The API is called HAPI and does file loading and creates the window for me. It gives me a pointer to the screen, which is in 32bit colors. So im not sure if I can use 16bit.
16 bit colour can still look nice, but you will lose your alpha channel. In the 2d APIs I have used you can set the bit depth when setting up the screen. The parameters usually go something like: graphics width, graphics height, bit depth, display mode. However, without knowing what api you are using its impossible for anyone to answer that accurately.