Republic of the Philippines

Supreme Court
Baguio City
THIRD DIVISION RICARDO B. BANGAYAN, Petitioner, G.R. No. 149193 Present: CARPIO,* CARPIO MORALES , J., Chairperson, BERSAMIN, VILLARAMA, JR., and SERENO, JJ. Promulgated: April 4, 2011

- versus

RIZAL COMMERCIAL BANKING CORPORATION AND PHILIP SARIA, Respondents,

x--------------------------------------------------x DECISION SERENO, J.: Before this Court is a Rule 45 Petition1 questioning the Court of Appeals affirmance of a trial courts dismissal of a complaint for damages filed by a depositor against a bank for the dishonor of seven checks and for the wrongful disclosure of information regarding the depositors account contrary to the Bank Secrecy Act (Republic Act No. 1405). 2 The Facts Petitioner Ricardo Bangayan had a savings account and a current account with one of the branches of respondent Rizal Commercial Banking

As per Division Raffle dated 13 September 2010. Rollo at 8-60. 2 RTC Decision dated 17 October 1994 (rollo at 77-87) and CA Decision dated 06 August 2001 (rollo at 62-76).
1

Corporation (RCBC). 3 These two accounts had an automatic transfer condition wherein checks issued by the depositor may be funded by any of the two accounts.4 On 26 June 1992, petitioner Bangayan purportedly signed a Comprehensive Surety Agreement (the Surety Agreement)5 with respondent RCBC in favor of nine corporations. 6 Under the Surety Agreement, the funds in petitioner Bangayans accounts with respondent RCBC would be used as security to guarantee any existing and future loan obligations, advances, credits/increases and other obligations, including any and all expenses that these corporations may incur with respondent bank. Petitioner Bangayan contests the veracity and due authenticity of the Surety Agreement on the ground that his signature thereon was not genuine, and that the agreement was not notarized. 7 Respondent RCBC refutes this claim, although it admitted that it was exceptional for a perfected Surety Agreement of the bank to be without a signature of the witness and to remain unnotarized. Mr. Eli Lao, respondent banks Group Head of Account Management, however, explained that the bank was still in the process of completing the Surety Agreement at that time. 8 The following are the transactions of respondent RCBC in relation to the Surety Agreement vis--vis the petitioner Bangayan. On 26 June 1992 (the same day that the Surety Agreement was allegedly signed), two of the corporations whose performance were guaranteed therein LBZ Commercial and Peaks Marketing were issued separate commercial letters of credit9 by respondent RCBC for the importation
3

Savings Account No. 1109-81805-0 and Current Account No. 0109-8232-5 at the RCBC Binondo Branch, 500 Quintin Paredes, St., Binondo, Manila. (See Amended Answer dated 12 January 1993; RTC records, Vol. 1, at 127) 4 RTC Decision dated 17 October 1994, at 9 (rollo at 85); CA Decision dated 06 August 2001, at 2 (rollo at 63). 5 Exhibit 1; RTC records, Vol. 2, at 705-707. 6 The nine corporations were: (1) LBZ Commercial ; (2) Peaks Manufacturing ; (3) Final Sales Enterprises ; (4) Lotec Marketing ; (5) Lucky M Motor Service; (6) 9M Trading; (7) WN Albos Trading Center; (8) KMT Import Trader; and (9) Silver Machine Trading. (Exhibit 1 -B, id. at 707) 7 Petition for Review on Certiorari, para. 25-27, at 44-45; rollo at 50-51. 8 TSN, 16 September 1994, at 22-23. 9 Exhibits 4 and 5, RTC records, Vol. 2, at 713-716.

of PVC resin from Korea. Three days later or on 29 June 1992, respondent RCBC issued a third letter of credit10 in favor of another corporation, Final Sales Enterprise, whose obligations to respondent bank were likewise secured by petitioner Bangayan under the Surety Agreement. Mr. Lao claimed that respondent bank would not have extended the letters of credit in favor of the three corporations without petitioner Bangayan acting as surety. 11 On 26 August 1992, a fourth letter of credit12 was issued by respondent RCBC for the importation of materials from Korea, this time by Lotec Marketing, another corporation enumerated in the Surety Agreement. The Korea Exchange Bank was designated as the advising bank for Lotec Marketings letter of credit. 13 On 15 September 1992, after the arrival of the shipments of the first three corporations from Korea, the Bureau of Customs (BOC) demanded via letter of the same date from respondent RCBC, which facilitated the three letters of credit, the remittance of import duties in the amount of thirteen million two hundred sixty-five thousand two hundred twenty-five pesos (PhP13,265,225).14 Mr. Lao of respondent RCBC allegedly called petitioner Bangayan and informed him of the BOCs demand for payment of import duties. 15 According to Mr. Lao, petitioner allegedly replied that he understood the situation and assured Mr. Lao that he was doing everything he could to solve the problem.16 Considering the BOCs demand, respondent RCBC decided to put on hold the funds in petitioner Bangayans accounts by virtue of the authority given to it by petitioner under the Surety Agreement. 17 Respondent RCBC reasoned that as the collecting agent, it had to earmark sufficient funds in the
10 11 12 13 14 15 16 17

