Case Digest (G.R. No. 118492)
Facts:
In Gregorio H. Reyes and Consuelo Puyat-Reyes v. Court of Appeals and Far East Bank and Trust Company, petitioners, spouses and officers of the Philippine Racing Club, Inc. (PRCI), sought to remit AU$1,610.00 to the 20th Asian Racing Conference Secretariat in Sydney, Australia, via Foreign Exchange Demand Draft (FXDD) No. 209968. PRCI’s chief cashier applied at Far East Bank’s Buendia branch, which customarily routed such drafts through its Westpac New York dollar account for reimbursement by Westpac Sydney. The bank issued the draft on July 28, 1988, but upon presentation on August 10 and again on September 14, Westpac Sydney dishonored it, citing “no account held,” due to its misreading of the bank’s SWIFT message (MT199 vs. MT799). When petitioners arrived in Sydney on September 18–19, they were publicly embarrassed at registration until they paid fees in cash days later. On November 23, 1988, they filed a damage suit in RTC Makati (Civil Case No. 88-2468). On November 12, 19Case Digest (G.R. No. 118492)
Facts:
- Transaction and Issuance of the FXDD
- The Philippine Racing Club, Inc. (PRCI) needed to remit AU$1,610.00 to Sydney for the 20th Asian Racing Conference in September 1988.
- PRCI’s chief cashier, Godofredo Reyes, applied at Far East Bank & Trust Company’s Buendia Branch. Unable to draw on an Australian dollar account, the bank proposed a long-standing arrangement: issue a demand draft drawn on Westpac Bank, Sydney (Westpac-Sydney), to be reimbursed from the bank’s U.S. dollar account at Westpac Bank, New York (Westpac-New York).
- On July 28, 1988, the bank issued FXDD No. 209968 for AU$1,610.00, payable to the conference secretariat in Sydney.
- Dishonor and Re-presentments
- Upon first presentment on August 10, 1988, Westpac-Sydney dishonored the draft for lack of an account. Meanwhile, Westpac-New York debited Far East Bank’s dollar account on August 16, 1988.
- Far East Bank notified both Westpac branches and re-confirmed reimbursement authority. A second presentment on September 14, 1988 again met dishonor for “no account.”
- The root cause was later found to be mis-decoding by Westpac-Sydney of the bank’s SWIFT message (MT199 read as MT799).
- Embarrassment of the Petitioners
- Gregorio H. Reyes arrived Sydney on September 18, 1988. At the conference registration desk, he was publicly refused registration and humiliated until he demanded to see the dishonored draft and then paid in cash on September 20.
- Consuelo Puyat-Reyes, a sitting congresswoman, arrived September 19, 1988 and suffered similar public mortification. Her husband’s intervention secured her registration after cash payment.
- Judicial Proceedings
- On November 23, 1988, the Reyes spouses filed Civil Case No. 88-2468 for damages (mental anguish, humiliation) against Far East Bank.
- On November 12, 1992, the Regional Trial Court of Makati dismissed the complaint and awarded P50,000.00 attorney’s fees to the bank.
- On July 22, 1994, the Court of Appeals affirmed dismissal but deleted attorney’s fees and cost award.
Issues:
- Whether Far East Bank was negligent by exercising only the diligence of an “ordinary prudent person” rather than a higher degree of care.
- Whether the bank breached the drawer’s warranty under Section 61 of the Negotiable Instruments Law by issuing a dishonored demand draft.
- Whether the dishonor stemmed from the bank’s negligence rather than the drawee bank’s mis-decoding error.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)