Ponente: PERALTA, J.

Decision Date: 2018-10-17

GR Number: G.R. No. 219491

Emir Mendoza 11 months ago
Avg. Rating:

Summary:

Ku filed a complaint for sum of money and specific performance with damages against RCBC Securities, seeking to recover money and stocks sold without his consent. The CA dismissed the case, holding that Branch 63 (a non-Special Commercial Court) had no jurisdiction over the case, since it involved an intra-corporate controversy and insufficient docket fees were paid.           

Doctrine:

An intra-corporate controversy is one which pertains to any of the following relationships: (I) between the corporation, partnership or association and the public; (2) between the corporation, partnership or association and the State insofar as its franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the stockholders, partners or associates themselves. Thus, under the relationship test, the existence of any of the above intra-corporate relations makes the case intra-corporate.

            Indeed, this Court has held that the ruling in Manchester does not apply to cases where insufficient filing fees were paid based on the assessment made by the clerk of court, and there was no intention to defraud the government. It was further held that the filing of the complaint or appropriate initiatory pleading and the payment of the prescribed docket fee vest a trial court with jurisdiction over the subject matter or nature of the action. If the amount of docket fees paid is insufficient considering the amount of the claim, the clerk of court of the lower court involved or his duly-authorized deputy has the responsibility of making a deficiency assessment. The party filing the case will be required to pay the deficiency, but jurisdiction is not automatically lost.

Facts:

Stephen Y. Ku opened an account with RCBC Securities on June 5, 2007 for the purchase and sale of securities.

            On February 22, 2013, Ku filed with the RTC of Makati a Complaint for Sum of Money and Specific Performance with Damages against respondent. Pertinent portions of his allegations read as follows:

            4. Unknown to plaintiff, the name of M.G. Valbuena ("MGV") was deliberately inserted beside the name of Ivan L. Zalameda as one of. the agents after plaintiff completed and signed the Agreement.

            5. As to when the fraudulent insertion was made, plaintiff has no idea. Plaintiff only discovered this anomaly when plaintiff recently requested for a copy of his Account Information.

            6. In the course of plaintiff's trading transactions with RSEC, MGV represented herself as a Sales Director of RSEC, duly authorized to transact business on behalf of the latter. xxxx

            7. With this representation, plaintiff continued to transact business with RSEC through MGV, on the honest belief that the latter was acting for and in behalf of RSEC. xxx

            13. Sometime in January 2012, it came to the knowledge of plaintiff that his account with RSEC was subject of mismanagement. MGV was blacklisted by RSEC due to numerous fraudulent and unauthorized transactions committed by the former. Worse, MGV allegedly was able to divert investments made by "high networth" clients of RSEC into some other accounts. xxx

            16. In the same letter, plaintiff made clear to RSEC that it has never authorized a discretionary account with MGV and requested for all documents relative to plaintiff's audit. xxxx

            17. After audit, plaintiff has conclusively determined that there were FOUR HUNDRED SIXTY-SEVEN (467) unauthorized transactions in his account. A review of the said transactions would show that multiple buying and selling transactions on the same day were repeatedly done over a period of four (4) years.

            Ku prayed for the payment of the amounts and the shares of stock resulting from his independent audit after excluding all unauthorized trades. Ku also sought the recovery of treble damages, exemplary damages and attorney's fees.

            The Complaint, docketed as Civil Case No. 13-171, was raffled off to Branch 63, RTC of Makati. On May 29, 2013, RCBC Securities filed a Motion to Dismiss.

            The RTC of Makati, Branch 63, issued its questioned Order dated September 12, 2013, to wit:

            xxxx After going over plaintiff's [herein Ku's] Complaint and defendant's [herein respondent's] Motion to Dismiss and the Reply that followed, the Court is of the considered view that this case involves trading of securities.

            Consequently, the case should be heard and tried before a Special Commercial Court. Accordingly, the Court's Branch Clerk of Court is forthwith directed to forward the entire record of the case to the Office of the Clerk of Court for re-raffle.