Exhibit 3, id. at 711-712. TSN, 16 September 1994, at 28. Exhibit 10, RTC records, Vol. 2, at 724-725. Id. Exhibit 6; id. at 766. TSN, 04 June 1993, at 28-29. Id. at 29. Id. at 30-32. See Surety Agreement (Exhibit 1); RTC records, Vol. 2 at 705.

account of petitioner Bangayan (the surety) to satisfy the tax obligations of the three corporations, in the event that they would fail to pay the same. 18 Thus, respondent bank refused payments drawn from petitioner Bangayans deposits, unless there was an order from the BOC. 19 Petitioner Bangayan, however, contests this action since respondent bank did not present any writ of garnishment that would authorize the freezing of his funds.20 On 18 September 1992, two of the seven checks that were drawn against petitioner Bangayans Current Account No. 0109-8232-5 were presented for payment to respondent RCBC, namely:
RCBC Check No. 9879921 93800022 Date of Presentment 18 Sept 1992 18 Sept 1992 TOTAL Paid To United Pacific Enterprises United Pacific Enterprises Amount PhP3,650,000 PhP4,500,000 PhP8,150,000

On the same day, the amounts of three million six hundred fifty thousand pesos (PhP3,650,000) and four million five hundred thousand pesos (PhP4,500,000)23 were successively debited from the said current account, as shown in petitioner Bangayans passbook for the current account. 24 Alongside these two debit entries in the passbook was the transaction reference code DFT, which apparently stands for debit fund transfer.25 On 21 September 1992, the same amounts in the two checks were credited to petitioner Bangayans current account, under the transaction reference code CM, that stands for credit memo.26 Moreover, petitioner Bangayans Checks Nos. 93799 and 93800 issued in favor of United Pacific

18 19

TSN, 16 September 1994, at 32. CA Decision; rollo at 65. 20 Petitioner Bangayans Memorandum dated 22 October 2002, at 19 ( rollo at 255). See also TSN, 31 March 1993, at 30-31. 21 Exhibit F, RTC records, Vol. 1, at 184. 22 Exhibit E, id. 23 These amounts correspond to the first two checks (Check Nos. 937999 and 93800) that were presented on 18 September 1992. 24 Exhibit A -1, RTC records, Vol. 1, at 182. 25 Id. 26 Id.

Enterprises were also returned by respondent RCBC with the notation REFER TO DRAWER.27 On the same day that the checks were referred to petitioner Bangayan by respondent RCBC, United Pacific Enterprises, through Mr. Manuel Dente, demanded from petitioner Bangayan the payment of eight million one hundred fifty thousand pesos (PhP8,150,000), which corresponded to the amounts of the two dishonored checks that were issued to it.28 Nothing more has been alleged by petitioner on this particular matter. On 24 September 1992, the Korea Exchange Bank (the advising bank) informed respondent RCBC through a telex that it had already negotiated the fourth letter of cred it for Lotec Marketings shipment, which amounted to seven hundred twelve thousand eight hundred U.S. dollars (US$712,800) and, thereafter, claimed reimbursement from respondent RCBC. 29 This particular shipment by Lotec Marketing became the subject matter of an investigation conducted by the Customs Intelligence & Investigation Service of the BOC, according to respondent bank. 30 Both parties agreed that the BOC likewise conducted an investigation covering the importation of the three corporations LBZ Commercial, Peaks Marketing and Final Sales Enterprise - that were opened through the letters of credit issued by respondent RCBC.31 On 09 October 1992, respondent Philip Saria, who was an Account Officer of respondent banks Binondo Branch, signed and executed a Statement before the BOC, with the assistance of Atty. Arnel Z. Dolendo of respondent RCBC, on the banks letters of credit issued in favor of the three corporations.32 Petitioner Bangayan cited this incident as the basis for the allegation in the Complaint he subsequently filed that respondent RCBC had disclosed to a third party (the BOC) information concerning the identity,
27 28 29 30 31 32

Exhibits H and I, id. at 186. Exhibit Q, id. at 203. Exhibit 11, id. Vol. 2, at 726. Respondent RCBC Pre-Trial Brief dated 03 February 1993, at 2; id. Vol. 1, at 208. Exhibit P, RTC records, Vol.1, at 198-202. Id.

nature, transaction and deposits including details of transaction related to and pertaining to his deposits with the said bank, in violation of the Bank Secrecy Act.33 It must be pointed out that the trial court found that no evidence was introduced by (petitioner Bangayan) to substantiate his claim that (respondent RCBC) gave any classified information in violation of the Bank Secrecy Law.34 Thus, the trial court considered the alleged disclosure of confidential bank information by respondent RCBC as a non-issue.35 On the same date, when Lotec Marketings loan obligation under the fourth letter of credit became due and demandable, 36 respondent RCBC issued an advice that it would debit the amount of twelve million seven hundred sixty-two thousand six hundred pesos (PhP12,762,600) from petitioner Bangayans current account to partially satisfy the guaranteed corporations loan.37 At that time, petitioner Bangayans passbook for his current account showed that it had funds of twelve million seven hundred sixty-two thousand six hundred forty-five and 64/100 pesos (PhP12,762,645.64). 38 On 12 October 1992, the amount of twelve million seven hundred sixtytwo thousand and six hundred pesos (PhP12,762,600) was debited from petitioner Bangayans current account, consequently reducing the funds to forty-five and 64/100 pesos (PhP45.64). 39 Respondent RCBC claimed that the former amount was debited from petitioners account to partially pay Lotec Marketings outstanding obligation which stood at eighteen million fortyseven thousand thirty-three and 60/100 pesos (PhP18,047,033.60). 40 Lotec Marketing, thereafter, paid the balance of its obligation to respondent RCBC in the amount of five million three hundred thirty-eight thousand eight

