G.R. No.

149193               April 4, 2011 was not genuine, and that the agreement was not
notarized.7 Respondent RCBC refutes this claim, although it
RICARDO B. BANGAYAN, Petitioner, admitted that it was exceptional for a perfected Surety Agreement
vs. of the bank to be without a signature of the witness and to remain
RIZAL COMMERCIAL BANKING CORPORATION AND PHILIP unnotarized. Mr. Eli Lao, respondent bank’s Group Head of
SARIA, Respondents, Account Management, however, explained that the bank was still
in the process of "completing" the Surety Agreement at that time.8
DECISION
The following are the transactions of respondent RCBC in relation
SERENO, J.: to the Surety Agreement vis-à-vis the petitioner Bangayan.

Before this Court is a Rule 45 Petition1 questioning the Court of On 26 June 1992 (the same day that the Surety Agreement was
Appeals’ affirmance of a trial court’s dismissal of a complaint for allegedly signed), two of the corporations whose performance
damages filed by a depositor against a bank for the dishonor of were guaranteed therein – LBZ Commercial and Peaks Marketing
seven checks and for the wrongful disclosure of information – were issued separate commercial letters of credit9 by
regarding the depositor’s account contrary to the Bank Secrecy respondent RCBC for the importation of PVC resin from Korea.
Act (Republic Act No. 1405).2 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
The Facts
secured by petitioner Bangayan under the Surety Agreement. Mr.
Lao claimed that respondent bank would not have extended the
Petitioner Ricardo Bangayan had a savings account and a current letters of credit in favor of the three corporations without petitioner
account with one of the branches of respondent Rizal Bangayan acting as surety.11
Commercial Banking Corporation (RCBC).3 These two accounts
had an "automatic transfer" condition wherein checks issued by
On 26 August 1992, a fourth letter of credit 12 was issued by
the depositor may be funded by any of the two accounts.4
respondent RCBC for the importation of materials from Korea,
this time by Lotec Marketing, another corporation enumerated in
On 26 June 1992, petitioner Bangayan purportedly signed a the Surety Agreement. The Korea Exchange Bank was
Comprehensive Surety Agreement (the Surety Agreement) 5 with designated as the advising bank for Lotec Marketing’s letter of
respondent RCBC in favor of nine corporations.6 Under the Surety credit.13
Agreement, the funds in petitioner Bangayan’s accounts with
respondent RCBC would be used as security to guarantee any
On 15 September 1992, after the arrival of the shipments of the
existing and future loan obligations, advances, credits/increases
first three corporations from Korea, the Bureau of Customs (BOC)
and other obligations, including any and all expenses that these
demanded – via letter of the same date – from respondent RCBC,
corporations may incur with respondent bank.
which facilitated the three letters of credit, the remittance of
import duties in the amount of thirteen million two hundred sixty-
Petitioner Bangayan contests the veracity and due authenticity of five thousand two hundred twenty-five pesos (PhP13,265,225).14
the Surety Agreement on the ground that his signature thereon
Mr. Lao of respondent RCBC allegedly called petitioner
Bangayan and informed him of the BOC’s 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 BOC’s demand, respondent RCBC decided to

