G.R. No. 221641 - East West Banking Corp. vs. Cruz

Case Summary (G.R. No. 221641)

Petitioner and Respondents

• Petitioner: East West Banking Corporation, claiming loss of P16,054,541.66
• Respondents:
– Ian Y. Cruz (account beneficiary and loan recipient)
– Paul Andrew Chua Hua (Bank sales officer handling deposits)
– Francisco T. Cruz and Alvin Y. Cruz (depositors impleaded as unwilling co-plaintiffs)

Key Dates

• June 11, 2012 – Complaint for Sum of Money with Application for Writ of Preliminary Attachment filed in RTC Makati, Branch 139
• May 21, 2013 – RTC grants writ of preliminary attachment against Ian and Paul
• November 25, 2013 – RTC dismisses Complaint for failure to state a cause of action and lack of real party in interest
• April 24 and December 10, 2015 – Court of Appeals dismisses appeal for wrong mode of review under Rules of Court
• July 12, 2021 – Supreme Court decision

Applicable Law

• 1987 Philippine Constitution
• Rules of Court:
– Rule 3 (Real Party in Interest; Unwilling Co-plaintiff)
– Rule 16 (Motion to Dismiss for Failure to State a Cause of Action)
– Rule 41 (Ordinary Appeal to CA: questions of fact or mixed)
– Rule 45 (Certiorari Appeal to SC: pure questions of law)
– Rule 50 (Dismissal of Improper Appeal to CA)
– Rule 57 (Preliminary Attachment)
• Civil Code (mutuum/simple loan principles governing deposits)

Background of Dispute

The Bank alleged that its sales officer, Paul, transferred P16 million-plus from the deposit accounts of Francisco and Alvin to Ian’s account under false promises of regularization. Ian used the credited amount to secure and repay a back-to-back loan. Francisco and Alvin later demanded payment based on FEFCs, which the Bank deemed spurious.

Application for Preliminary Attachment

At a hearing on the Bank’s application, its witness recounted the transfers and FEFCs, confirmed loan repayment by Ian, and acknowledged nonpayment to Francisco and Alvin following their demand. The RTC issued a preliminary attachment writ against Paul and Ian on May 21, 2013.

RTC Dismissal Order

On November 25, 2013, the RTC granted Ian’s motion to dismiss:

The Complaint failed to allege any right of the Bank itself, as deposit rights belonged to Francisco and Alvin.
It did not show any obligation or breach by Ian regarding the Bank.
It neglected to allege Ian’s actual participation in unauthorized withdrawals or use of FEFCs.
Francisco and Alvin, as real parties in interest, were improperly impleaded as unwilling co-plaintiffs instead of defendants under Rules 3 and 10.

Appeal to the Court of Appeals

The Bank filed a Notice of Appeal under Rule 41 to the CA. Respondents moved to dismiss for wrong remedy, arguing that the dismissal addressed pure questions of law warranting a Rule 45 petition to the Supreme Court.

Court of Appeals Resolutions

The CA held that:
• Failure to state a cause of action and lack of real party in interest are pure questions of law, reviewable only by certiorari under Rule 45.
• An interlocutory attachment order does not alter the nature of the RTC’s dismissal.
Accordingly, the CA dismissed the appeal on April 24, 2015 and denied reconsideration on December 10, 2015.

Supreme Court Issue

Whether the Bank availed of the correct remedy in assailing the RTC’s final dismissal order.

Supreme Court’s Analysis on Mode of Review

• Under Rule 41, the CA may review questions of fact or mixed questions; Rule 45 permits only pure questions of law to the Supreme Court.
• The Bank’s appeal involved only legal issues—cause of action sufficiency and real party in interest—thus requiring a Rule 45 petition, not a Rule 41 appeal.

Failure to State a Cause of Action

• A motion to dismiss under Rule 16(g) tests legal sufficiency within the four corners of the Complaint and annexes.
• The Bank