            The case was, subsequently, re-raffled to Branch 149 of the RTC of Makati. Thereafter, in its Order dated October 25, 2013, the RTC of Makati, Branch 149, denied the Motion to Dismiss for lack of merit. It held that Ku's payment of insufficient docket fees does not warrant the dismissal of the Complaint and that the trial court still acquires jurisdiction over the case subject to the payment of the deficiency assessment. The RTC, thus, ordered Ku "to pay the docket fees on the value of the shares of stocks being prayed to be returned to him, within thirty (30) days from receipt" of the said Order.

            The CA reversed and dismissed Ku’s complaint, on the ground of lack of jurisdiction by Branch 63. Thus, the case should have been dismissed.

Issues Ratio:

Stephen Y. Ku opened an account with RCBC Securities on June 5, 2007 for the purchase and sale of securities.

            On February 22, 2013, Ku filed with the RTC of Makati a Complaint for Sum of Money and Specific Performance with Damages against respondent. Pertinent portions of his allegations read as follows:

            4. Unknown to plaintiff, the name of M.G. Valbuena ("MGV") was deliberately inserted beside the name of Ivan L. Zalameda as one of. the agents after plaintiff completed and signed the Agreement.

            5. As to when the fraudulent insertion was made, plaintiff has no idea. Plaintiff only discovered this anomaly when plaintiff recently requested for a copy of his Account Information.

            6. In the course of plaintiff's trading transactions with RSEC, MGV represented herself as a Sales Director of RSEC, duly authorized to transact business on behalf of the latter. xxxx

            7. With this representation, plaintiff continued to transact business with RSEC through MGV, on the honest belief that the latter was acting for and in behalf of RSEC. xxx

            13. Sometime in January 2012, it came to the knowledge of plaintiff that his account with RSEC was subject of mismanagement. MGV was blacklisted by RSEC due to numerous fraudulent and unauthorized transactions committed by the former. Worse, MGV allegedly was able to divert investments made by "high networth" clients of RSEC into some other accounts. xxx

            16. In the same letter, plaintiff made clear to RSEC that it has never authorized a discretionary account with MGV and requested for all documents relative to plaintiff's audit. xxxx

            17. After audit, plaintiff has conclusively determined that there were FOUR HUNDRED SIXTY-SEVEN (467) unauthorized transactions in his account. A review of the said transactions would show that multiple buying and selling transactions on the same day were repeatedly done over a period of four (4) years.

            Ku prayed for the payment of the amounts and the shares of stock resulting from his independent audit after excluding all unauthorized trades. Ku also sought the recovery of treble damages, exemplary damages and attorney's fees.

            The Complaint, docketed as Civil Case No. 13-171, was raffled off to Branch 63, RTC of Makati. On May 29, 2013, RCBC Securities filed a Motion to Dismiss.

            The RTC of Makati, Branch 63, issued its questioned Order dated September 12, 2013, to wit:

            xxxx After going over plaintiff's [herein Ku's] Complaint and defendant's [herein respondent's] Motion to Dismiss and the Reply that followed, the Court is of the considered view that this case involves trading of securities.

            Consequently, the case should be heard and tried before a Special Commercial Court. Accordingly, the Court's Branch Clerk of Court is forthwith directed to forward the entire record of the case to the Office of the Clerk of Court for re-raffle.

            The case was, subsequently, re-raffled to Branch 149 of the RTC of Makati. Thereafter, in its Order dated October 25, 2013, the RTC of Makati, Branch 149, denied the Motion to Dismiss for lack of merit. It held that Ku's payment of insufficient docket fees does not warrant the dismissal of the Complaint and that the trial court still acquires jurisdiction over the case subject to the payment of the deficiency assessment. The RTC, thus, ordered Ku "to pay the docket fees on the value of the shares of stocks being prayed to be returned to him, within thirty (30) days from receipt" of the said Order.

            The CA reversed and dismissed Ku’s complaint, on the ground of lack of jurisdiction by Branch 63. Thus, the case should have been dismissed.

Dispositive:

CA decision REVERSED. Civil Case No. 13-171, entitled Stephen Y. Ku v. RCBC Securities, Inc., is hereby REINSTATED and the Regional Trial Court of Makati City, Branch 149, is DIRECTED to PROCEED WITH THE HEARING of the case, with utmost dispatch, until its termination. ·

Other Notes:


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