put on hold the funds in petitioner Bangayan’s 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 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 Bangayan’s 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 Bangayan’s Current Account No. 0109-8232-5
were presented for payment to respondent RCBC, namely:
RCBC Check No. Date of Presentment Paid To Amount
9879921 18 Sept 1992 United Pacific Enterprises PhP3,650,000
93800022 18 Sept 1992 United Pacific Enterprises PhP4,500,000
TOTAL PhP8,150,000
On the same day, the amounts of three million six hundred fifty that were opened through the letters of credit issued by
thousand pesos (PhP3,650,000) and four million five hundred respondent RCBC.31
thousand pesos (PhP4,500,000)23 were successively debited from
the said current account, as shown in petitioner Bangayan’s On 09 October 1992, respondent Philip Saria, who was an
passbook for the current account.24 Alongside these two debit Account Officer of respondent bank’s Binondo Branch, signed
entries in the passbook was the transaction reference code and executed a Statement before the BOC, with the assistance of
"DFT," which apparently stands for "debit fund transfer."25 Atty. Arnel Z. Dolendo of respondent RCBC, on the bank’s letters
of credit issued in favor of the three corporations.32 Petitioner
On 21 September 1992, the same amounts in the two checks Bangayan cited this incident as the basis for the allegation in the
were credited to petitioner Bangayan’s current account, under the Complaint he subsequently filed that respondent RCBC had
transaction reference code "CM," that stands for "credit disclosed to a third party (the BOC) information concerning the
memo."26 Moreover, petitioner Bangayan’s Checks Nos. 93799 identity, nature, transaction and deposits including details of
and 93800 issued in favor of United Pacific Enterprises were also transaction related to and pertaining to his deposits with the said
returned by respondent RCBC with the notation "REFER TO bank, in violation of the Bank Secrecy Act.33 It must be pointed out
DRAWER."27 that the trial court found that "no evidence was introduced by
(petitioner Bangayan) to substantiate his claim that (respondent
On the same day that the checks were referred to petitioner RCBC) gave any classified information" in violation of the Bank
Bangayan by respondent RCBC, United Pacific Enterprises, Secrecy Law.34 Thus, the trial court considered the alleged
through Mr. Manuel Dente, demanded from petitioner Bangayan disclosure of confidential bank information by respondent RCBC
the payment of eight million one hundred fifty thousand pesos as a non-issue.35
(PhP8,150,000), which corresponded to the amounts of the two
dishonored checks that were issued to it.28 Nothing more has On the same date, when Lotec Marketing’s loan obligation under
been alleged by petitioner on this particular matter. the fourth letter of credit became due and
demandable,  respondent RCBC issued an advice that it would
36

On 24 September 1992, the Korea Exchange Bank (the advising debit the amount of twelve million seven hundred sixty-two
bank) informed respondent RCBC through a telex that it had thousand six hundred pesos (PhP12,762,600) from petitioner
already negotiated the fourth letter of credit for Lotec Marketing’s Bangayan’s current account to partially satisfy the guaranteed
shipment, which amounted to seven hundred twelve thousand corporation’s loan.37 At that time, petitioner Bangayan’s passbook
eight hundred U.S. dollars (US$712,800) and, thereafter, claimed for his current account showed that it had funds of twelve million
reimbursement from respondent RCBC.29 seven hundred sixty-two thousand six hundred forty-five and
64/100 pesos (PhP12,762,645.64).38
This particular shipment by Lotec Marketing became the subject
matter of an investigation conducted by the Customs Intelligence On 12 October 1992, the amount of twelve million seven hundred
& Investigation Service of the BOC, according to respondent sixty-two thousand and six hundred pesos (PhP12,762,600) was
bank.30 Both parties agreed that the BOC likewise conducted an debited from petitioner Bangayan’s current account, consequently
investigation covering the importation of the three corporations – reducing the funds to forty-five and 64/100 pesos
LBZ Commercial, Peaks Marketing and Final Sales Enterprise - (PhP45.64).39 Respondent RCBC claimed that the former amount
was debited from petitioner’s account to partially pay Lotec
Marketing’s outstanding obligation which stood at eighteen million
forty-seven 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 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 bank’s letters of credit.45

On 15 October 2010, five other checks of petitioner Bangayan

were presented for payment to respondent RCBC, namely:
On 15 October 2010, five other checks of petitioner Bangayan were presented for payment to respondent RCBC, namely:

RCBC Check No. Date of Presentment Paid To Amount

93801146 15 Oct 1992 Simplex Merchandising PhP1,200,000
93801247 15 Oct 1992 Simplex Merchandising PhP1,260,000
93801348 15 Oct 1992 Simplex Merchandising PhP1,180,000
93801449 15 Oct 1992 Hinomoto Trading Company PhP1,052,000
93801550 15 Oct 1992 Hinomoto Trading Company PhP982,000
TOTAL AMOUNT PhP5,674,000
On 16 October 1992, these five checks were also dishonored by RCBC that his accounts were garnished, but no notice or writ of
respondent RCBC on the ground that they had been drawn garnishment was ever shown to him;63 and that his name and
against insufficient funds ("DAIF") and were subsequently reputation were tarnished because of the dishonor of checks that
returned.51 were issued in relation to his automotive business.64

