CONSOLIDATED BANK AND TRUST CORP. V.

COURT OF APPEALS

FACTS:

Solidbank is a domestic banking corporation while private respondent L.C. Diaz and Company,
CPAs (L.C. Diaz), is a professional partnership engaged in the practice of accounting and which
opened a savings account with Solidbank. Diaz through its cashier, Mercedes Macaraya , filled up a
savings cash deposit slip and a savings checks deposit slip. Macaraya instructed the messenger of L.C.
Diaz, Ismael Calapre, to deposit the money with Solidbank and give him the Solidbank passbook.
Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the passbook. The
teller acknowledged receipt of the deposit by returning to Calapre the duplicate copies of the two deposit
slips. Since the transaction took time and Calapre had to make another deposit for L.C. Diaz with Allied
Bank, he left the passbook with Solidbank. When Calapre returned to Solidbank to retrieve the passbook,
Teller No. 6 informed him that somebody got the passbook. Calapre went back to L.C. Diaz and reported
the incident to Macaraya. The following day,, L.C. Diaz through its Chief Executive Officer, Luis C.
Diaz, called up Solidbank to stop any transaction using the same passbook until L.C. Diaz could open a
new account followed by a formal written request later that day. It was also on the same day that L.C.
Diaz learned of the unauthorized withdrawal the day before of P300,000 from its savings account. The
withdrawal slip bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz and Rustico
L. Murillo. The signatories, however, denied signing the withdrawal slip. A certain Noel Tamayo received
the P300,000.

L.C. Diaz demanded from Solidbank the return of its money but to no avail. Hence, L.C. Diaz
filed a Complaint for Recovery of a Sum of Money against Solidbank with the Regional Trial Court. After
trial, the trial court rendered a decision absolving Solidbank and dismissing the complaint. Court of
Appeals reversed the decision of the trial court.

ISSUE:

WHETHER OR NOT SOLIDBANK SHOULD BE HELD LIABLE

RULING:

The Supreme Court ruled that the bank should be held liable considering that there was a breach
of contractual obligation between the bank and L.C. Diaz when the former gave the latters passbook to
another person who is not its authorized representative. According to the Court, when the passbook is in
the possession of solidbanks tellers during the withdrawals, the law imposes on Solidbank and its tellers
an even higher degree of diligence in safeguarding the passbook. Likewise, the banks tellers must
exercise a higher degree of diligence in insuring that they return the passbook to the depositor or his duly
authorized representative.

Considering that there was breach of contractual obligation, the bank has the burden to prove that
it was not negligent in handling the account and transaction of L.C. Diaz. Also, Solidbank is bound by the
negligence of its employees under the principle of respondeat superior or command responsibility. Since
this case arose from culpa contractual, the defense of exercising diligence in the selection and supervision
of its employees cannot be properly invoked. Hence, the bank was held liable.

However, considering that there was contributory negligence on the part of L.C. Diaz when it
allowed the withdrawal slip to be signed by its authorized representatives, the Supreme Court ruled to
mitigate the banks liability. The Court adjudged that the 60% amount of damages shall be borne by the
bank and the remaining 40% by L.C. Diaz.