G.R. No. 221220 - Metropolitan Bank and Trust Co. vs. Cruz

Case Summary (G.R. No. 221220)

Petitioner’s and Respondents’ Positions

Respondents alleged they obtained multiple loans from Metrobank (aggregate P40,600,000 from 1993–1998 and additional loans in 1999), made numerous cash and check payments (1999–2004), discovered apparent overpayments in 2004, and, after engaging an accountant, claimed P3,540,519.55 in overpayment as of September 21, 2004. Metrobank maintained it had rendered a true and complete accounting, denied material allegations, asserted that some requested documents had been superseded or lawfully disposed under its five-year retention policy (citing AMLA and Manual of Regulations for Banks), and invoked estoppel based on respondents’ execution of subsequent promissory notes; Metrobank also counterclaimed for damages and attorney’s fees.

Key Dates

Loans and transactions: 1993–1999 (initial loans and later loans) and continued payments through 2004.
Respondents’ request for statement of account: May 1999 (Metrobank response reflecting balance as of March 26, 1999).
Discovery of overpayment and request for new statement: September–October 2004 (Metrobank provided SAP covering Dec. 29, 1999–Sept. 2004).
Complaint for accounting filed: May 4, 2005 (RTC Civil Case No. 2005-1035-MK).
RTC Decision ordering full accounting and production of documents: September 21, 2012.
CA Decision affirming RTC: February 23, 2015 (with remand for accounting).
Supreme Court Decision: January 19, 2021 (denying Metrobank’s Rule 45 petition).

Applicable Law and Constitutional Basis

The decision is governed by the 1987 Philippine Constitution (applicable because the decision date is 1990 or later). Relevant statutory and regulatory provisions discussed in the case include: Republic Act No. 8791 (Banking Law) emphasizing the fiduciary nature of banking; Section 9 of the Anti-Money Laundering Act (AMLA) and Section X808 of the Manual of Regulations for Banks (both cited by Metrobank for a five-year record retention policy); and controlling jurisprudence on the high standard of diligence required of banks (cases cited: Simex International (1990), Phil. Banking Corp. (2004), Far East Bank and Trust Co. (2012), Landbank of the Philippines (2014)).

Facts Relevant to Accounting Claim

Respondents presented contemporaneous payment proofs: yellow sheets listing payments and check numbers, with bank employees’ acknowledgments; promissory notes; SAPs; original receipts and cleared checks. An accountant, Michael G. Palisoc, examined available records and concluded respondents’ payments totaled P32,648,374.60 while Metrobank recorded only P20,507,855.05, yielding an unaccounted payment of P12,140,519.55; after deducting a restructured loan balance of P8,600,000.00, Palisoc computed an overpayment of P3,540,519.55 as of September 21, 2004. Palisoc also identified practices that could explain discrepancies (late recordings that inflated interest, failure to issue receipts for lump-sum payments, failure to record certain checks, and omission of a pre-1999 dacion en pago).

Procedural History and Lower Courts’ Rulings

Respondents filed a complaint for accounting in 2005. Metrobank answered and filed a counterclaim. The RTC (Branch 192, Marikina City) in its September 21, 2012 Decision ordered Metrobank to render a complete and detailed accounting of payments from 1993 to 2004 and to furnish copies of all promissory notes and loan documents for the same period; the RTC dismissed Metrobank’s counterclaim. The CA affirmed on February 23, 2015, emphasizing the fiduciary nature of banking, finding Metrobank’s records incomplete and discrepancies unresolved, rejecting reliance on a five-year document-retention policy, and remanding the case for proper accounting and reception of further evidence. Metrobank then filed a Rule 45 petition to the Supreme Court.

Issues Presented to the Supreme Court

Whether Metrobank should be ordered to render a full and detailed accounting of respondents’ payments.
Whether Metrobank should be ordered to produce all pertinent loan documents.
Ancillary claims: whether respondents are estopped from denying indebtedness due to subsequent promissory notes, and whether Metrobank is entitled to damages and attorney’s fees.

