Bangayan Vs.

Rizal Commercial Banking Corporation

Facts: Petitioner Ricardo Bangyan had 2 bank accounts with RCBC (Respondent) , one savings account and one current account. Both accounts had auto-transfer feature. The petitioner also signed a Surety Agreement with RCBC in favor of 9 corporations. This Surety Agreement was to be used as a security guarantee for any loan obligations, advances, credits and other obligations. Petitioner contests the authenticity of the surety agreement and claims that it has to be notarized. Respondent had also issued Letters of Credit LCs to 3 of the corporations guaranteed by petitioner. The LCs were used for payment for imports. Bureau of Customs sent a letter to RCBC demanding remittance of import duties for 3 shipments for which RCBC had issued 3 LCs. RCBC had informed Petitioner that the BOC had sent a letter demanding outstanding duties. Petitioner told RCBC that he will take care of matter. RCBC froze funds in Petitioners accounts due to the BOC demand, since the latter had given authority under the Surety Agreement. RCBC would only draw from petitioners accounts upon order from the BOC. Petitioner issued 2 checks, but were returned to with notation of Refer to Drawer. One of the Corporations included in the Surety Agreement had a LC that was due and demandable, RCBC went ahead and debited petitioners account to partially satisfy the loan. After the debit the petitioners passbook reflected a balance of 45.46. Thereafter the petitioner had issued 5 more checks, but were also dishonored. The payees of the dishonored checks were demanding immediate payment. Petitioner demanded that RCBC restore all the funds debited from his account and indemnify him for damages.

ISSUES:

WON RCBC was justified in dishonoring the checks and whether petitioner is entitled to indemnity. WON the Surety Agreement was valid. WON RCBC violated the Bank Secrecy Law RA 1406, when the BOC made an investigation of 3 of the companies included in the Surety Agreement and if petitioner is can claim damages.

HELD/RATIO: RCBC was not in bad faith when it dishonored the checks. The actions of RCBC were justified by the stipulations of the Surety Agreement. Since the petitioner had guaranteed the corporations stipulated in the Surety Agreement, RCBC had a fiduciary duty to debit the funds from the petitioners account to settle the loans and duties of the said corporations. The Surety Agreement was a valid contract between the Petitioner and RCBC. The petitioner could not prove his allegations of forgery and lack of consent of the agreement. The petitioner signed the Surety Agreement in behalf of the 9 Corporations. The petitioner also acknowledged the Surety Agreement when he was informed by RCBC of the demand from the BOC and he assured the bank that he was going to solve the problem. RCBC and its representative did not divulge any information in the Affidavit submitted to the BOC. The petitioner failed to prove that there was wrong doing on the part of respondent RCBC, since the dishonoring of the checks was the product of an surety agreement for the 4 corporations LCs which he voluntarily contracted.