G.R. No. 154469 ; December 6, 2006
Metropolitan Bank and Trust Company, petitioner, vs. Renato D. Cabilzo, respondent.

FACTS

Respondent Renato Cabilzo, a client of petitioner Metrobank, issued a check for P1,000.00. The check was subsequently altered, with the amount raised to P91,000.00 and the date changed. After the altered check was presented and cleared through the banking system, Metrobank debited P91,000.00 from Cabilzo’s account. Upon discovery, Cabilzo immediately informed Metrobank and demanded the re-crediting of the erroneously debited P90,000.00. Metrobank refused, prompting Cabilzo to file a civil action for damages.
Metrobank defended itself by asserting it exercised due diligence in examining the check before payment. It argued that the collecting bank, Westmont Bank, as the last indorser, should bear the loss. Metrobank also contended that Cabilzo was negligent for leaving spaces on the check, facilitating the alteration. The trial court ruled in favor of Cabilzo, a decision affirmed by the Court of Appeals with the modification of deleting exemplary damages and attorney’s fees.

ISSUE

Whether Metrobank, as the drawee bank, is liable to its depositor, Cabilzo, for the amount debited from his account based on a materially altered check.

RULING

Yes, Metrobank is liable. The Supreme Court affirmed the appellate court’s decision with the reinstatement of exemplary damages. The relationship between a bank and its depositor is fiduciary, imposing on the bank a high degree of diligence in protecting the client’s account. As the drawee bank, Metrobank had the primary duty to verify the authenticity of checks presented for payment and to know the signature of its drawer. Its failure to detect the apparent alteration on the check constituted negligence.
The Court rejected Metrobank’s defenses. The alleged negligence of Cabilzo in preparing the check was not proven; mere issuance of a check does not amount to negligence constituting the proximate cause of the loss. The proximate cause was Metrobank’s failure in its duty of diligence. Furthermore, the warranty of a collecting bank does not absolve the drawee bank from its direct liability to its own depositor. Metrobank’s recourse is to pursue the forger or the collecting bank separately. Its refusal to promptly re-credit the account after being notified of the alteration warranted the award of exemplary damages to serve as a deterrent and uphold public confidence in the banking system.