33

Second Cause of Action, Complaint dated 05 November 1992, at 7-8 (RTC records, Vol. 1, at 78); CA Decision dated 06 August 2001, at 3 (rollo at 64). 34 RTC Decision dated 17 October 1994, at 8; rollo , at 84. 35 On this score, plaintiff (petitioner Bangayan) has no cause of action for damages against defendant RCBC. (RTC Decision dated 17 October 1994, at 8; id. ). 36 Import Bill dated 09 October 1992 (Exhibit 18,; RTC records, Vol. 2, at 735). 37 Debit Advice dated 09 October 1992 (Exhibit 19; id. at 736). 38 Exhibit A -1; id. ,Vol. 1, at 182. 39 Id. 40 Respondent RCBC Pre-Trial Brief dated 03 February 1993, at 2-3; id. at 208-209.

hundred nineteen and 20/100 pesos (PhP5,338,819.20)41 under the fourth letter of credit. On 13 October 2010, the three corporations earlier adverted to paid the corresponding customs duties demanded by the BOC. 42 Receipts were subsequently issued by the BOC for the corporations payments, copies of which were received by Atty. Nelson Loyola, counsel of petitioner Bangayan in this case.43 The trial court considered this as payment by petitioner of the three corporations obligations for custom duties. 44 Thereafter, respondent RCBC released to the corporations the necessary papers for their PVC resin shipments which were imported through the banks letters of credit. 45 On 15 October 2010, five other checks of petitioner Bangayan were presented for payment to respondent RCBC, namely:
RCBC Check No. 93801146 93801247 93801348 93801449 93801550 Date of Paid To Presentment 15 Oct 1992 Simplex Merchandising 15 Oct 1992 Simplex Merchandising 15 Oct 1992 Simplex Merchandising 15 Oct 1992 Hinomoto Trading Company 15 Oct 1992 Hinomoto Trading Company TOTAL AMOUNT Amount PhP1,200,000 PhP1,260,000 PhP1,180,000 PhP1,052,000 PhP982,000 PhP5,674,000

On 16 October 1992, these five checks were also dishonored by respondent RCBC on the ground that they had been drawn against insufficient funds (DAIF) and were subsequently returned. 51 On 20 October 1992, Hinomoto Trading Company, one of the payees for two of the dishonored checks, 52 demanded that petitioner Bangayan make

41 42

RCBC Official Receipt dated 28 October 1992 (Exhibit 20; id. Vol. 2, at 737). Exhibits 7-a, 8-a, and 9-a, id. at 718-723. 43 Id. 44 It appears that these taxes were eventually funded by plaintiff sometime on Octobe r 13, 1992. (RTC Decision dated 17 October 1994, at 10; rollo at 86. 45 Exhibits 7, 8, and 9, id. 46 Exhibit D; id., Vol. 1, at 183. 47 Exhibit C, id. 48 Exhibit B, id. 49 Exhibit I, id. at 187. 50 Exhibit J, id.

good on his payments. 53 On 21 October 1992, the other payee of the three other dishonored checks, 54 Simplex Merchandising, likewise made a final demand on petitioner to replace the dishonored instruments.55 On 23 October 1992, petitioner Bangayan, through counsel, demanded that respondent bank restore all the funds to his account and indemnify him for damages.56 On 30 October 1992, nineteen thousand four hundred twenty-seven and 15/100 pesos (P hP19,427.15) was credited in petitioner Bangayans current account, with the transaction reference code INT referring to interest. 57 Petitioner explains that even if the outstanding balance at that time was reduced, this interest was earned based on the average daily balance of the account for the quarter and not just on the balance at that time, which was forty-five and 64/100 pesos (PhP45.64). 58 The Case in the Trial Court On 09 November 1992, petitioner Bangayan filed a complaint for damages against respondent RCBC. 59 Subsequently, respondent RCBC filed an Answer dated 02 December 1992 with compulsory counter-claims.60 On 12 January 1993, respondent RCBC filed a Motion for Leave to File Attached Amended Answer and Amended Answer. 61 Petitioner Bangayan argues that at the time the dishonored checks were issued, there were sufficient funds in his accounts to cover them; 62 that he was informed by personnel of respondent RCBC that his accounts were garnished, but no notice or writ of garnishment was ever shown to him; 63 and that his

name and reputation were tarnished because of the dishonor of checks that were issued in relation to his automotive business. 64 In its defense, respondent RCBC claims that petitioner Bangayan signed a Surety Agreement in favor of several companies that defaulted in their payment of customs duties that resulted in the imposition of a lien over the accounts, particularly for the payment of customs duties assessed by the Bureau of Customs.65 Respondent bank further claimed that it had funded the letter of credit66 availed of by Lotec Marketing to finance the latters importation with the account of petitioner Bangayan, who agreed to guarantee Lotec Marketings obligations under the Surety Agreement; and, that respondent bank applied petitioner Bangayans deposits to satisfy part of Lotec Marketings obligation in the amount of twelve million seven hundred sixty-two thousand and six hundred pesos (PhP12,762,600), which resulted in the depletion of the bank accounts. 67 Petitioner Bangayan also alleged that respondent RCBC disclosed to a third party (the BOC) classified information about the identity and nature of the transactions and deposits, in violation of the Bank Secrecy Act. Resp ondent RCBC counters that no confidential information on petitioners bank accounts was disclosed. Availing himself of discovery proceedings in the lower court, petitioner Bangayan filed a Request for Admission68 and Request for Answer to Written Interrogatories,69 to which respondent RCBC filed the corresponding Answers and Objections to Interrogatories 70 and Response to Request for Admission. 71 During the presentation of complainants evidence, petitioner Bangayan, Atty. Randy Rutaquio, respondent Saria and Manuel Dantes

