G.R. No.

118492       August 15, 2001

GREGORIO H. REYES and CONSUELO PUYAT-REYES, petitioners,

vs.
THE HON. COURT OF APPEALS and FAR EAST BANK AND TRUST COMPANY, respondents.

DE LEON, JR., J.:

FACTS:

The Philippine Racing Club, Inc. sent 4 delegates to join the 20 th Asian Racing Conference in
Sydney, Australia. But before that, the petitioner, Gregorio Reyes went to Far East Bank and Trust
Company in Buendia to apply for the demand draft payable to the 20 th Asian Racing Conference. It
was dishonored because the Far East Bank did not have the account in West-Pac Sydney. Due to
the urgency, Gregorio took the advice of the bank’s assistant that was to draw a demand draft
against Westpac bank in Sydney and have the latter reimburse itself from the US dollar of the
respondent bank in Westpac Bank in New York, USA.

The respondent bank approved the application of PRCI and issued Foreign Exchange Demand Draft
in the sum of AU$ 1,610.00 payable to the order of 20 th Asian Racing Conference Secretariat of
Sydney, Australia and addressed to Westpac-Sydney as the drawee bank.

Upon presentment of the foreign exchange demand draft, it was dishonored stating that no account
held with Westpac. Meanwhile, Wespac New York sent a cable to respondent bank informing that its
dollar account was debited. The respondent bank informed Wespac-Sydney of the issuance of the
demand draft be drawn against Wespac-Sydney and would be reimbursed from the respondent’s
bank dollar account in Westpac-New York. The respondent bank also informed Wespac-New York
on the same day to honor the reimbursement claim of Wespac-Sydney.

Upon the second presentment for payment, it was still dishonored for the same reason.

When the petitioners arrived in Australia, they could not register because the foreign exchange
demand draft for their registration fee had been dishonored. They were embarrassed in the
presence of other foreign delegates, so they were forced to pay the registration in cash.

Petitioners filed in RTC Makati a complaint for damages against the respondent bank due to the
dishonor of the said foreign exchange draft issued by the respondent bank.

The RTC rendered judgment in favor of the defendant.

The petitioners appealed to the Court of Appeals but the latter affirmed the decision of RTC.

According to CA, there is no basis to hold the respondent bank liable for damages because it
exerted every effort for the subject foreign exchange demand draft to be honored.

Hence, arose this petition before this court.

ISSUE:

Whether or not the Far East Bank and Trust Company is required to exercise more than the degree
of diligence of a good father of a family?
DECISION OF THE SUPREME COURT

No.

Banks are duty bound to treat the deposit accounts of their depositors with the highest degree of
care. But the said ruling applies only to cases where banks act under their fiduciary capacity, that is,
as depositary of the deposits of their depositors. But the same higher degree of diligence is not
expected to be exerted by banks in commercial transactions that do not involve their fiduciary
relationship with their depositors.

The case at bar, the relationship involved was that of a buyer and seller, that is, between the
respondent bank as the seller of the subject foreign exchange demand draft, and PRCI as the buyer
of the same, with the 20 th Asian Racing conference Secretariat in Sydney, Australia as the payee
thereof.

FALLO:

WHEREFORE, the petition is hereby DENIED, and the assailed decision of the Court of Appeals
is AFFIRMED. Costs against the petitioners.