Civil Law

Consolidated Bank and Trust Corporation vs Court of Appeals and L.C. Diaz and Company, CPA’s

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G.R. No. 138569 – 457 Phil. 688 – 410 SCRA 562 – Civil Law – Torts and Damages – Liabilities of banks for the negligence of their employees – Unauthorized Withdrawal

Civil Law – Obligations and Contracts – Relationship between bank and depositor – Simple Loan

L.C. Diaz and Company (LC Diaz), an accounting firm, has a savings account with Consolidated Bank and Trust Corporation (now called Solidbank Corporation).

On August 14, 1991, the firm’s messenger, a certain Ismael Calapre, deposited an amount with the bank but due to a long line and the fact that he still needs to deposit a certain amount in another bank, the messenger left the firm’s passbook with a teller of Solidbank. But when the messenger returned, the passbook is already missing. Apparently, the teller returned the passbook to someone else.

On August 15, 1991, LC Diaz made a formal request ordering Solidbank not to honor any transaction concerning their account with them until the firm is able to acquire a new passbook. It appears however that in the afternoon of August 14, 1991, the amount of P300,000.00 was already withdrawn from the firm’s account.

LC Diaz demanded Solidbank to refund the said amount which the bank refused. LC Diaz then sued Solidbank.

In its defense, Solidbank contends that under their banking rules, they are authorized to honor withdrawals if presented with the passbook; that when the P300k was withdrawn, the passbook was presented. Further, the withdrawer presented a withdrawal slip which bore the signatures of the representatives of LC Diaz.

The RTC ruled in favor of Solidbank. It found LC Diaz to be negligent in handling its passbook. The loss of the P300k was not the result of Solidbank’s negligence.

On appeal, the Court of Appeals reversed the decision of the RTC. The CA used the rules on quasi-delict (Article 2176 of the Civil Code).

ISSUE: Whether or not the relations between Solidbank and LC Diaz, the depositor, is governed by quasi-delict in determining the liability of Solidbank.

HELD: No. Solidbank is liable for the loss of the P300k but it’s liability is grounded on culpa contractual.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan (Article 1980, Civil Code). There is a debtor-creditor relationship between the bank and its depositor. The bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor on demand. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties.

Under their contract, it is the duty of LC Diaz to secure its passbook. However, this duty is also applicable to Solidbank when it gains possession of said passbook which it did when the messenger left it to the bank’s possession through the bank’s teller. The act of the teller returning the passbook to someone else other than Calapre, the firm’s authorized messenger, is a clear breach of contract. Such negligence binds the bank under the principle of respondeat superior or command responsibility.

No contract of trust between bank and depositor

The Supreme Court emphasized that the contractual relation between the bank and the depositor is that of a simple loan. This is despite the wording of Section 2 of Republic Act 8791 (The General Banking Law of 2000) which states that the State recognizes the “fiduciary nature of banking that requires high standards of integrity and performance.” That “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.”

This fiduciary relationship means that the bank’s obligation to observe “high standards of integrity and performance” is deemed written into every deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family.

However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its depositors from a simple loan to a trust agreement, whether express or implied. Failure by the bank to pay the depositor is failure to pay a simple loan, and not a breach of trust.

In short, the General Banking Act simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan, beyond those required of non-bank debtors under a similar contract of simple loan. The General Banking Law in no way modified Article 1980 of the Civil Code.

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