On 20 October 1992, Hinomoto Trading Company, one of the In its defense, respondent RCBC claims that petitioner Bangayan
payees for two of the dishonored checks, 52 demanded that signed a Surety Agreement in favor of several companies that
petitioner Bangayan make good on his payments.53 On 21 defaulted in their payment of customs duties that resulted in the
October 1992, the other payee of the three other dishonored imposition of a lien over the accounts, particularly for the payment
checks,54 Simplex Merchandising, likewise made a final demand of customs duties assessed by the Bureau of
on petitioner to replace the dishonored instruments.55 Customs.65 Respondent bank further claimed that it had funded
the letter of credit66 availed of by Lotec Marketing to finance the
On 23 October 1992, petitioner Bangayan, through counsel, latter’s importation with the account of petitioner Bangayan, who
demanded that respondent bank restore all the funds to his agreed to guarantee Lotec Marketing’s obligations under the
account and indemnify him for damages.56 Surety Agreement; and, that respondent bank applied petitioner
Bangayan’s deposits to satisfy part of Lotec Marketing’s
On 30 October 1992, nineteen thousand four hundred twenty- obligation in the amount of twelve million seven hundred sixty-two
seven and 15/100 pesos (PhP19,427.15) was credited in thousand and six hundred pesos (PhP12,762,600), which
petitioner Bangayan’s current account, with the transaction resulted in the depletion of the bank accounts.67
reference code "INT" referring to interest.57 Petitioner explains
that even if the outstanding balance at that time was reduced, this Petitioner Bangayan also alleged that respondent RCBC
interest was earned based on the average daily balance of the disclosed to a third party (the BOC) classified information about
account for the quarter and not just on the balance at that time, the identity and nature of the transactions and deposits, in
which was forty-five and 64/100 pesos (PhP45.64).58 violation of the Bank Secrecy Act. Respondent RCBC counters
that no confidential information on petitioner’s bank accounts was
The Case in the Trial Court disclosed.

On 09 November 1992, petitioner Bangayan filed a complaint for Availing himself of discovery proceedings in the lower court,
damages against respondent RCBC.59 Subsequently, respondent petitioner Bangayan filed a Request for Admission 68 and Request
RCBC filed an Answer dated 02 December 1992 with compulsory for Answer to Written Interrogatories, 69 to which respondent
counter-claims.60 On 12 January 1993, respondent RCBC filed a RCBC filed the corresponding Answers and Objections to
Motion for Leave to File Attached Amended Answer and Interrogatories70 and Response to Request for Admission.71
Amended Answer.61
During the presentation of complainant’s evidence, petitioner
Petitioner Bangayan argues that at the time the dishonored Bangayan, Atty. Randy Rutaquio, respondent Saria and Manuel
checks were issued, there were sufficient funds in his accounts to Dantes testified in open court. Petitioner Bangayan thereafter
cover them;62 that he was informed by personnel of respondent filed a Formal Offer of Evidence.72
On the other hand, respondent RCBC presented Mr. Lao as its The Ruling of the Court of Appeals
lone defense witness. Before the termination of Mr. Lao’s direct
examination, respondent RCBC filed a Motion to Inhibit Presiding After petitioner Bangayan84 and respondent RCBC85 filed their
Judge Pedro Santiago,73 who subsequently denied the respective appeal briefs, the Court of Appeals affirmed the trial
motion.74 The Order denying the Motion to Inhibit was the subject court’s decision in toto.86 The appellate court found that the
matter of petitions filed by respondent RCBC in the Court of dishonor of the checks by respondent RCBC was not without
Appeals75 and subsequently in this Court, which were all good reason, considering that petitioner Bangayan’s account had
dismissed. been debited owing to his obligations as a surety in favor of
several corporations. Thus, the Court Appeals found "there was
In the meantime, when respondent RCBC’s witness (Mr. Lao) no ‘dishonest purpose,’ or ‘some moral obliquity,’ or ‘conscious
failed to appear at the hearing, Judge Santiago ordered that Mr. doing of wrong,’ or ‘breach of a known duty,’ or ‘some motive or
Lao’s testimony be stricken off the record despite respondent interest,’ or ‘ill will’ that ‘partakes (sic) nature of fraud’ that can be
bank’s motion to have the case reset.76 After the appellate attributed" to respondent RCBC.87 It likewise ruled that petitioner
proceedings for respondent RCBC’s Petition as regards the Bangayan cannot raise the question as to the genuineness,
Motion to Inhibit, however, Judge Santiago set aside his earlier authenticity and due execution of the Surety Agreement for the
Order and reinstated the testimony of Mr. Lao, subject to cross- first time on appeal.88
examination.77 Petitioner Bangayan took exception to the Order
reinstating Mr. Lao’s testimony, but continued to conduct his This Decision of the appellate court is the subject of the instant
cross examination with a reservation to raise the Order in the Petition for Review on Certiorari filed by petitioner Bangayan
appellate courts.78 under Rule 45 of the Rules of Court.89

