Samuel U. Lee vs. KBC Bank N.V., GR NO.

164673, Juanuary 15, 2010 Facts: Midas Diversified Export Corporation (MDEC) obtained a $1,400,000 and $ 65,000 loan from KBC Bank N.V. (KBC Bank. Samuel U. Lee (Lee), assistant treasurer and director of MDEC, executed a promissory note in favor of KBC Bank and a deed of assignment transferring all of MDECs rights over Confirmed Purchase Order No. MTC-548 and WC-128 to KBC Bank. The Confirmed Purchase Orders No. MTC-548 were allegedly issued by Otto Versand. MDEC defaulted on its obligation. This prompted KBC bank to verify the validity of the purchase orders. A representative of Otto Versand denied the existence of the said purchase orders via facsimile. This prompted KBC bank to filed a suit for estafe against Lee and Lim. However, upon the recommendation of the Secretary of Justice, which in part reads: Since Ms. Pajarillo did not have personal knowledge of the fact that the subject purchase orders were in fact fake, her testimony cannot be the basis for finding probable cause against respondents. Ms. Pajarillo can testify only to those facts that she knew of her personal knowledge. Admittedly, she derived knowledge of the supposed spurious character of the purchase orders from a mere fax copy of a message that [KBC Bank] received from a certain representative of Otto Versand in Germany, someone who she did not even know personally. Unfortunately, this fax copy is hearsay evidence and therefore, inadmissible to prove the truth of what it contains (Pastor vs. Gaspar, 2 Phil 592). the prosecution filed a motion to withdraw the complaint. The motion was granted by the RTC. The Judge did not state the reasons for granting the motion. He practically concurred that the fax message was hearsay evidence and inadmissible. Issue: Whether or not the admissibility of the fax message may be properly ruled upon in a preliminary investigation. Ruling: No. Whether the facsimile message is admissible in evidence and whether the element of deceit in the crime of estafa is present are matters best ventilated in a full-blown trial, not in the preliminary investigation. In Andres v. Justice Secretary Cuevas, the Court held that: [A preliminary investigation] is not the occasion for the full and exhaustive display of [the prosecutions] evidence. The presence or absence of the

elements of the crime is evidentiary in nature and is a matter of defense that may be passed upon after a full-blown trial on the merits.

In fine, the validity and merits of a partys defense or accusation, as well as the admissibility of testimonies and evidence, are better ventilated during trial proper than at the preliminary investigation level.