GREGORIO H. REYES AND CONSUELO PUYAT-REYES, PETITIONERS, VS.

THE
HON. COURT OF APPEALS AND FAR EAST BANK AND TRUST COMPANY,
RESPONDENTS.
G.r. no. 118492, august 15, 2001
De leon, jr., j.:
Doctrine: The degree of extraordinary diligence applies only to cases where banks act under their
fiduciary capacity, that is, as depositary of the deposits of their depositors.
Facts:
Petitioners spouses Gregorio H. Reyes and Consuelo Puyat-Reyes left for Australia to
attend a racing conference in Sydney as representative of the Philippine Racing Club, Inc. . Prior
to their flight, the club secretary apply for a demand draft in the amount One Thousand Six
Hundred Ten Australian Dollars (AU$1,610.00) payable to the order of the 20th Asian Racing
Conference Secretariat of Sydney, Australia at Far East Bank and Trust Company Buendia
Branch. Respondent bank’s assistant cashier accommodate the application upon the insistence of
the club secretary, with reservation since the bank do not have an Australian dollar account in
any bank in Sydney. The respondent bank approved the said application of PRCI and issued
Foreign Exchange Demand Draft (FXDD) No. 209968 in the sum applied for, that is, One
Thousand Six Hundred Ten Australian Dollars (AU$1,610.00), payable to the order of the 20th
Asian Racing Conference Secretariat of Sydney, Australia, and addressed to Westpac-Sydney as
the drawee bank. Petitioner spouses Gregorio H. Reyes and Consuelo Puyat-Reyes was
humiliated upon registration they could not register because the foreign exchange demand draft
for his registration fee had been dishonored. Petitioners sued Far East Bank due to their
humiliation.
Issue :
The honorable court of appeals erred in finding private respondent not negligent by
erroneously applying the standard of diligence of an “ordinary prudent person” when in truth a
higher degree of diligence is imposed by law upon the banks.
Ruling :
Upholding a long standing doctrine, the Court ruled that the degree of diligence required
of banks, is more than that of a good father of a family where the fiduciary nature of their
relationship with their depositors is concerned. In other words 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.
Considering the foregoing, the respondent bank was not required to exert more than the diligence
of a good father of a family in regard to the sale and issuance of the subject foreign exchange
demand draft. The case at bar does not involve the handling of petitioners’ deposit, if any, with
the respondent bank. Instead, 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 20th Asian Racing Conference Secretariat in Sydney,
Australia as the payee thereof.