Respondent RCBC thereafter filed its Formal Offer of Exhibits.79 Assignment of Errors

On 17 October 1994, the trial court rendered a Decision, the Petitioner Bangayan makes the following assignment of errors:
dispositive portion of which reads:
A. THE COURT OF APPEALS ACTED WITH GROSS
"WHEREFORE, premises above considered, plaintiff not having ARBITRARINESS AND IN BLATANT VIOLATION OF
proved that defendant RCBC acted wrongly, maliciously and
negligently in dishonoring his 7 checks, nor has the bank given THE CONSTITUTIONAL RIGHTS OF THE PETITITONER TO
any confidential informations against the plaintiff in violation of DUE PROCESS, AND A FAIR TRIAL:
R.A. 1405 and the defendant bank having established on the
contrary that plaintiff has no sufficient funds for his said checks,
(1) WHEN IT REINSTATED THE TESTIMONY OF ELI
the instant complaint is hereby DISMISSED."80 (Emphasis
LAO ALREADY STRICKEN OFF THE RECORDS UPON
supplied)
PRIOR ORDER OF THE RTC AFFIRMED BY THE
COURT OFAPPEALS AND CONFIRMED BY THE
When his omnibus motion81 to have the Decision reconsidered SUPREME COURT;
was denied,82 petitioner Bangayan filed a notice of appeal.83
 (2) WHEN IT SANCTIONED THE CAVALIER ACT OF C. Whether respondent RCBC violated the Bank Secrecy
RESPONDENTS IN DEMEANING THE RULES ON Act.
DISCOVERY PROCEDURE;
The Ruling of the Court
(3) WHEN IT RENDERED A DECISION WHICH IS
CONTRARY TO THE FACTS AND THE EVIDENCE Preliminarily, petitioner Bangayan raises questions of
PRESENTED AT THE TRIAL; and fact91 regarding the authenticity of the Surety Agreement and the
events leading up to the dishonor of the seven checks. However,
(4) WHEN IT REFUSED TO APPLY THE LAWS petitions for review on certiorari under Rule 45 are limited only to
SQUARELY IN POINT ON THE MATTER IN pure questions of law92 and, generally, questions of fact are not
CONTROVERSY. reviewable93 since this Court is not a trier of facts. 94 Although
respondent RCBC briefly treated this procedural matter,95 the
B. THE HONORABLE COURT OF APPEALS DECIDED THIS Court finds that the instant Petition is indeed subject to dismissal
CASE IN A WAY NOT IN ACCORD WITH THE APPLICABLE because the determination of questions of fact is improper in a
DECISIONS OF THE HONORABLE SUPREME COURT; Rule 45 proceeding.96 In any case, even if procedural rules were
to be relaxed at this instance, the substantial merits of petitioner
C. THERE ARE SPECIAL AND IMPORTANT REASONS THAT Bangayan’s cause is nonetheless insufficient to reverse the
REQUIRE A REVIEW OF THE CA DECISION; decisions of the trial and appellate courts, as will be discussed in
detail below.
D. THE DECISION OF THE COURT OF APPEALS … IS
NEITHER JUST NOR IN ACCORD WITH THE RULES OF LAW A. There was no malice or bad faith on the part of respondent
AND JURISPRUDENCE NOR IS IT EQUITABLE AND IT RCBC in the dishonor of the checks, since its actions were
IGNORES THE PREVIOUS RULINGS OF THE SUPREME justified by petitioner Bangayan’s obligations under the Surety
COURT IN EARLIER PRECEDENT CASES.90 Agreement.