testified in open court. Petitioner Bangayan thereafter filed a Formal Offer of Evidence.72 On the other hand, respondent RCBC presented Mr. Lao as its lone defense witness. Before the termination of Mr. Laos direct examination, respondent RCBC filed a Motion to Inhibit Presiding Judge Pedro Santiago, 73 who subsequently denied the motion. 74 The Order denying the Motion to Inhibit was the subject matter of petitions filed by respondent RCBC in the Court of Appeals 75 and subsequently in this Court, which were all dismissed. In the meantime, when respondent RCBCs witness (Mr. Lao) failed to appear at the hearing, Judge Santiago ordered that Mr. Laos testimony be stricken off the record despite respondent banks motion to have the case reset.76 After the appellate proceedings for respondent RCBCs Petition as regards the Motion to Inhibit, however, Judge Santiago set aside his earlier Order and reinstated the testimony of Mr. Lao, subject to cross-examination.77 Petitio ner Bangayan took exception to the Order reinstating Mr. Laos testimony, but continued to conduct his cross examination with a reservation to raise the Order in the appellate courts. 78 Respondent RCBC thereafter filed its Formal Offer of Exhibits. 79 On 17 October 1994, the trial court rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises above considered, plaintiff not having proved that defendant RCBC acted wrongly, maliciously and negligently in dishonoring his 7 checks , nor has the bank given any confidential informations against the plaintiff in violation of R.A. 1405 and the defendant bank having established on the contrary that plaintiff has no sufficient funds for his said checks , the instant complaint is hereby DISMISSED.80 (Emphasis supplied)

When his omnibus motion81 to have the Decision reconsidered was denied,82 petitioner Bangayan filed a notice of appeal. 83 The Ruling of the Court of Appeals After petitioner Bangayan84 and respondent RCBC 85 filed their respective appeal briefs, the Court of Appeals affirmed the trial courts decision in toto.86 The appellate court found that the dishonor of the checks by respondent RCBC was not without good reason, considering that petitioner Bangayans account had been debited owing to his obligations as a surety in favor of several corporations. Thus, the Court Appeals found there was no dishonest purpose, or some moral obliquity, or conscious doing of wrong, or breach of a known duty, or some motive or interest, or ill will that partakes (sic) nature of fraud that can be attributed to respondent RCBC.87 It likewise ruled that petitioner Bangayan cannot raise the question as to the genuineness, authenticity and due execution of the Surety Agreement for the first time on appeal.88 This Decision of the appellate court is the subject of the instant Petition for Review on Certiorari filed by petitioner Bangayan under Rule 45 of the Rules of Court.89 Assignment of Errors Petitioner Bangayan makes the following assignment of errors:
A. THE COURT OF ARBITRARINESS AND APPEALS ACTED WITH GROSS IN BLATANT VIOLATION OF

THE CONSTITUTIONAL RIGHTS OF THE PETITITONER TO DUE PROCESS, AND A FAIR TRIAL: (1) WHEN IT REINSTATED THE TESTIMONY OF ELI LAO ALREADY STRICKEN OFF THE RECORDS UPON PRIOR ORDER OF THE RTC AFFIRMED BY THE COURT OFAPPEALS AND CONFIRMED BY THE SUPREME COURT; (2) WHEN IT SANCTIONED THE CAVALIER ACT OF RESPONDENTS IN DEMEANING THE RULES ON DISCOVERY PROCEDURE; (3) WHEN IT RENDERED A DECISION WHICH IS CONTRARY TO THE FACTS AND THE EVIDENCE PRESENTED AT THE TRIAL; and (4) WHEN IT REFUSED TO APPLY THE LAWS SQUARELY IN POINT ON THE MATTER IN CONTROVERSY. B. THE HONORABLE COURT OF APPEALS DECIDED THIS CASE IN A WAY NOT IN ACCORD WITH THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT; C. THERE ARE SPECIAL AND IMPORTANT REASONS THAT REQUIRE A REVIEW OF THE CA DECISION; D. THE DECISION OF THE COURT OF APPEALS IS NEITHER JUST NOR IN ACCORD WITH THE RULES OF LAW AND JURISPRUDENCE NOR IS IT EQUITABLE AND IT IGNORES THE PREVIOUS RULINGS OF THE SUPREME COURT IN EARLIER PRECEDENT CASES.90

The Issues A. Whether respondent RCBC was justified in dishonoring the

checks, and, consequently, whether petitioner Bangayan is entitled to damages arising from the dishonor. B. testimony. C. Whether respondent RCBC violated the Bank Secrecy Act. Whether there was reversible error on the part of the lower court

in allowing the testimony of Mr. Lao, despite its earlier Order to strike off the

