Case Summary (G.R. No. 149193)
Factual Background Regarding the Surety Agreement and Bank Accounts
Petitioner Bangayan maintained two bank accounts—savings and current—at RCBC, both subject to an automatic transfer condition for check funding. On June 26, 1992, Bangayan allegedly signed a Comprehensive Surety Agreement (Surety Agreement) with RCBC that acted as security for the obligations of nine corporations under loans, advances, and credits extended by the bank. The agreement authorized RCBC to hold petitioner’s funds as collateral to guarantee these corporations' loans and associated obligations. Bangayan disputed the validity of this document, alleging forgery of his signature and lack of notarization.
Banking Transactions and Letters of Credit Secured by the Surety Agreement
On the same date the Surety Agreement was allegedly signed, RCBC issued letters of credit (LCs) for three corporations—LBZ Commercial, Peaks Marketing, and Final Sales Enterprise—to facilitate importations from Korea. A fourth LC was issued for Lotec Marketing on August 26, 1992. These LCs were secured by petitioner Bangayan under the Surety Agreement. Following shipment arrivals, the Bureau of Customs (BOC) demanded remittance of import duties amounting to over PhP13 million via letter dated September 15, 1992; petitioner was informed and allegedly acknowledged this.
Bank Actions and Dishonor of Checks
In response to the BOC demand, RCBC placed a hold on funds in Bangayan's accounts pursuant to the Surety Agreement. Consequently, RCBC dishonored seven checks amounting to PhP13,824,000 due to insufficient funds, after applying petitioner’s deposits to satisfy obligations of the corporations guaranteed under the agreement. The first two checks, presented on September 18, 1992, were dishonored despite initial debiting entries, while the remaining five checks were dishonored on October 15, 1992. Payees subsequently demanded payment from Bangayan following these dishonors.
Allegations of Violation of the Bank Secrecy Act
Petitioner Bangayan accused RCBC and Philip Saria of wrongfully disclosing confidential information about his bank accounts to the BOC in violation of the Bank Secrecy Act (RA 1405). However, the trial court found no evidence supporting the claim that confidential information was improperly divulged and considered the issue as non-substantial.
Proceedings in the Trial Court
Petitioner filed a complaint for damages against RCBC in November 1992, alleging wrongful dishonor of checks and violation of the Bank Secrecy Act. Respondent bank denied wrongdoing, asserting Bangayan’s obligation under the Surety Agreement and justification in withholding and applying his funds to settle guaranteed debts. The trial involved witness testimonies, discovery motions, and procedural disputes, including a motion to inhibit the presiding judge and issues over the exclusion and later reinstatement of RCBC witness Eli Lao’s testimony.
Trial Court Decision
The trial court ruled in favor of RCBC, dismissing the complaint on the grounds that Bangayan failed to prove malice, negligence, or wrongful dishonor. It held that RCBC acted within its rights as a creditor under the valid Surety Agreement and that no confidential bank information was unlawfully disclosed.
Court of Appeals Affirmance
The Court of Appeals affirmed the trial court’s decision, concluding that RCBC dishonored the checks justifiably given the lien on Bangayan’s accounts under the Surety Agreement, and there was no proof of bad faith or fraud. The appellate court also ruled that Bangayan could not raise questions concerning the authenticity of the Surety Agreement for the first time on appeal.
Issues on Appeal to the Supreme Court
The petition raised the following key issues:
- Whether RCBC was justified in dishonoring the checks and if Bangayan was entitled to damages;
- Whether the trial court erred in reinstating the testimony of RCBC’s witness Lao;
- Whether RCBC violated the Bank Secrecy Act by disclosing confidential information.
Limitation on Review and Factual Findings
The Supreme Court emphasized that under Rule 45, only questions of law may be reviewed, and questions of fact are generally outside its jurisdiction. The Court found no compelling reason to depart from facts established by the lower courts which found the Surety Agreement authentic and the bank’s actions justified.
Validity and Authenticity of the Surety Agreement
The Court held that Bangayan failed to substantiate allegations that his signature was forged. Forgery cannot be presumed and must be proven by clear and convincing evidence, which was lacking. RCBC witness Lao positively identified Bangayan’s signature and the documents’ authenticity. Further, absence of notarization did not invalidate the Surety Agreement since notarization is not an essential element for the validity of contracts in the Philippines. The annex listing addresses, though unsigned, did not affect the main agreement’s validity.
Justification for Dishonor of Checks and Application of Funds
The Court found no evidence of malice or bad faith by RCBC in dishonoring the checks. The bank exercised its contractual rights to apply Bangayan’s funds as surety for the corporations’ obligations under the Letters of Credit, which had become due and demandable. The "independence principle" in letters of credit obligated RCBC to pay the beneficiary promptly, justifying the application of Bangayan’s deposits to settle the obligations. Any damages suffered were the consequence of Bangayan’s obligations as surety, not wrongful acts by RCBC.
Reinstatement of Witness Testimony and Due Process Considerations
The Court upheld the trial court’s discretionary pow
Case Syllabus (G.R. No. 149193)
Facts of the Case
- Petitioner Ricardo B. Bangayan maintained a savings and a current account with Rizal Commercial Banking Corporation (RCBC), having an automatic transfer feature between them.
- On June 26, 1992, Bangayan allegedly signed a Comprehensive Surety Agreement with RCBC, securing obligations of nine corporations to the bank, including loan obligations, advances, credits/increases, and other expenses incurred by these companies.
- Bangayan contested the authenticity and due execution of this Surety Agreement, alleging his signature was forged and the document was unnotarized.
- Despite the contested agreement, RCBC issued letters of credit for several of the guaranteed corporations shortly after the alleged signing.
- The Bureau of Customs (BOC) demanded payment of import duties related to shipments imported via these letters of credit, prompting RCBC to place holds ("earmark") on Bangayan's accounts to secure these obligations.
- Petitioner Bangayan’s checks totaling over Php 13 million were dishonored by RCBC on grounds of insufficient funds, after the bank applied the deposits to pay the guaranteed corporations' obligations.
- Bangayan filed a complaint claiming damage from dishonor of seven checks and wrongful disclosure of confidential bank information contrary to the Bank Secrecy Act (RA No. 1405).
Issues Presented
- Whether RCBC was justified in dishonoring Bangayan’s checks, and whether Bangayan is entitled to damages.
- Whether the trial court erred in reinstating the testimony of RCBC's witness, Mr. Eli Lao, after an earlier order had stricken such testimony.
- Whether RCBC violated the Bank Secrecy Act by disclosing confidential depositor information.
Proceedings and Decisions Below
- Trial court dismissed Bangayan’s complaint, holding that RCBC acted properly under the Surety Agreement and no Bank Secrecy Act violation was shown.
- The Court of Appeals affirmed in toto, citing sufficiency of funds issue due to obligations secured by the Surety Agreement and no proof of malice in dishonor of checks.
- Petitioner filed a Rule 45 Petition for Review on Certiorari before the Supreme Court, raising assignments of errors including alleged procedural irregularities, violations of due process, and erroneous application of the law.
Supreme Court Ruling – Jurisdiction and Scope of Review
- The Court emphasized Rule 45 limits review to pure questions of law; questions of fact, including authenticity of the Surety Agreement, are not proper for review.
- The Court held that no reversible error existed in the lower courts’ factual findings and that no compelling reasons warranted overturning these findings.
Analysis on Whether RCBC Was Justified in Dishonoring the Checks
- The Court ruled no malice or bad faith was shown against RCBC; the bank rightfully applied Bangayan’s deposits to satisfy debts guaranteed under the Surety Agreement.
- Bangayan failed to prove forgery of his signature. The burden of