International Exchange Bank v. Lee
REITERATIONFacts
The Antecedents: International Exchange Bank (iBank, now UnionBank) discovered through post-audit that its treasury products sales associate, Christina T. Lee, fraudulently pre-terminated clients Liu Siu Lang Sy's P8,800,000.00 Forward Foreign Exchange Placement Account and Spouses Ernesto and Olivia Co's P8,244,645.27 account by falsifying instructions in the Log Card and processing debit memos, crediting the proceeds to Settlement Account No. 006100040891, then deceiving superiors to transfer these to her boyfriend Jeffrey R. Esquivel's account. Jeffrey subsequently transferred portions to accounts of Christina's relatives: Karin Tse Go (P2,020,000.00), Violeta T. Lee (Christina's mother, since deceased), Jose Co Lee (Christina's father, credited P2,715,000.00 to personal account 013-0-20-010888 and P2,020,000.00 via J.C. Lee Construction, Inc. account 029-03-0-006188, later batched to personal), and Angela T. Lee (Christina's sister). Notably, on February 11, 2002, Jeffrey deposited P1,200,000.00 into Jose's account (previously holding only P25,000.00), and Jose issued a check for exactly P1,200,000.00 to Triangle Ace Corporation the same day; iBank reinstated the funds to clients, suffering loss. Jose and Angela denied complicity, claiming legitimate business transactions totaling P84M, with no demand letter received. Procedural History: On November 20, 2003, iBank filed a complaint for sum of money and damages against Christina, Jeffrey, Violeta, Karin, Jose, and Angela before RTC Makati Branch 58. After iBank's evidence-in-chief on May 10, 2016, Jose and Angela (Violeta deceased) filed Demurrer to Evidence, granted March 1, 2017 for insufficiency: no client witnesses confirming non-consent, Christina solely culpable, no demand letter. iBank's partial MR denied May 22, 2017; filed Notice of Appeal June 2, 2017 with Motion for Leave, but RTC delayed resolution despite Motion to Resolve July 5, 2017. iBank withdrew appeal July 28, 2017 (granted August 23), filed Rule 65 Certiorari to CA August 31, 2017; CA Former Twelfth Division dismissed August 17, 2018 (MR denied November 13, 2018) ruling appeal proper, no GAD. The Petition: UnionBank petitioned Supreme Court via Rule 45 January 4, 2019, arguing certiorari proper due to RTC delay and partial dismissal (main case pending vs. others), akin to motion to dismiss per DM Ferrer; RTC GAD as prima facie evidence (bank records, transfers, Jose's same-day check) proved fraud complicity, entitlement to relief. Respondents countered factual issues, improper remedy, CA correctly found no GAD.
Issue(s)
Whether a petition for certiorari under Rule 65 was the correct remedy to contest the RTC's grant of demurrer to evidence. Whether UnionBank established sufficient prima facie evidence entitling it to relief against Jose and whether UnionBank established sufficient prima facie evidence entitling it to relief against Angela.
Ruling
The Petition is PARTIALLY GRANTED. CA August 17, 2018 Decision and November 13, 2018 Resolution REVERSED and SET ASIDE as to Jose Co Lee, who is ORDERED to return amounts fraudulently transferred to his account; affirmed as to Angela T. Lee.
Ratio Decidendi
On Issue 1 (Procedural Remedy): A demurrer to evidence under Rule 33, Sec. 1 tests plaintiff's evidence sufficiency, resulting in merits dismissal akin to motion to dismiss, generally appealable under Rule 41, Sec. 1 as final order; however, Rule 41, Sec. 1(g) excepts 'judgment or final order for or against one or more of several parties... while the main case is pending, unless the court allows an appeal therefrom,' mandating Rule 65 certiorari—directly applying Jan-Dec Construction Corp. v. CA (517 Phil. 96, RTC dismissal vs. one defendant proper for certiorari as case vs. other pending) and D.M. Ferrer v. UST (680 Phil. 805, same rationale), rejecting CA distinction as demurrer 'has the effect of dismissing a case on the merits.' Here, dismissal only vs. Jose/Angela while complaint pending vs. Christina/Jeffrey/Karin triggered exception; RTC's inordinate delay (no action on Motion for Leave despite Motion to Resolve, forcing withdrawal pre-Reglementary period lapse) independently justified certiorari to avoid laches, protecting petitioner's rights without fault. Thus, CA erred dismissing on improper remedy grounds. On Issue 2 (Sufficiency of Evidence): Supreme Court not trier of facts (Rule 45 limits to errors of law; Century Iron Works v. Bañas, 711 Phil. 576 distinguishes law vs. fact questions delving into probative value), but reviews facts exceptionally where CA finding 'premised on supposed absence of evidence contradicted by record' (Medina v. Asistio, 269 Phil. 225 exception 10). RTC/CA GAD: records show prima facie case vs. Jose—post-audit revealed Christina/Jeffrey diversion (admitted by Christina) to Jose's accounts (P2,715,000.00 Sy funds; P2,020,000.00 Co funds via corp. then personal batches January 2003); critically, Jeffrey's P1,200,000.00 deposit February 11, 2002 into low-balance (P25,000.00) account prompted same-day P1,200,000.00 check to Triangle Ace, evidencing knowledge/benefit/use without inquiry, satisfying preponderance (Rule 133, Sec. 1; BP Oil v. Total, 805 Phil. 244: prima facie shifts burden). Per Republic v. Gimenez (776 Phil. 233) and Atienza, courts caution against demurrer grants, preferring trials for fraud complicity doubts; reversal deems Jose waived evidence (Rule 33, Sec. 1; Siayngco v. Costibolo, 136 Phil. 475 rationale: stands on plaintiff's case). No similar links vs. Angela (mere receipt, no suspicious use shown), so affirmed. Court renders judgment vs. Jose on plaintiff's evidence to expedite, avoid remand congestion.
Main Doctrine
The grant of a demurrer to evidence, which dismisses the complaint on the merits against specific defendants in a multi-defendant case while the action against others remains pending, falls under the Rule 41, Section 1(g) exception to appealability, rendering a petition for certiorari under Rule 65 the proper remedy, as affirmed by precedents like Jan-Dec Construction Corp. v. Court of Appeals and D.M. Ferrer v. University of Santo Tomas. Trial court inaction or delay on motions for leave to appeal further justifies certiorari to preserve rights within reglementary periods. Upon reversal of the demurrer grant on appeal, the defendant is deemed to have waived the right to present evidence, empowering the appellate court to render judgment based solely on plaintiff's prima facie evidence under Rule 33, Section 1. Courts must exercise caution in granting demurrers, preferring full trials to resolve doubts on participation in fraud schemes, especially where bank records show suspicious fund flows like immediate check issuance matching unexplained deposits. Evidence of mere receipt and use of fraudulently transferred funds, absent inquiry or return, establishes prima facie liability by preponderance, shifting burden and warranting denial of demurrer for complete adjudication.