The Issues The Court is unconvinced by petitioner Bangayan’s arguments

that respondent RCBC acted with malice or bad faith in
dishonoring the seven checks, which would entitle him to an
A. Whether respondent RCBC was justified in dishonoring
award of damages.
the checks, and, consequently, whether petitioner
Bangayan is entitled to damages arising from the
dishonor. At the heart of the controversy is the Surety Agreement that
secured the obligations of the nine corporations in favor of
respondent RCBC.
B. 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 testimony. 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, the findings of fact of the Court of Appeals are conclusive and
being guaranteed, appear in a separate piece of paper that does binding on the parties and are not reviewable by this Court.
not bear his signature or conformity.97
It is a hornbook doctrine that the findings of fact of trial courts are
Both the trial and the appellate courts gave credence to the entitled to great weight on appeal and should not be disturbed
Surety Agreement, which categorically guaranteed the four except for strong and valid reasons. It is not a function of this
corporations’ obligations to respondent RCBC under the letters of Court to analyze and weigh evidence by the parties all over
credit. Petitioner Bangayan did not provide sufficient reason for again. Our jurisdiction is limited to reviewing errors of law that
the Court to reverse these findings. The evidence on record might have been committed by the Court of Appeals. Where the
supports the conclusion arrived at by the lower court and the factual findings of the trial court are affirmed in toto by the Court
Court of Appeals. of Appeals as in this case, there is great reason for not disturbing
such findings and for regarding them as not reviewable by this
First, aside from his bare allegations, petitioner Bangayan failed Court. (Emphasis supplied)
to establish how his signature in the Surety Agreement was
forged and therefore, not genuine. Furthermore, petitioner Bangayan did not adduce any evidence to
support his claim of forgery, despite the opportunity to do so.
Before a private document is offered as authentic, its due Considering that there was evidence on record of his genuine
execution and authenticity must be proved: (a) either by anyone signature and handwriting (the signature card and the dishonored
who has seen the document executed or written; or (b) by checks themselves), nothing should have prevented petitioner
evidence of the genuineness of the signature or handwriting of Bangayan from submitting the Surety Agreement for examination
the maker.98 As a rule, forgery cannot be presumed and must be or comparison by a handwriting expert.
proved by clear, positive and convincing evidence.99 The burden
of proof rests on the party alleging forgery.100 Mere allegation of Even respondent RCBC did not interpose any objection when the
forgery is not evidence.101 possibility of forwarding the signature card and Surety Agreement
forwarded to the National Bureau of Investigation for examination
Mr. Lao, witness for respondent RCBC, identified the Surety was raised during the testimony of Mr. Lao:
Agreement102 as well as the genuineness of petitioner Bangayan’s
signature therein using petitioner’s signature cards in his bank ATTY. LOYOLA
accounts.103 The trial and the appellate courts gave due credence
to the identification and authentication of the Surety Agreement Considering the delicate nature or the significance of the
made by Mr. Lao.104 signatures in the signature cards and the risk of my admitting the
authenticity of a mere xerox copies [sic] and considering further
In Deheza-Inamarga v. Alano,105 the Court ruled that: that it is our position that the surety agreement as well as
specimen signatures on the signature cards must be submitted to
The question of forgery is one of fact. It is well-settled that when the Court and later forwarded to the NBI, Question Document
supported by substantial evidence or borne out by the records, 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 however, does not detract from the validity of the agreement,
and the signature cards be forwarded to the NBI later on for especially in this case where the genuineness and due
examination and in the mean time, the questioned documents be authenticity of petitioner Bangayan’s signature in the contract was
entrusted to the custody of the Honorable Court. not successfully assailed.

ATTY. POBLADOR The failure to notarize the Surety Agreement does not invalidate
petitioner Bangayan’s consent to act as surety for the nine
With respect to the manifestation of counsel that the documents corporations’ obligations to respondent RCBC. Contracts are
with the signatures should be submitted to the NBI, we have no obligatory in whatever form they may have been entered into,
objection, but at this juncture, we are only asking, Your Honor, if provided all essential requisites are present109 and the notarization
the xerox copies are faithful reproduction of the is not an essential requisite for the validity of a Surety
original.106 (Emphasis supplied) Agreement.110

