RICARDO B. BANGAYAN vs.

RIZAL COMMERCIAL BANKING CORPORATION AND

PHILIP SARIA
G.R. No. 149193 April 4, 2011
Ponente: SERENO, J .

FACTS: Petitioner Bangayan had a savings account and a current account with one of the
branches of respondent Rizal Commercial Banking Corporation (RCBC). Bangayan purportedly
signed a Comprehensive Surety Agreement with respondent RCBC in favor of nine
corporations. Under the Surety Agreement, the funds in petitioner Bangayans accounts with
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. Bangayan contests the veracity and due
authenticity of the Agreement on the ground that his signature thereon was not genuine, and
that the agreement was not notarized. Respondent RCBC refutes this claim.

Then occurred different transactions between RCBC with other entities in relation to the Surety
Agreement. RCBC issued commercial letters of credit in favor of different corporations. Mr. Lao,
of RCBC, claimed that the bank would not have extended the letters of credit in favor of the
three corporations without petitioner Bangayan acting as surety. After all the transactions in
relation to the letters of credit issued by RCBC in relation to the Surety Agreement, Bangayans
account was depleted.

Two of the seven checks that were drawn against petitioner Bangayans Current Account were
presented for payment to respondent RCBC were returned by respondent RCBC with the notation
"REFER TO DRAWER. Five other checks of petitioner Bangayan were presented for payment to
respondent RCBC. These five checks were dishonored by respondent RCBC on the ground that
they had been drawn against insufficient funds ("DAIF") and were likewise returned.

Thus, Bangayan, demanded that respondent bank restore all the funds to his account and
indemnify him for damages. Bangayan filed a complaint for damages against respondent
RCBC. In its defense, RCBC claims that 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. Also, it funded a letter of credit of Lotec Marketing with
the account of petitioner Bangayan, who agreed to guarantee Lotec Marketings obligations
under the Surety Agreement; and, that the bank applied Bangayans deposits to satisfy part of
Lotec Marketings obligation which resulted in the depletion of the bank accounts.

ISSUE: Whether respondent RCBC was justified in dishonoring the checks, and, consequently,
whether petitioner Bangayan is entitled to damages arising from the dishonor.

HELD: Yes. RCBC was justified in dishonoring the checks. Bangayan is not entitled to
damages.

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.

First, 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. 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. As petitioner failed to discharge his burden of demonstrating that his signature
was forged, there being no positive and convincing evidence to prove such fact, 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. 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. Fourth, petitioner Bangayan never contested the existence of the Surety
Agreement prior to the filing of the Complaint. It must be also be emphasized that petitioner
Bangayan did not complain against the four corporations which had benefitted from his bank
account.

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. 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.

Under Articles 2199 and 2200 of the Civil Code, actual or compensatory damages are those
awarded in satisfaction of or in recompense for loss or injury sustained. They proceed from a
sense of natural justice and are designed to repair the wrong that has been done.

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.