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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

AT A GLANCE:

A circumspect scrutiny of the loan documents and a proper accounting of the payments remitted will finally settle the question of whether or not there was an overpayment of the loan. It is Metrobank’s fiduciary obligation to treat the respondents’ accounts with the highest degree of diligence.

In financial transactions, trust is the foundation upon which the banking system stands. Clients entrust banks not only with their money, but also with the expectation that every transaction will be recorded with accuracy, transparency, and integrity. This principle was underscored in a case involving Metropolitan Bank and Trust Company and its borrowers, where the courts emphasized the fiduciary duty of banks to their clients.

Background of the Case

From 1993 to 1998, Respondents Carmelita Cruz and Vilma Low Tay obtained various loans from Metrobank amounting to over Forty Million Pesos (PhP40,000,000.00). These loans were supported by promissory notes.

In 1999, the Respondents obtained additional loans from Metrobank and requested a statement of account to determine their total outstanding obligation which was later issued by Metrobank through a letter dated May 17, 1999 stating that as of March 26, 1999, respondents owed One Million One Hundred Thirty Thousand Four Hundred Forty-Four and 31/100 Pesos (PhP 1,130,444.31.)

Over the years, the Respondents’ loans were restructured. They were made to sign blank promissory notes in bulk. In September 2004, upon reviewing their records, the Respondents suspected that they had overpaid. When they requested a new statement of account, Metrobank sent a Summary on Application of Payments (SAP) from December 29, 1999 to September 2004, which indicated that Respondents’ existing obligation was PhP8,344,185.55.

Doubtful of Metrobank’s computation, Respondents hired accountant Michael G. Palisoc who discovered a significant gap: He found that the Respondents had paid a total of PhP32,648,374.60 but Metrobank only recorded PhP20,507,855.05, thereby resulting in an unaccounted payment of PhP 12,140,519.55. Then, he subtracted PhP8,600,000.00 which represented the balance of the restructured loan, and discovered that as of September 21, 2004, Respondents made an overpayment of PhP3,540,519.55.

Palisoc further observed the following questionable practices, Metrobank recorded payments weeks after they were made, which caused the interest rates to increase; it failed to account for a dacion en pago that was made before 1999; it failed to issue receipts for some lump sum payments; and its employees did not record some checks they had received from Cruz.

In view of the discrepancies, respondents requested for the reconciliation of their records and demanded a refund of their overpayment. Despite repeated demands, Metrobank to produce a complete and detailed accounting of all payments from 1993 to 2004 and instead insisted on payment of PhP8,344,185.55.

The Legal Battle                                   

Respondents filed a complaint for accounting before the RTC (Regional Trial Court) praying for the production of all pertinent loan records, as well as the reimbursement of their excess payment, with damages. In response, Metrobank filed its Answer with Counterclaim denying the allegations in the Complaint and countered that the Respondents’ payments were properly accounted for. They further claimed that the Respondents admitted their existing indebtedness when they signed the latest promissory note, and are thus, estopped from claiming otherwise.

RTC ordered Metrobank to render a complete accounting of Respondents’ payments. Metrobank is not excused from complying with its obligation, simply because the documents requested were too old and were executed beyond the holding period. Neither may it rely on the principle of estoppel. The RTC refused to rule on whether or not an overpayment was made absent a complete and detailed accounting.

The Court of Appeals (CA) affirmed the RTC’s ruling that Respondents are entitled to a complete and detailed accounting of all their payments. Undeterred, Metrobank filed the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court.

The issue in this case is whether a bank may refuse to provide a complete accounting of a client’s records on the ground that such records are too old or beyond the retention period.

Supreme Court Ruling

The Supreme Court denied Metrobank’s petition and upheld the rulings of the lower courts.

In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. 

In view of the fiduciary nature of the banking business, banks are mandated to comply with two essential and fundamental obligations- to treat their clients’ accounts with utmost fidelity and meticulous care, and to record all transactions accurately and promptly.

Indeed, Metrobank’s business is imbued with public interest. Its relationship with the respondents was based on trust and confidence. Correlatively, it had the duty to accurately and promptly record all the payments made by the respondents, to conduct a precise and thorough accounting of said payments, and to furnish the respondents with the copies of their loan documents. In fulfilling these tasks, it was bound by law and jurisprudence to observe high standards of integrity.

It bears emphasis that the documents respondents requested are not simply general records, but documents that are essential to their existing loan with Metrobank. Although the loans have been restructured, the accuracy of the outstanding obligation depends on a full and complete computation of the previous loans. Metrobank cannot hide behind its five-year policy to renege on its obligation to render an accurate accounting of the respondents’ payments. As between its five-year holding policy versus its legal and jurisprudential fiduciary duty to exercise the highest degree of care in conducting its affairs, the latter consideration certainly prevails.

A circumspect scrutiny of the loan documents and a proper accounting of the payments remitted will finally settle the question of whether or not there was an overpayment of the loan. It is Metrobank’s fiduciary obligation to treat the respondents’ accounts with the highest degree of diligence. Accordingly, the Court affirms the RTC’s and CA’s directive for Metrobank to provide a full accounting of all payments made, and to furnish all pertinent loan documents.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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