Scope of Review Under Rule 45

The Supreme Court reiterated the limited scope of review under Rule 45: the Court reviews questions of law and not questions of fact. The core disputes—whether Metrobank’s accounting and submitted documents were sufficient and whether unexplained discrepancies existed—are predominantly factual and were properly resolved by the trial court and the CA. The Supreme Court declined to reweigh evidence, noting that Metrobank failed to show that the factual findings of the RTC (as affirmed by the CA) were devoid of basis.

Fiduciary Duty of Banks and Its Application

The Court applied longstanding jurisprudence recognizing banking as a business imbued with public interest and subject to a heightened fiduciary standard. Citing Simex International and later cases, the Court reiterated that banks must treat clients’ accounts with the highest degree of diligence, record transactions accurately and promptly, and ensure the integrity of client records. These duties include rendering proper accountings and furnishing necessary documents where discrepancies suggest an incomplete or inaccurate record. The Court held that Metrobank’s obligations to its clients under R.A. No. 8791 and relevant jurisprudence prevailed over its asserted records-retention policy when confronted with requests necessary to resolve disputes over an existing loan balance.

Records Retention Argument and Applicability of AMLA/MORB

Metrobank relied on a five-year retention policy citing AMLA Section 9 and MORB Section X808. The Court distinguished the AMLA/MORB retention requirements (which relate to customer identification and anti-money laundering audit trails and prescribe five-year retention for specific types of records) from Metrobank’s broader obligation to maintain and produce loan records essential to resolving a customer’s dispute over loan balances. The Court found the five-year retention rule inapplicable as a blanket defense to production where requested documents are necessary to determine current indebtedness. The Court also noted contradictions in Metrobank’s position: its own witnesses admitted older records were stored in a warehouse, and Metrobank had previously produced documents dating back to 1993 when before the RTC, undermining the claim that production of old records was impossible.

Estoppel Argument and Bu

Case Syllabus (G.R. No. 221220)

Case Caption and Procedural Posture

First Division of the Supreme Court, G.R. No. 221220, decided January 19, 2021; decision penned by Justice Gaerlan.
Petition for Review on Certiorari under Rule 45 was filed by petitioner Metropolitan Bank and Trust Company (Metrobank) seeking reversal of the Court of Appeals (CA) February 23, 2015 Decision and October 21, 2015 Resolution in CA-G.R. CV No. 99886 (Rollo, Vol. I, pp. 18-49; pp. 62-79).
The CA had affirmed the Regional Trial Court (RTC), Marikina City, Branch 192, Decision dated September 21, 2012 ordering Metrobank to render a complete and detailed accounting of payments made by respondents Carmelita C. Cruz and Vilma Low Tay and to furnish loan documents (Rollo, Vol. I, pp. 828-837; RTC Decision penned by Judge Geraldine C. Fiel-Macaraig).
The Supreme Court denied the petition and affirmed the CA and RTC rulings (Rollo, pp. 18-49; 62-79; 828-837).

Parties and Nature of the Action

Petitioner: Metropolitan Bank and Trust Company (Metrobank).
Respondents: Carmelita C. Cruz and Vilma Low Tay, doing business as "Republic Shoes & Handbag Manufacturing."
Nature of action: Complaint for accounting filed by respondents seeking a complete and detailed accounting of loan payments and production of loan records, and reimbursement for alleged overpayment with damages (Rollo, Vol. I, pp. 143-150).

Material Facts — Loan Transactions and Payments

From 1993 to 1998, respondents obtained various loans from Metrobank aggregating P40,600,000.00 and executed promissory notes covering those loans (Rollo, Vol. I, p. 64).
In March 1999 respondents obtained additional loans and requested a statement of account to determine their outstanding obligation; Metrobank sent a letter dated May 17, 1999 stating that as of March 26, 1999 respondents owed P1,130,444.31 (Rollo, Vol. I, pp. 63-64).
Respondents’ loans were restructured over the years; respondents were made to sign blank promissory notes in bulk (Rollo, Vol. I, pp. 64, 66).
From 1999 to 2004 respondents remitted cash and check payments to Metrobank; Cruz listed amounts and check numbers on “yellow sheets” and asked bank employees to sign and acknowledge receipt (Rollo, Vol. I, p. 66).
In September 2004 respondents reviewed their records and discovered a possible overpayment; in October 2004 they requested a new statement of account (Rollo, Vol. III, p. 1760; Vol. I, p. 65).
Metrobank sent a Summary on Application of Payments (SAP) covering December 29, 1999 to September 2004 indicating respondents’ obligation as P8,344,185.55 (Rollo, Vol. I, p. 65).