The Ruling of the Court Preliminarily, petitioner Bangayan raises questions of fact91 regarding the authenticity of the Surety Agreement and the events leading up to the dishonor of the seven checks. However, petitions for review on certiorari under Rule 45 are limited only to pure questions of law92 and, generally, questions of fact are not reviewable93 since this Court is not a trier of facts. 94 Although respondent RCBC briefly treated this procedural matter, 95 the Court finds that the instant Petition is indeed subject to dismissal because the determination of questions of fact is improper in a Rule 45 proceeding. 96 In any case, even if procedural rules were to be relaxed at this instance, the substantial merits of petitioner Bangayans cause is nonetheless insufficient to reverse the decisions of the trial and appellate courts, as will be discussed in detail below. A. There was no malice or bad faith on the part of respondent RCBC in the dishonor of the checks, since its actions were justified by petitioner Bangayans obligations under the Surety Agreement. The Court is unconvinced by petitioner Bangayans arguments that respondent RCBC acted with malice or bad faith in dishonoring the seven checks, which would entitle him to an award of damages. At the heart of the controversy is the Surety Agreement that secured the obligations of the nine corporations in favor of respondent RCBC. Petitioner Bangayan denies the genuineness, authenticity and due execution of the alleged agreement on the following grounds: (a) his signature on the document is not genuine; (b) the Surety Agreement was never

notarized; and (c) the alleged accounts, being guaranteed, appear in a separate piece of paper that does not bear his signature or conformity. 97 Both the trial and the appellate courts gave credence to the Surety Agreement, which categorically guaranteed the four corporations obligations to respondent RCBC under the letters of credit. Petitioner Bangayan did not provide sufficient reason for the Court to reverse these findings. The evidence on record supports the conclusion arrived at by the lower court and the Court of Appeals. First, aside from his bare allegations, petitioner Bangayan failed to establish how his signature in the Surety Agreement was forged and therefore, not genuine. Before a private document is offered as authentic, its due execution and authenticity must be proved: (a) either by anyone who has seen the document executed or written; or (b) by evidence of the genuineness of the signature or handwriting of the maker.98 As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence. 99 The burden of proof rests on the party alleging forgery. 100 Mere allegation of forgery is not evidence.101 Mr. Lao, witness for respondent RCBC, identified the Surety Agreement102 as well as the genuineness of petitioner Bangayans signature therein using petitioners signature cards in his bank accounts. 103 The trial and the appellate courts gave due credence to the identification and authentication of the Surety Agreement made by Mr. Lao. 104 In Deheza-Inamarga v. Alano,105 the Court ruled that:

The question of forgery is one of fact. It is well-settled that when supported by substantial evidence or borne out by the records, the findings of fact of the Court of Appeals are conclusive and binding on the parties and are not reviewable by this Court. It is a hornbook doctrine that the findings of fact of trial courts are entitled to great weight on appeal and should not be disturbed except for strong and valid reasons. It is not a function of this Court to analyze and weigh evidence by the parties all over again. Our jurisdiction is limited to reviewing errors of law that might have been committed by the Court of Appeals. Where the factual findings of the trial court are affirmed in toto by the Court of Appeals as in this case, there is great reason for not disturbing such findings and for regarding them as not reviewable by this Court. (Emphasis supplied)

Furthermore, petitioner Bangayan did not adduce any evidence to support his claim of forgery, despite the opportunity to do so. Considering that there was evidence on record of his genuine signature and handwriting (the signature card and the dishonored checks themselves), nothing should have prevented petitioner Bangayan from submitting the Surety Agreement for examination or comparison by a handwriting expert. Even respondent RCBC did not interpose any objection when the possibility of forwarding the signature card and Surety Agreement forwarded to the National Bureau of Investigation for examination was raised during the testimony of Mr. Lao:
ATTY. LOYOLA Considering the delicate nature or the significance of the signatures in the signature cards and the risk of my admitting the authenticity of a mere xerox copies [sic] and considering further that it is our position that the surety agreement as well as specimen signatures on the signature cards must be submitted to the Court and later forwarded to the NBI, Question Document Section, for examination, I am in no position to admit now that the machine copies in the signature cards are faithful reproduction. Accordingly, I am hoping at this stage that the surety agreement and the signature cards be forwarded to the NBI later on for examination and in the mean time, the questioned documents be entrusted to the custody of the Honorable Court. ATTY. POBLADOR With respect to the manifestation of counsel that the documents with the signatures should be submitted to the NBI, we have no objection, but at this juncture, we are only asking, Your Honor, if

the xerox copies are faithful reproduction of the original. 106 (Emphasis supplied)