Despite his intention to have the signatures in the Surety Third, that the annex of the Surety Agreement does not bear
Agreement compared with those in the signature cards, petitioner petitioner Bangayan’s signature is not a sufficient ground to
Bangayan did not have the questioned document examined by a invalidate the main agreement altogether. As the records will bear
handwriting expert in rebuttal and simply relied on his bare out, the Surety Agreement enumerated the names of the
allegations. There is no clear, positive and convincing evidence to corporation whose obligations petitioner Bangayan are securing.
show that his signature in the Surety Agreement was indeed The annex to the Surety Agreement enumerated not only the
forged. As petitioner failed to discharge his burden of names of the corporations but their respective addresses as
demonstrating that his signature was forged, there is no reason to well.111 The corporations enumerated in the annex correspond to
overturn the factual findings of the lower courts with respect to the the nine corporations enumerated in the main body of the Surety
genuineness and due execution of the Surety Agreement. Agreement. Ordinarily, the name and address of the principal
borrower whose obligation is sought to be assured by the surety
Second, the mere absence of notarization does not necessarily is placed in the body of the agreement, but in this case the
render the Surety Agreement invalid. 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
Notarization of a private document converts the document into a
postal addresses of the nine corporations were to be found in an
public one, renders it admissible in court without further proof of
"attached" document.
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 Fourth, petitioner Bangayan never contested the existence of the
of the contract reflected in the document.108 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
On its face, the Surety Agreement is not notarized, even if
letters of credit, the petitioner assured respondent bank that "he
respondent RCBC’s standard form for that agreement makes
is doing everything he can to solve the problem."112 If petitioner
provisions for it. The non-completion of the notarization form,
Bangayan purportedly never signed the Surety Agreement, he
would have been surprised or at least perplexed that respondent appellate court that the funds in petitioner’s account served as the
RCBC would contact him regarding the three corporations’ letters lien of the custom duties assessed; thus, the funds cannot be
of credit, when, as he claims, he never agreed to act as their considered as sufficient to cover future transactions.114
surety. Instead, he acknowledged the situation and even offered
to solve the predicament of these borrower corporations. In fact, On the other hand, the five other checks were subsequently
Atty. Loyola, petitioner’s counsel in this case, even obtained dishonored because petitioner Bangayan’s account was by that
copies of the BOC receipts after the three corporations paid the time already depleted due to the partial payment of Lotec
customs duties for their importation under the letters of credit Marketing’s loan obligation.115 Although the lien earlier imposed
giving a possible interpretation that petitioner was himself on petitioner’s account was lifted when the three corporations
answering the obligations of the three corporations for the unpaid paid the customs duties,116 the account was almost completely
customs duties. depleted when the funds were subsequently used to partially pay
Lotec Marketing’s outstanding obligation under the fourth letter of
It must be emphasized that petitioner Bangayan did not complain credit.117 Respondent RCBC was compelled to fully debit the
against the four corporations which had benefitted from his bank funds to satisfy the main loan obligation of Lotec Marketing, which
account. He claims to have no reasonable connection to these petitioner had guaranteed in joint and several capacity.
borrower corporations and denies having signed the Surety
Agreement. If true, nothing should have stopped him from taking What must be underscored in respondent RCBC’s immediate
these corporations to court and demanding compensation as well action of applying petitioner Bangayan’s account to the Lotec
as damages for their unauthorized use of his bank account. Yet, Marketing is the nature of the loan instrument used in this case –
these bank accounts were put on hold and/or depleted by the a letter of credit. In a letter of credit, the engagement of the
letters of credit issued to the four entities. That petitioner did not issuing bank (respondent RCBC in this instance) is to pay the
include them in the present suit strengthens the finding that he seller or beneficiary of the credit (or the advising bank, Korean
had indeed consented to act as surety for those entities, and that Exchange Bank, in this instance) once the draft and the required
there seems to be no arm’s length relationship between petitioner documents are presented to it.118 This "independence principle" in
and the three entities. letters of credit assures the seller or the beneficiary of prompt
payment independent of any breach of the main contract and
Whatever damage to petitioner Bangayan’s interest or reputation precludes the issuing bank from determining whether the main
from the dishonor of the seven checks was a consequence of his contract is actually accomplished or not.119
agreement to act as surety for the corporations and their failure to
pay their loan obligations, advances and other expenses. In this case, respondent RCBC, as the issuing bank for Lotec
Marketing’s letter of credit had to make prompt payment to Korea
With respect to the first two dishonored checks, respondent Exchange Bank (the advising bank) when the obligation became
RCBC had already put on hold petitioner Bangayan’s account to due and demandable. Precisely because of the independence
answer for the customs duties being demanded from the bank by principle in letters of credit and the need for prompt
the BOC. In fact, the trial court considered the referral of these payment,120 respondent RCBC required a Surety Agreement from
checks to petitioner Bangayan as an effort by respondent RCBC petitioner Bangayan before issuing the letters of credit in favor of
to allow its depositor an opportunity to "arrange his accounts and the four corporations, including Lotec Marketing.
provide funds for his checks."113 It likewise appeared to the
Under Articles 2199121 and 2200122 of the Civil Code, actual or expedition of business, and in the decision of interlocutory
compensatory damages are those awarded in satisfaction of or in matters on conflicting facts where one tribunal could not easily
recompense for loss or injury sustained. 123 They proceed from a prescribe to another the appropriate rule of procedure. 125 Thus,
sense of natural justice and are designed to repair the wrong that the Court ruled:
has been done.124
In its very nature, the discretionary control conferred upon the trial
In all seven dishonored checks, respondent RCBC properly judge over the proceedings had before him implies the absence
exercised its right as a creditor under the Surety Agreement to of any hard-and-fast rule by which it is to be exercised, and in
apply the petitioner Bangayan’s funds in his accounts as security accordance with which it may be reviewed. But the discretion
for the obligations of the four corporations under the letters of conferred upon the courts is not a willful, arbitrary, capricious and
credit. Thus, petitioner Bangayan cannot attribute any wrong or uncontrolled discretion. It is a sound, judicial discretion which
misconduct to respondent RCBC since there was no malice or should always be exercised with due regard to the rights of the
bad faith on the part of respondent in dishonoring the checks. Any parties and the demands of equity and justice. As was said in the
damage to petitioner arising from the dishonor of those checks case of The Styria vs. Morgan (186 U.S., 1, 9): "The
was brought about, not by the bank’s actions, but by the establishment of a clearly defined rule of action would be the end
corporations that defaulted on their obligations that petitioner had of discretion, and yet discretion should not be a word for arbitrary
guaranteed to pay. The trial and the appellate courts, therefore, will or inconsiderate action." So in the case of Goodwin vs. Prime
committed no reversible error in disallowing the award of (92 Me., 355), it was said that "discretion implies that in the
damages to petitioner. 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."
B. The trial court did not commit reversible error when it
reinstated the testimony of Mr. Lao and allowed petitioner There being no "positive law or fixed rule" to guide the judge in
Bangayan to cross-examine him. 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
Petitioner Bangayan also assails the lower court’s order that premises, and such courts will not therefore attempt to control the
reinstated the direct testimony of Mr. Lao, respondent RCBC’s exercise of discretion by the court below unless it plainly appears
lone witness. Petitioner claims that Judge Santiago acted with that there was "inconsiderate action" or the exercise of mere
partiality by reinstating Mr. Lao’s testimony, because this Court in "arbitrary will", or in other words that his action in the premises
another case had already sustained the lower court’s earlier amounted to "an abuse of discretion." But the right of an appellate
Order striking out the testimony. Hence, petitioner says that the court to review judicial acts which lie in the discretion of inferior
judge’s reinstatement of Mr. Lao’s testimony was in violation of courts may properly be invoked upon a showing of a strong and
petitioner’s right to due process. 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
Petitioner Bangayan’s arguments are unmeritorious. not vested in discretion.126 (Emphasis supplied)

