METROPOLITAN BANK AND TRUST CO.

v CABILZO
(Kristel)510 SCRA 259

FACTS:
Renato Cabilzo was one of Metrobank’s clients who maintained current account with the bank’s Pasong Tamo
Branch. On Nov. 12, 1994, he issued a check payable to cash and post dated on Nov.24, 1994 for the amount of
P1,000. The check was presented to Westmont Bank for payment and the latter indorsed it to Metrobank.
Metrobank cleared the check and debited Cabilzo’s account. It was found out later by Cabilzo that the check’s
amount was altered to P91,000 and the date changed to Nov. 14. Cabilzo demanded that Metrobank re-credit the
90,000 to his account. Metrobank refused. Cabilzo filed a civil action for damages against Metrobank. In its
defense, Metrobank said that it exercised due diligence in examining the genuineness of the signature and the
technical entries including the amount in figures and in words to see if there were alterations and found that there
was none. It further stated that Cabilzo was partly responsible for leaving spaces on the check which made the
fraudulent insertion possible. The RTC and the Court of Appeals ruled in favor of Cabilzo saying that Metrobank
was liable

ISSUE:
W/N Metrobank should be held liable for damages for its negligence

HELD:
YES. The degree of diligence required of a reasonable man in the exercise of his tasks and the performance of his
duties has been faithfully complied with by Cabilzo. In fact, he was wary enough that he filled with asterisks the
space between and after the amounts, not only those stated in words but also those in numerical figures in order
to prevent any fraudulent insertion. Metrobank cannot rely on the doctrine of equitable estoppel which states that
“when one of the two innocent persons, each guiltless of any intentional or moral wrong, must suffer a loss, it
must be borne by the one whose erroneous conduct, either by omission or commission, was the cause of
injury.”Metrobank did not prove that Cabilzo was negligent or that this negligence was the proximate cause of the
loss. Negligence is not presumed but it must be proven by the one who alleges it. Banking is a business affected
with public interest and because of the nature of its functions, the bank is under obligation to treat the accounts of
its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. The
appropriate degree of diligence required of a bank must a be a high degree of diligence, if not the utmost
diligence. Here, the alterations on the check are visible to the naked eye but Metrobank failed to detect the
alterations which could not escape the attention of even an ordinary person. This negligence is further exacerbated
by the fact that it was the cash custodian who examined the check when his functions do not involve the
examining of checks. Obviously, the custodian was not versed and competent in handling such duty. Banks are
expected to exercise the highest degree of diligence in the selection and supervision of employees.

Banks and Banking; The point is that as a business affected with public interest and because of the nature of its
functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in
mind the fiduciary nature of their relationship.—The point is that as a business affected with public interest and
because of the nature of its functions, the bank
is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary
nature of their relationship. The appropriate degree of diligence required of a bank must be a high degree of
diligence, if not the utmost diligence.

Negotiable Instruments; Checks; Payment made under materially altered instrument is not payment done in
accordance with the instruction of the drawer.—The bank on which the check is drawn, known as the drawee bank,
is under strict liability to pay to the order of the payee in accordance with the drawer’s instructions as reflected on
the face and by the terms of the check. Payment made under materially altered instrument is not payment done in
accordance with the instruction of the drawer. When the drawee bank pays a materially altered check, it violates
the terms of the check, as well as its duty to charge its client’s account only for bona fide disbursements he had
made. Since the drawee bank, in the instant case, did not pay according to the original tenor of the instrument, as
directed by the drawer, then it has no right to claim reimbursement from the drawer, much less, the right to
deduct the erroneous payment it made from the drawer’s account which it was expected to treat with utmost
fidelity.

Same; It owes the highest degree fidelity to its client and should not therefore lightly rely on the judgment of other
banks on occasions where its clients money were involve, no matter how small or substantial the amount at stake.
—The reliance made by Metrobank on Westmont Bank’s indorsement is clearly inconsistent, if not totally offensive
to the dictum that being impressed with public interest, banks should exercise the highest degree of diligence, if
not utmost diligence in dealing with the accounts of its own clients. It owes the highest degree fidelity to its clients
and should not therefore lightly rely on the judgment of other banks on occasions where its clients money were
involve, no matter how small or substantial the amount at stake.