Despite his intention to have the signatures in the Surety Agreement compared with those in the signature cards, petitioner Bangayan did not have the questioned document examined by a handwriting expert in rebuttal and simply relied on his bare allegations. There is no clear, positive and convincing evidence to show that his signature in the Surety Agreement was indeed forged. As petitioner failed to discharge his burden of demonstrating that his signature was forged, there is no reason to overturn the factual findings of the lower courts with respect to the genuineness and due execution of the Surety Agreement. Second , the mere absence of notarization does not necessarily render the Surety Agreement invalid. Notarization of a private document converts the document into a public one, renders it admissible in court without further proof of its authenticity, and is entitled to full faith and credit upon its face. 107 However, the irregular notarization or, for that matter, the lack of notarization does not necessarily affect the validity of the contract reflected in the document.108 On its face, the Surety Agreement is not notarized, even if respondent RCBCs standard form for that agreement makes provisions for it. The non completion of the notarization form, however, does not detract from the validity of the agreement, especially in this case where the genuineness and due authenticity of petitioner Bangayans signature in the contract was not successfully assailed. The failure to notarize the Surety Agreement does not invalidate petitioner Bangayans consent to act as surety for the nine corporations obligations to respondent RCBC. Contracts are obligatory in whatever form they may have been entered into, provided all essential requisites are

present109 and the notarization is not an essential requisite for the validity of a Surety Agreement.110 Third , that the annex of the Surety Agreement does not bear petitioner Bangayans signature is not a sufficient ground to invalidate the main agreement altogether. As the records will bear out, the Surety Agreement enumerated the names of the corporation whose obligations petitioner Bangayan are securing. The annex to the Surety Agreement enumerated not only the names of the corporations but their respective addresses as well. 111 The corporations enumerated in the annex correspond to the nine corporations enumerated in the main body of the Surety Agreement. Ordinarily, the name and address of the principal borrower whose obligation is sought to be assured by the surety is placed in the body of the agreement, but in this case the addresses could not all fit in the body of the document, thus, requiring that the address be written in an annex. The Surety Agreement itself noted that the principal places of business and postal addresses of the nine corporations were to be found in an attached document. Fourth , petitioner Bangayan never contested the existence of the Surety Agreement prior to the filing of the Complaint. When Mr. Lao informed him of the letter from the BOC regarding the failure of the three corporations to pay the customs duties under the letters of credit, the petitioner assured respondent bank that he is doing everything he can to solve the problem. 112 If petitioner Bangayan purportedly never signed the Surety Agreement, he would have been surprised or at least perplexed that respondent RCBC would contact him regarding the three corporations letters of credit, when, as he claims, he never agreed to act as their surety. Instead, he acknowledged the situation and even offered to solve the predicament of these borrower corporations. In fact, Atty. Loyola, petitioners counsel in this case, even obtained copies of the BOC receipts after the three corporations paid the customs duties for their importation under the letters of credit giving a

possible interpretation that petitioner was himself answering the obligations of the three corporations for the unpaid customs duties. It must be emphasized that petitioner Bangayan did not complain against the four corporations which had benefitted from his bank account. He claims to have no reasonable connection to these borrower corporations and denies having signed the Surety Agreement. If true, nothing should have stopped him from taking these corporations to court and demanding compensation as well as damages for their unauthorized use of his bank account. Yet, these bank accounts were put on hold and/or depleted by the letters of credit issued to the four entities. That petitioner did not include them in the present suit strengthens the finding that he had indeed consented to act as surety for those entities, and that there seems to be no arms length relationship between petitioner and the three entities. Whatever damage to petitioner Bangayans interest or reputation from the dishonor of the seven checks was a consequence of his agreement to act as surety for the corporations and their failure to pay their loan obligations, advances and other expenses. With respect to the first two dishonored checks, respondent RCBC had already put on hold petitioner Bangayans account to answer for the customs duties being demanded from the bank by the BOC. In fact, the trial court considered the referral of these checks to petitioner Bangayan as an effort by respondent RCBC to allow its depositor an opportunity to arrange his accounts and provide funds for his checks.113 It likewise appeared to the appellate court that the funds in petitioners account served as the lien of the custom duties assessed; thus, the funds cannot be considered as sufficient to cover future transactions. 114 On the other hand, the five other checks were subsequently dishonored because petitioner Bangayans account was by that time already depleted due

to the partial payment of Lotec Marketings loan obligation. 115 Although the lien earlier imposed on petitioners acco unt was lifted when the three corporations paid the customs duties, 116 the account was almost completely depleted when the funds were subsequently used to partially pay Lotec Marketings outstanding obligation under the fourth letter of credit. 117 Respondent RCBC was compelled to fully debit the funds to satisfy the main loan obligation of Lotec Marketing, which petitioner had guaranteed in joint and several capacity. What must be underscored in respondent RCBCs immediate action of applying petitioner Bangayans account to the Lotec Marketing is the nature of the loan instrument used in this case a letter of credit. In a letter of credit, the engagement of the issuing bank (respondent RCBC in this instance) is to pay the seller or beneficiary of the credit (or the advising bank, Korean Exchange Bank, in this instance) once the draft and the required documents are presented to it.118 This independence principle in letters of credit assures the seller or the beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank from determining whether the main contract is actually accomplished or not. 119 In this case, respondent RCBC, as the issuing bank for Lotec Marketings letter of credit had to make prompt payment to Korea Exchange Bank (the advising bank) when the obligation became due and demandable. Precisely because of the independence principle in letters of credit and the need for prompt payment, 120 respondent RCBC required a Surety Agreement from petitioner Bangayan before issuing the letters of credit in favor of the four corporations, including Lotec Marketing.