Discretionary power is generally exercised by trial judges in Prior to a final judgment, trial courts have plenary control over the
furtherance of the convenience of the courts and the litigants, the proceedings including the judgment, and in the exercise of a
sound judicial discretion, may take such proper action in this In this case, petitioner Bangayan’s right to due process was not
regard as truth and justice may require.127 violated, as he was given the freedom and opportunity to cross-
examine and confront Mr. Lao on the latter’s testimony. Even if
In the instant case, the trial court was within the exercise of its respondent RCBC had not filed any motion, it was well within the
discretionary and plenary control of the proceedings when it court’s discretion to have Mr. Lao’s testimony reinstated in the
reconsidered motu propio its earlier order striking out the "interest of substantial justice." The proceedings in the trial court
testimony of Mr. Lao128 and ordered it reinstated.129 The order of in this civil case were adversarial in nature insofar as the parties,
the judge cannot be considered as "willful, arbitrary, capricious in the process of attaining justice, were made to advocate their
and uncontrolled discretion," since his action allowed respondent respective positions in order to ascertain the truth.136 The truth-
bank to present its case fully, especially considering that Mr. Lao seeking function of the judicial system is best served by giving an
was the sole witness for the defense. opportunity to all parties to fully present their case, subject to
procedural and evidentiary rules. Absent any blatant neglect or
Petitioner Bangayan’s reliance130 on the Decisions of the Court of willful delay, both parties should be afforded equal latitude in
Appeals (CA-G.R. SP No. 31865) and this Court (G.R. No. presenting the evidence and the testimonies of their witnesses in
115922) with respect to respondent RCBC’s Petition is favor of their respective positions, as well as in testing the
misplaced. Contrary to his claim, what respondent RCBC credibility and the veracity of the opposing party’s claims through
questioned in those cases was the denial by Judge Santiago of cross-examination.
its Motion for Inhibition.131 As respondent pointed out, its Petitions
to the Court of Appeals and the Court simply prayed for the The Court finds no reversible error on the part of the trial court in
reversal of the denial of the Motion for Inhibition and did not allowing the full presentation of the reinstated testimony of
include the Order striking out the testimony of Mr. Lao. Even the respondent RCBC’s lone witness, especially since the other party
appellate court (CA-G.R. CV No. 48479) noted that "what was was afforded the occasion to cross-examine the witness and in
resolved by the High Court was the issue of Inhibition of the fact availed himself of the opportunity. Although he expressly
Judge and not the striking out of the testimony of Mr. Eli Lao."132 reserved his right to question the court’s reinstatement of the
testimony of the witness, petitioner Bangayan did not
Neither can petitioner Bangayan claim any deprivation of due satisfactorily offer convincing arguments to overturn the trial
process when the trial court ordered the reinstatement of Mr. court’s order. That the court gave petitioner the opportunity to
Lao’s testimony without any motion or prayer from respondent cross-examine Mr. Lao – a remedy that petitioner even fully
RCBC. The right of a party to confront and cross-examine availed himself of – negates the allegation of bias against the
opposing witnesses in a judicial litigation, be it criminal or civil in Judge.
nature, or in proceedings before administrative tribunals with
quasi-judicial powers, is a fundamental right which is part of due The timing of petitioner Bangayan’s allegations of prejudice on
process.133 This right, however, has always been understood as the part of Judge Santiago is suspect, since the latter had already
requiring not necessarily an actual cross-examination but merely rendered a Decision unfavorable to petitioner’s cause.
an opportunity to exercise the right to cross-examine if
desired.134 What is proscribed by statutory norm and A motion to inhibit shall be denied if filed after a member of the
jurisprudential precept is the absence of the opportunity to cross- court has already given an opinion on the merits of the case, the
examine.135 rationale being that "a litigant cannot be permitted to speculate on
the action of the court . . . (only to) raise an objection of this sort All deposits of whatever nature with banks or banking institutions
after the decision has been rendered."137 in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its
When respondent RCBC moved for Judge Santiago’s inhibition, instrumentalities, are hereby considered as of an absolutely
petitioner even interposed an objection and characterized as confidential nature and may not be examined, inquired or looked
unfounded respondent bank’s charge of partiality. 138 It is now too into by any person, government official, bureau or office, except
late in the day to suddenly accuse Judge Santiago of prejudice in upon written permission of the depositor, or in cases of
the proceedings below, after he has already rendered an impeachment, or upon order of a competent court in cases of
unfavorable judgment against petitioner. If at all, the latter’s claim bribery or dereliction of duty of public officials, or in cases where
that Judge Santiago was biased in favoring respondent RCBC is the money deposited or invested is the subject matter of the
a mere afterthought that fails to support a reversal by the Court. litigation.

C. Respondent RCBC did not violate the Bank Secrecy Act. Petitioner Bangayan claims that respondent Saria divulged
confidential information through the Affidavit he submitted to the
The Court affirms the trial court’s findings which were likewise BOC.141 However, nothing in respondent Saria’s Affidavit before
concurred with by the Court of Appeals that the alleged violation the BOC showed that details of petitioner Bangayan’s bank
of the Bank Secrecy Act was not substantiated: 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
The Customs’s investigation with a subpoena/duces tecum sent
who had guaranteed the payment or obligations of the importers
to witness Mr. Lao on the three companies, Final Sales
under the Surety Agreement.
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 According to petitioner Bangayan, the responses of respondent
having given any statement in connection therewith. No evidence RCBC’s officers in relation to the BOC’s actions led to unsavory
was introduced by plaintiff to substantiate his claim that defendant news reports that "disparaged petitioner’s good character and
bank gave any classified information in violation of Republic Act reputation" and exposed him to "public ridicule and
No. 1405. On this score, plaintiff has no cause of action for contempt."142 However, as the appellate court correctly found, the
damages against said defendant RCBC.139 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
In his Memorandum, petitioner Bangayan argues that there was a
charges filed by the Bureau of Customs which found their way in
wrongful disclosure by respondents RCBC and Philip Saria of
the headlines of newspapers.143
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 Both the trial and appellate courts correctly found that petitioner
BOC that would make them liable under the said law. 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
Section 2 of the Bank Secrecy Act provides:
adduce further evidence in the instant Petition with respect to the
bank’s 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 Bangayan’s argument as regards

the bank’s 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 RCBC’s responses, then
his remedy is to expose the falsity (if any) of the bank’s
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 1avvphi1

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.