Metropolitan Bank and Trust Co. vs. Cruz

Factual Background

The respondents obtained various loans from Metrobank from 1993 to 1998 aggregating P40,600,000 and executed promissory notes covering those loans. In March 1999 they obtained additional loans. After requesting a statement of account, Metrobank advised by letter dated May 17, 1999 that as of March 26, 1999 the outstanding obligation was P1,130,444.31. Over the years the loans were restructured and, according to the respondents, they signed blank promissory notes in bulk. From 1999 to 2004 the respondents remitted cash and checks and had bank employees acknowledge receipt on yellow sheets prepared by Cruz. In September 2004 the respondents suspected an overpayment and in October 2004 requested a new statement of account. Metrobank supplied a Summary on Application of Payments covering December 29, 1999 to September 2004 reflecting an existing obligation of P8,344,185.55.

Accountant's Examination and Allegations of Discrepancy

The respondents engaged accountant Michael G. Palisoc to audit available records from 1999 to 2004. Palisoc compared the SAPs, promissory notes, original receipts, cleared checks and the amounts listed on Cruz's yellow sheets. He concluded that the respondents paid P32,648,374.60 while Metrobank recorded only P20,507,855.05, producing an unaccounted payment of P12,140,519.55; after subtracting P8,600,000 representing a restructured loan balance, he found an alleged overpayment of P3,540,519.55 as of September 21, 2004. Palisoc also noted questionable practices such as late recording of payments, failure to account for a dacion en pago made before 1999, absence of receipts for some lump sum payments, and failure of employees to record certain checks.

Trial Court Proceedings

The respondents filed a complaint for accounting on May 4, 2005 praying for production of pertinent loan records and reimbursement of any excess payments with damages. Metrobank answered on June 10, 2005, denying material allegations, asserting that payments were properly accounted for, and contending that it had furnished a concise accounting except for records beyond its holding period. Metrobank further maintained that subsequent loan documents superseded earlier records and that the respondents were estopped by admitting indebtedness in the latest promissory note; it counterclaimed for moral and exemplary damages and attorney's fees. In a Decision dated September 21, 2012, the RTC ordered Metrobank to render a complete and detailed accounting of payments from 1993 to 2004 and to furnish copies of all promissory notes and other loan documents within the same period, and it dismissed the bank's counterclaim.

Court of Appeals Ruling

On appeal the Court of Appeals affirmed the RTC on February 23, 2015. The CA held that the fiduciary nature of banking imposed on Metrobank a duty to maintain accurate records and to furnish financial statements relating to the respondents' account. The CA found that the documents submitted below contained discrepancies and lacked necessary detail to determine the correct indebtedness. It rejected Metrobank's invocation of a five-year document retention policy and its reliance on estoppel, and remanded the case to the RTC for a proper accounting and reception of evidence to determine the actual amount of indebtedness and adjudicate the parties' claims.

Issues Presented to the Supreme Court

The petition raised primarily two legal questions: whether Metrobank should be ordered to render a full and detailed accounting of the respondents' payments, and whether Metrobank must furnish all pertinent loan documents. Metrobank argued that it had already rendered a true and complete accounting, that it complied with production orders, that the documents it submitted accurately reflected the outstanding balance, that the respondents bore the burden to prove full payment, and that production of older loan documents was impossible due to a five-year retention policy purportedly mandated by AMLA and the Manual of Regulations for Banks. Metrobank also invoked estoppel and sought damages for reputational injury.

Parties' Contentions Below

The respondents contended that Metrobank mishandled their accounts, failed to record some cash and check payments despite acknowledgments, failed to furnish updated statements until prompted in 1999, and applied payments and interest inconsistently. They asserted that Metrobank could not hide behind its five-year retention policy because bank personnel admitted access to older records in warehouse storage and because Metrobank had previously produced documents dating to 1993. The respondents denied any laches or estoppel that would bar their claim and maintained their right to seek accounting and reimbursement.

Scope of Review and Threshold Procedural Determination

The Supreme Court reiterated that review under Rule 45, Rules of Court is limited to errors of law and does not extend to factual reexamination. The Court explained that whether discrepancies existed in the accountings and whether the submitted documents were sufficient are primarily factual matters that require appraisal of evidence on record. Because the RTC made factual findings that were affirmed by the CA and because Metrobank failed to demonstrate that those findings lacked basis, the petition could not prevail on factual grounds within a Rule 45 petition.

Legal Basis and Reasoning on the Merits

The Court emphasized the fiduciary character of banking and the concomitant obligations of banks to treat clients' accounts with utmost fidelity and meticulous care, citing R.A. No. 8791, Section 2 and pertinent jurisprudence including Simex International (Manila) Inc. v. Court of Appeals and other decisions that require banks to record every transaction accurately and promptly. The Court held that these duties compel a bank to render a full and detailed accounting when discrepancies are shown and to preserve and produce records necessary to verify the account. The Court distinguished the retention mandate in Section 9 of the AMLA and Section X808 of the Manual of Regulations for Banks, observing that those provisions require five-year record keeping primarily for anti-money laundering and customer identification purposes and do not excuse a bank's legal duty to maintain records essential to resolve a customer's claim on a loan account. The Court further found that Metrobank had admitted