Under Articles 2199121 and 2200122 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of or in recompense for loss or injury sustained. 123 They proceed from a sense of natural justice and are designed to repair the wrong that has been done. 124 In all seven dishonored checks, respondent RCBC properly exercised its right as a creditor under the Surety Agreement to apply the petitioner Bangayans funds in his accounts as security for the obligations of the four corporations under the letters of credit. Thus, petitioner Bangayan cannot attribute any wrong or misconduct to respondent RCBC since there was no malice or bad faith on the part of respondent in dishonoring the checks. Any damage to petitioner arising from the dishonor of those checks was brought about, not by the banks actions, but by the corporations that defaulted on their obligations that petitioner had guaranteed to pay. The trial and the appellate courts, therefore, committed no reversible error in disallowing the award of damages to petitioner. B. The trial court did not commit reversible error when it reinstated the testimony of Mr. Lao and allowed petitioner Bangayan to cross-examine him. Petitioner Bangayan also assails the lower courts order that reinstated the direct testimony of Mr. Lao, respondent RCBCs lone witness. Petitioner claims that Judge Santiago acted with partiality by reinstating Mr. Laos testimony, because this Court in another case had already sustained the lower courts earlier Order striking out the testimony. Hence, petitioner says that the judges reinstatement of Mr. Laos testimony was in violation of petitioners right to due process. Petitioner Bangayans arguments are unmeritorious. Discretionary power is generally exercised by trial judges in furtherance of the convenience of the courts and the litigants, the expedition

of business, and in the decision of interlocutory matters on conflicting facts where one tribunal could not easily prescribe to another the appropriate rule of procedure.125 Thus, the Court ruled:
In its very nature, the discretionary control conferred upon the trial judge over the proceedings had before him implies the absence of any hardand-fast rule by which it is to be exercised, and in accordance with which it may be reviewed. But the discretion conferred upon the courts is not a willful, arbitrary, capricious and uncontrolled discretion. It is a sound, judicial discretion which should always be exercised with due regard to the rights of the parties and the demands of equity and justice . As was said in the case of The Styria vs. Morgan (186 U.S., 1, 9): The establishment of a clearly defined rule of action would be the end of discretion, and yet discretion should not be a word for arbitrary will or inconsiderate action. So in the case of Goodwin vs. Prime (92 Me., 355), it was said that discretion implies that in the absence of positive law or fixed rule the judge is to decide by his view of expediency or by the demands of equity and justice . There being no positive law or fixed rule to guide the judge in the court below in such cases, there is no positive law or fixed rule to guide a court of appeals in reviewing his action in the premises, and such courts will not therefore attempt to control the exercise of discretion by the court below unless it plainly appears that there was inconsiderate action or the exercise of mere arbitrary will, or in other words that his action in the premises amounted to an abuse of discretion. But the right of an appellate court to review judicial acts which lie in the discretion of inferior courts may properly be invoked upon a showing of a strong and clear case of abuse of power to the prejudice of the appellant, or that the ruling objected to rested on an erroneous principle of law not vested in discretion.126 (Emphasis supplied)

Prior to a final judgment, trial courts have plenary control over the proceedings including the judgment, and in the exercise of a sound judicial discretion, may take such proper action in this regard as truth and justice may require.127 In the instant case, the trial court was within the exercise of its discretionary and plenary control of the proceedings when it reconsidered motu propio its earlier order striking out the testimony of Mr. Lao 128 and ordered it reinstated. 129 The order of the judge cannot be considered as willful, arbitrary, capricious and uncontrolled discretion, since his action

allowed respondent bank to present its case fully, especially considering that Mr. Lao was the sole witness for the defense. Petitioner Bangayans reliance130 on the Decisions of the Court of Appeals (CA-G.R. SP No. 31865) and this Court (G.R. No. 115922) with respect to respondent RCBCs Petition is misplaced. Contrary to his claim, what respondent RCBC questioned in those cases was the denial by Judge Santiago of its Motion for Inhibition. 131 As respondent pointed out, its Petitions to the Court of Appeals and the Court simply prayed for the reversal of the denial of the Motion for Inhibition and did not include the Order striking out the testimony of Mr. Lao. Even the appellate court (CA-G.R. CV No. 48479) noted that what was resolved by the High Court was the issue of Inhibition of the Judge and not the striking out of the testimony of Mr. Eli Lao.132 Neither can petitioner Bangayan claim any deprivation of due process when the trial court ordered the reinstatement of Mr. Laos testimony without any motion or prayer from respondent RCBC. The right of a party to confront and cross-examine opposing witnesses in a judicial litigation, be it criminal or civil in nature, or in proceedings before administrative tribunals with quasijudicial powers, is a fundamental right which is part of due process. 133 This right, however, has always been understood as requiring not necessarily an actual cross-examination but merely an opportunity to exercise the right to cross-examine if desired.134 What is proscribed by statutory norm and jurisprudential precept is the absence of the opportunity to cross-examine.135 In this case, petitioner Bangayans right to due process was not violated, as he was given the freedom and opportunity to cross-examine and confront Mr. Lao on the latters testimony. Even if respondent RCBC had not filed any motion, it was well within the courts discretion to have Mr. Laos testimony

