directly payable to Gomez, while others were indorsed by their respective payees and then indorsed by Gomez as the second indorser.

Between June 25 and July 16, 1979, Gloria Castillo, the cashier of Golden Savings, indorsed and deposited all the warrants to its Savings Account No. 2498 in Metrobank's branch in Calapan, Mindoro. The warrants were then sent for clearing to Metrobank's principal office and forwarded to the Bureau of Treasury for special clearing.

Gloria Castillo made several inquiries regarding the clearance of the warrants at the Calapan branch, being told to wait. Finally, Metrobank decided to accommodate Golden Savings and allow it to make withdrawals from the proceeds of the warrants. Golden Savings made three withdrawals in July 1979, totaling P968,000.00. Subsequently, Golden Savings allowed Gomez to withdraw from his account, collecting a total of P1,167,500.00 from the proceeds of the cleared warrants.

On July 21, 1979, Metrobank informed Golden Savings that 32 of the warrants had been dishonored by the Bureau of Treasury, demanding a refund of the previously withdrawn amount. Golden Savings rejected the demand, leading Metrobank to sue Golden Savings. The trial court rendered judgment in favor of Golden Savings, and Metrobank appealed. The Court of Appeals affirmed the decision and Metrobank filed a petition for review before the Supreme Court.

ISSUES:

  1. Whether Metrobank, acting as a collecting agent, can disclaim responsibility for the negligence in allowing Golden Savings to withdraw from uncleared treasury warrants.

  2. Whether Metrobank can recover the disputed amount if the warrants are not paid for any reason.

  3. Whether the treasury warrants in question are negotiable instruments under the Negotiable Instruments Law.

  4. Whether Golden Savings can be held liable for the dishonored treasury warrants.

  5. How should the liability for the dishonored treasury warrants be distributed between Golden Savings and Metrobank.

RULING:

  1. Metrobank, as an agent, can be held responsible not only for fraud but also for negligence. The court held that Metrobank's negligence in giving implied clearance to the treasury warrants and allowing withdrawals by Golden Savings has been sufficiently established.

  2. Metrobank cannot recover the disputed amount if the warrants are not paid for any reason. The court ruled that the condition allowing recovery for "any reason" is not acceptable and would render the requirement of clearance unnecessary. Additionally, Metrobank's belated notification of the supposed dishonor of the warrants exacerbated its earlier negligence.

  3. The treasury warrants are not negotiable instruments under the Negotiable Instruments Law. The indication of a particular fund as the source of payment makes the order to pay "not unconditional" and the warrants non-negotiable.

  4. Golden Savings cannot be held liable for the dishonored treasury warrants as it did not guarantee the genuineness of the warrants. The indorsement made by Golden Savings was only for the purpose of depositing them for clearance.

  5. Metrobank, being negligent, shall bear the consequences of its own negligence and be liable for the amount withdrawn from the dishonored treasury warrants. The remaining balance shall be debited to Golden Savings, as the depositor who can no longer withdraw the amount due to the dishonor.

PRINCIPLES:

  • Negotiability of instruments requires an unconditional promise or order to pay a fixed amount of money, payable to order or bearer, and payable on demand or at a definite time, with no other undertaking or instruction.

  • Conditions imposed by a bank unilaterally may not be binding on the depositor unless there is clear consent.

  • An agent can be held responsible not only for fraud but also for negligence, which may be judged with more or less rigor by the courts depending on whether the agency is compensated.

  • Forgery cannot be presumed and must be established by clear, positive, and convincing evidence.

  • The requirements for an instrument to be negotiable under the Negotiable Instruments Law:

a. In writing and signed by the maker or drawer.

b. Contains an unconditional promise or order to pay a sum certain in money.

c. Payable on demand, or at a fixed or determinable future time.

d. Payable to order or to bearer.

e. The drawee must be named or otherwise indicated with reasonable certainty.

  • An order or promise to pay out of a particular fund is not unconditional and, therefore, the instrument is not negotiable.

  • The guarantee of genuineness under Section 66 of the Negotiable Instruments Law does not apply to non-negotiable instruments.

  • Negligence in accepting checks can result in liability for the bank, but negligence cannot be imputed to the depositor of non-negotiable treasury warrants.

  • The liability for dishonored treasury warrants shall be distributed between the negligent bank and the depositor, with the negligent bank bearing the consequences of its negligence and the depositor being liable for the remaining balance.