Allied Banking Corporation v. Bank of the Philippine Islands

Summary

This Supreme Court case involves a dispute between Allied Banking Corporation and Bank of the Philippine Islands over liability for wrongful clearance of a post-dated check worth P1,000,000.00. Allied accepted the obviously post-dated check (dated one year in the future) for deposit, while BPI cleared it without proper verification despite their standard procedures. Both banks were found negligent under banking regulations and Civil Code provisions. The Court applied the doctrine of contributory negligence, holding that while BPI's clearing without verification was the proximate cause of loss, Allied's acceptance of the post-dated check constituted contributory negligence. Following established jurisprudence in banking cases, the Court allocated damages on a 60-40 ratio, with BPI bearing the greater liability. The decision emphasizes that banks must exercise extraordinary diligence in handling checks and cannot take lightly violations of fundamental banking practices regarding post-dated instruments.