reinstated in the interest of substantial justice. The proceedings in the trial court in this civil case were adversarial in nature insofar as the parties, in the process of attaining justice, were made to advocate their respective positions in order to ascertain the truth. 136 The truth-seeking function of the judicial system is best served by giving an opportunity to all parties to fully present their case, subject to procedural and evidentiary rules. Absent any blatant neglect or willful delay, both parties should be afforded equal latitude in presenting the evidence and the testimonies of their witnesses in favor of their respective positions, as well as in testing the credibility and the veracity of the opposing partys claims through cross -examination. The Court finds no reversible error on the part of the trial court in allowing the full presentation of the reinstated testimony of respondent RCBCs lone witness, especially since the other party was afforded the occasion to cross-examine the witness and in fact availed himself of the opportunity. Although he expressly reserved his right to question the courts reinstatement of the testimony of the witness, petitioner Bangayan did not satisfactorily offer convincing arguments to overturn the trial courts order. That the court gave petitioner the opportunity to cross-examine Mr. Lao a remedy that petitioner even fully availed himself of negates the allegation of bias against the Judge. The timing of petitioner Bangayans allegations of prejudice on the part of Judge Santiago is suspect, since the latter had already rendered a Decision unfavorable to petitioners cause. A motion to inhibit shall be denied if filed after a member of the court has already given an opinion on the merits of the case, the rationale being that a litigant cannot be permitted to speculate on the action of the court . . . (only to) raise an objection of this sort after the decision has been rendered. 137 When respondent RCBC moved for Judge Santiagos inhibition, petitioner even interposed an objection and characterized as unfounded

respondent banks charge of partiality. 138 It is now too late in the day to suddenly accuse Judge Santiago of prejudice in the proceedings below, after he has already rendered an unfavorable judgment against petitioner. If at all, the latters claim that Judge Santiago was biased in favoring respondent RCBC is a mere afterthought that fails to support a reversal by the Court. C. Respondent RCBC did not violate the Bank Secrecy Act. The Court affirms the trial courts findings which were likewise concurred with by the Court of Appeals that the alleged violation of the Bank Secrecy Act was not substantiated:
The Customss investigation with a subpoena/duces tecum sent to witness Mr. Lao on the three companies, Final Sales Enterprises, Peak Marketing and LBZ Commercial, guaranteed by plaintiff naturally raised an alarm. Mr. Lao was asked to bring documents on the questioned importations. The witness denied having given any statement in connection therewith. No evidence was introduced by plaintiff to substantiate his claim that defendant bank gave any classified information in violation of Republic Act No. 1405. On this score, plaintiff has no cause of action for damages against said defendant RCBC.139

In his Memorandum, petitioner Bangayan argues that there was a wrongful disclosure by respondents RCBC and Philip Saria of confidential information regarding his bank accounts in violation of the Bank Secrecy Act.140 However, petitioner failed to identify which confidential information respondents divulged before the BOC that would make them liable under the said law. Section 2 of the Bank Secrecy Act provides:
All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation.

Petitioner Bangayan claims that respondent Saria divulged confidential information through the Affidavit he submitted to the BOC. 141 However, nothing in respondent Sarias Affidavit before the BOC showed that details of petitioner Bangayans bank accounts with respondent bank was disclosed. If at all, respondent Saria merely discussed his functions as an account officer in respondent bank and identified petitioner as the one who had guaranteed the payment or obligations of the importers under the Surety Agreement. According to petitioner Bangayan, the responses of respondent RCBCs officers in relation to the BOCs actions led to unsavory news reports that disparaged petitioners good character and reputation and exposed him to public ridicule and contempt.142 However, as the appellate court correctly found, the humiliation and embarrassment that petitioner Bangayan suffered in the business community was not brought about by the alleged violation of the Bank Secrecy Act; it was due to the smuggling charges filed by the Bureau of Customs which found their way in the headlines of newspapers. 143 Both the trial and appellate courts correctly found that petitioner Bangayan did not satisfactorily introduce evidence to substantiate his claim that defendant bank gave any classified information in violation of the Bank Secrecy Act. Failing to adduce further evidence in the instant Petition with respect to the banks purported disclosure of confidential information as regards his accounts, petitioner cannot be awarded any damages arising from an unsubstantiated and unproved violation of the Bank Secrecy Act. Rules of Discovery The Court finds that petitioner Bangayans argument as regards the banks purported failure to comply with the rules of discovery is not substantive enough to warrant further discussion by this Court. Petitioner has not alleged any different outcome that would be generated if we were to agree with him on this point. If petitioner is unsatisfied with respondent RCBCs

responses, then his remedy is to expose the falsity (if any) of the banks responses in the various modes of discovery during the trial proper. He could have confronted respondent with contradictory statements, testimonies or other countervailing evidence. The Court affirms the findings of the appellate court that the rules of discovery were not treated lightly by respondent RCBC.144 In summary, petitioner Bangayan failed to establish that the dishonor of the seven checks by respondent RCBC entitled him to damages, since the dishonor arose from his own voluntary agreement to act as surety for the four corporations letters of credit. There was no bad faith or malice on the part of respondent bank, as it merely acted within its rights as a creditor under the Surety Agreement. IN VIEW OF THE FOREGOING, the instant Petition for Review on Certiorari filed by Ricardo B. Bangayan is DENIED. The Decisions of the trial court and appellate court dismissing the Complaint for damages filed by Bangayan against respondents Rizal Commercial Banking Corporation and Philip Saria are hereby AFFIRMED. SO ORDERED.

MARIA LOURDES P. A. SERENO Associate Justice WE CONCUR:

ANTONIO T. CARPIO Associate Justice

CONCHITA CARPIO MORALES Associate Justice Chairperson

LUCAS P. BERSAMIN Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson, Third Division

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice