Title
International Exchange Bank vs. Jose Co Lee and Angela Lee
Case
G.R. No. 243163
Decision Date
Jul 4, 2022
Bank sued respondents over fraudulent fund transfers; SC ruled Jose Co Lee liable for receiving funds, dismissed case against Angela T. Lee due to lack of evidence.
demurrer to
evidence
petition for
A

Case Summary (G.R. No. 243163)

Petitioner

iBank/UnionBank filed a complaint for sum of money and damages alleging that Christina and others fraudulently diverted P8,800,000.00 (Sy) and P8,244,645.27 (Spouses Co) from clients’ forward placement accounts, causing those funds to be credited to various accounts controlled or used by Jeffrey, Karin, Jose, Angela, and others, and that the bank was required to reinstate the funds to the clients.

Respondents

Jose and Angela answered denying involvement; Jose asserted extensive legitimate banking activity and denial of knowledge. Violeta had died before the demurrer to evidence was filed.

Key Dates and Procedural Milestones

  • November 20, 2003: iBank filed its complaint against multiple defendants, including Christina, Jeffrey, Karin, Jose, Angela, Violeta.
  • May 10, 2016: After plaintiff’s evidence, Jose and Angela filed a Demurrer to Evidence.
  • March 1, 2017: RTC (Branch 58) granted the demurrer as to Jose and Angela and dismissed complaint against them for insufficiency of evidence.
  • May 22, 2017: Motion for Partial Reconsideration denied by RTC.
  • June 2, 2017: UnionBank filed Notice of Appeal and Motion for Leave to Appeal; later withdrew the Notice of Appeal due to alleged inaction by the RTC on its Motion for Leave.
  • July 31, 2017: UnionBank filed a Petition for Certiorari with the Court of Appeals.
  • August 17, 2018: Court of Appeals dismissed the petition for certiorari for being an improper remedy and held no grave abuse of discretion by the RTC.
  • November 13, 2018: CA denied UnionBank’s motion for reconsideration.
  • January 2019: UnionBank filed a Petition for Review on Certiorari with the Supreme Court.
  • Supreme Court decision (final adjudication on remedies and merits) followed the record and issues as recited.

Applicable Law and Governing Rules

  • Constitutional framework: 1987 Constitution (applicable because the decision post-dates 1990).
  • Rules of Court provisions principally discussed: Rule 33, Section 1 (Demurrer to Evidence); Rule 41, Section 1 (Appeal from final order and exceptions); Rule 65 (Special civil action for certiorari); Rule 45 (Petition for Review on Certiorari to Supreme Court; limitation to questions of law); Rule 133 (burden of proof in civil cases).
  • Controlling jurisprudential principles cited in the decision: cases addressing remedy when claim dismissed as to some parties while main case remains pending (e.g., Jan-Dec Construction Corp., D.M. Ferrer, Palma v. Galvez) and standards on review of factual findings and exceptions allowing Supreme Court factual review (e.g., Medina v. Mayor Asistio, Jr., Century Iron Works).

Procedural Issue Presented: Correct Remedy (Appeal vs. Certiorari)

The primary procedural question was whether UnionBank’s filing of a petition for certiorari under Rule 65 with the Court of Appeals was an improper remedy in lieu of an appeal from the RTC’s order granting the demurrer to evidence. The general rule is that an appeal lies from a final judgment dismissing a case on its merits, and a demurrer to evidence that is granted results in dismissal and is normally appealed. However, Rule 41, Section 1 contains an explicit exception (item (g)) allowing certiorari when a final order is rendered for or against one or more of several parties while the main case is pending (and there is no allowance to appeal from it). The Supreme Court applied this exception: because the RTC’s dismissal was only as to some defendants (Jose and Angela) while the main case against other defendants continued, the dismissal fell within the exception. The Court further found that the RTC’s protracted or refusal to act on UnionBank’s Motion for Leave to file its Notice of Appeal left UnionBank effectively unable to pursue a timely appeal and justified resort to certiorari. Consequently, the Supreme Court held that the petition for certiorari under Rule 65 was a proper remedy in the circumstances.

Legal Standard and Scope of Review on the Merits of Demurrer to Evidence

The Supreme Court reiterated that it is ordinarily confined to questions of law in petitions for review under Rule 45 and that factual findings of lower courts are binding when supported by substantial evidence. It recited the test distinguishing questions of law from questions of fact: whether resolution requires assessment of probative value and credibility (questions of fact) or purely legal application (questions of law). The Court acknowledged, however, recognized exceptions permitting review of factual findings by higher courts where, inter alia, a finding is premised on supposed absence of evidence contradicted by the record.

For demurrer to evidence, the Court emphasized caution in granting dismissal: demurrer tests the sufficiency (not just admissibility) of plaintiff’s evidence and, if doubt exists about a defendant’s participation, the demurrer should be denied to allow a full evidentiary presentation. The jurisprudence cited underscores that admissibility and probative weight are distinct, and courts should avoid disposing of claims on technical grounds when evidence could merit fuller testing at trial.

Analysis of Evidence Relating to Jose Co Lee

The Supreme Court reviewed the trial record and identified several pieces of evidence that, taken together, supported at least a prima facie case against Jose:

  • Post-audit bank records showed the diverted proceeds from Sy and Spouses Co were credited to accounts including Jose’s personal accounts and those of J.C. Lee Construction, Inc., for substantial sums (e.g., credits of P2,715,000.00 and P2,020,000.00 to his accounts).
  • Subsequent transfers from J.C. Lee Construction, Inc. account to Jose’s personal account occurred in multiple sizable batches on January 7 and 13, 2003 (P1,600,000.00; P206,225.80; P600,000.00).
  • On February 11, 2002, a deposit/credit of P1,200,000.00 was posted to Jose’s account, and on the same date Jose issued a check for P1,200,000.00 payable to Triangle Ace Corporation—despite his account balance immediately prior to deposit being only P25,000.00.
  • Christina admitted that P8,244,645.27 from Spouses Co’s investment was transferred to Jeffrey, who then distributed funds to various accounts including those of respondents.

The Court reasoned that these facts could support an inference that Jose was aware of and benefitted from the diverted funds. The immediacy of his issuance of a check for the exact amount of the credit, and the disparity between his prior account balance and the check amount, pointed toward probable knowledge and use of the funds rather than mere coincidence or innocent banking activity. The Supreme Court held that, given this evidence, the demurrer to evidence should not have been granted as to Jose and that a full trial would have been the proper forum to resolve the competing explanations; the trial court’s dismissal amounted to an improper premature disposition of the claim against him.

Analysis of Evidence Relating to Angela T. Lee

By contrast, the record did not contain comparable evidence to link Angela to knowledge of, participation in, or benefit from the fraudulent transfers. The Court found no showing that she was aware of Christina’s scheme or that she used the funds in a manner establishing liability. Therefore, the trial court’s grant of the demurrer to evidence as to Angela was upheld.

Application of Rule 33 Provision

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