Accountant’s Examination and Findings

Respondents engaged accountant Michael G. Palisoc to examine SAPs, promissory notes, original receipts, cleared checks, and Cruz’s yellow sheets (Rollo, Vol. I, pp. 65-66).
Palisoc concluded respondents had paid a total of P32,648,374.60 whereas Metrobank recorded P20,507,855.05, resulting in unaccounted payments totaling P12,140,519.55 (Rollo, Vol. I, pp. 65-66).
After subtracting P8,600,000.00 representing the balance of a restructured loan, Palisoc found an overpayment of P3,540,519.55 as of September 21, 2004 (Rollo, Vol. I, p. 65).
Palisoc observed questionable banking practices: Metrobank recorded payments weeks after they were made (increasing interest), it failed to account for a dacion en pago before 1999, it failed to issue receipts for some lump-sum payments, and employees did not record some checks received from Cruz (Rollo, Vol. I, pp. 66-67).

Respondents’ Demands and Metrobank’s Initial Response

Respondents repeatedly demanded reconciliation of their records and refund of alleged overpayment; Metrobank failed to produce a complete and detailed application of all payments from 1993 to 2004 (Rollo, Vol. I, p. 65).
Metrobank insisted on the payment of P8,344,188.55 as respondents’ outstanding balance per the SAP provided (Rollo, Vol. I, p. 65).

Pleadings and Counterclaim

Complaint for accounting filed May 4, 2005, praying for production of loan records, reimbursement of excess payment, and damages (Rollo, Vol. I, pp. 143-150).
Metrobank filed Answer with Counterclaim on June 10, 2005, denying material allegations, claiming respondents’ payments were properly accounted for, asserting it provided a concise accounting and furnished necessary loan documents except for some records beyond the bank’s holding period, and invoking estoppel because respondents admitted indebtedness in the latest promissory note; Metrobank sought moral and exemplary damages and attorney’s fees (Rollo, Vol. I, pp. 173-183).

Ruling of the Regional Trial Court (RTC)

RTC Decision dated September 21, 2012 ordered Metrobank to:
- Render a complete and detailed accounting of payments made by respondents from 1993 to 2004;
- Furnish respondents copies of all promissory notes and other loan documents signed within the same period;
- Dismiss Metrobank’s counterclaim for lack of merit (Rollo, Vol. I, pp. 828-837; dispositive portion at p. 837).
RTC rationale included that Metrobank could not avoid compliance because documents were old or beyond holding period, and estoppel could not be relied upon to deny accounting; RTC refused to decide on overpayment absent a complete accounting (Rollo, Vol. I, pp. 828-837).

Ruling of the Court of Appeals (CA)

CA, in its February 23, 2015 Decision, affirmed the RTC’s order that respondents are entitled to a complete and detailed accounting (Rollo, Vol. I, pp. 62-75).
The CA emphasized the fiduciary nature of banking imposing a duty on Metrobank to maintain accurate payment records and supply financial statements relating to the account (Rollo, Vol. I, pp. 72, 74).
CA found Metrobank’s submitted documents contained discrepancies and lacked necessary details; Metrobank could not hide behind a company policy of discarding records after five years; production was not physically impossible; estoppel did not relieve Metrobank of accounting obligation (Rollo, Vol. I, pp. 72-74).
CA remanded the case to RTC for proper accounting and reception of evidence to determine actual indebtedness and adjudicate parties’ claims accordingly (Rollo, Vol. I, p. 75).

Issues Presented to the Supreme Court

Whether Metrobank should be ordered to render a full and detailed accounting of respondents’ payments.
Whether Metrob