Ku vs.

RCBC Securities (2018) FACTS:

SUMMARY: Stephen Y. Ku opened an account with RCBC Securities on June

Ku filed a complaint for sum of money and specific performance 5, 2007 for the purchase and sale of securities.
with damages against RCBC Securities, seeking to recover
money and stocks sold without his consent. The CA dismissed the On February 22, 2013, Ku filed with the RTC of Makati a
case, holding that Branch 63 (a non-Special Commercial Court) Complaint for Sum of Money and Specific Performance with
had no jurisdiction over the case, since it involved an intra- Damages against respondent. Pertinent portions of his allegations
corporate controversy and insufficient docket fees were paid. read as follows:

4. Unknown to plaintiff, the name of M.G. Valbuena

DOCTRINE:
("MGV") was deliberately inserted beside the name of Ivan L.
An intra-corporate controversy is one which pertains to any of the Zalameda as one of. the agents after plaintiff completed and
following relationships: (I) between the corporation, partnership or signed the Agreement.
association and the public; (2) between the corporation, 5. As to when the fraudulent insertion was made, plaintiff
partnership or association and the State insofar as its franchise, has no idea. Plaintiff only discovered this anomaly when plaintiff
permit or license to operate is concerned; (3) between the recently requested for a copy of his Account Information.
corporation, partnership or association and its stockholders,
partners, members or officers; and (4) among the stockholders, 6. In the course of plaintiff's trading transactions with
RSEC, MGV represented herself as a Sales Director of RSEC,
partners or associates themselves. Thus, under the relationship
duly authorized to transact business on behalf of the latter. xxxx
test, the existence of any of the above intra-corporate relations
makes the case intra-corporate. 7. With this representation, plaintiff continued to transact
business with RSEC through MGV, on the honest belief that the
Indeed, this Court has held that the ruling in Manchester does not latter was acting for and in behalf of RSEC. xxx
apply to cases where insufficient filing fees were paid based on
the assessment made by the clerk of court, and there was no 13. Sometime in January 2012, it came to the knowledge
intention to defraud the government. It was further held that the of plaintiff that his account with RSEC was subject of
filing of the complaint or appropriate initiatory pleading and the mismanagement. MGV was blacklisted by RSEC due to
numerous fraudulent and unauthorized transactions committed
payment of the prescribed docket fee vest a trial court with
by the former. Worse, MGV allegedly was able to divert
jurisdiction over the subject matter or nature of the action. If the
investments made by "high networth" clients of RSEC into some
amount of docket fees paid is insufficient considering the amount other accounts. xxx
of the claim, the clerk of court of the lower court involved or his
duly-authorized deputy has the responsibility of making a 16. In the same letter, plaintiff made clear to RSEC that
deficiency assessment. The party filing the case will be required to it has never authorized a discretionary account with MGV and
pay the deficiency, but jurisdiction is not automatically lost. 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 ISSUES:
same day were repeatedly done over a period of four (4) years.
1. WoN RTC Branch 63 has jurisdiction
Ku prayed for the payment of the amounts and the shares of stock
resulting from his independent audit after excluding all YES. The Court finds, and so holds, that the case is not an intra-
unauthorized trades. Ku also sought the recovery of treble corporate dispute and, instead, is an ordinary civil action. There
damages, exemplary damages and attorney's fees. are no intra-corporate relations between the parties. Ku is neither
a stockholder, partner, member or officer of RCBC Securities
The Complaint, docketed as Civil Case No. 13-171, was raffled off corporation. The parties' relationship is limited to that of an
to Branch 63, RTC of Makati. On May 29, 2013, RCBC Securities investor and a securities broker. Moreover, the questions involved
filed a Motion to Dismiss. neither pertain to the parties' rights and obligations under the
Corporation Code, if any, nor to matters directly relating to the
The RTC of Makati, Branch 63, issued its questioned Order dated
regulation of the corporation.
September 12, 2013, to wit:
On the basis of the foregoing, since the Complaint filed by Ku
xxxx After going over plaintiff's [herein Ku's] Complaint
and defendant's [herein respondent's] Motion to Dismiss and the
partakes of the nature of an ordinary civil action, it is clear that it
Reply that followed, the Court is of the considered view that this was correctly raffled-off to Branch 63. Hence, it is improper for it
case involves trading of securities. (Branch 63) to have ordered the re-raffle of the case to another
branch of the Makati RTC.
Consequently, the case should be heard and tried before a Special
Commercial Court. Accordingly, the Court's Branch Clerk of Court is Nonetheless, the September 12, 2013 Order of Branch 63,
forthwith directed to forward the entire record of the case to the Office of although erroneous, was issued in the valid exercise of the RTC's
the Clerk of Court for re-raffle. jurisdiction. Such mistaken Order can, thus, be considered as a
mere procedural lapse which does not affect the jurisdiction which
The case was, subsequently, re-raffled to Branch 149 of the RTC
the RTC of Makati had already acquired.
of Makati. Thereafter, in its Order dated October 25, 2013, the
RTC of Makati, Branch 149, denied the Motion to Dismiss for lack Moreover, while designated as a Special Commercial Court,
of merit. It held that Ku's payment of insufficient docket fees does Branch 149, to which it was subsequently re-raffled, retains its
not warrant the dismissal of the Complaint and that the trial court general jurisdiction to try ordinary civil cases such as Ku's
still acquires jurisdiction over the case subject to the payment of Complaint. In addition, after its re-raffle to Branch 149, the case
the deficiency assessment. The RTC, thus, ordered Ku "to pay the remained docketed as an ordinary civil case. Thus, the Order
docket fees on the value of the shares of stocks being prayed to dated October 12, 2013 was, likewise issued by Branch 149 in the
be returned to him, within thirty (30) days from receipt" of the said valid exercise of the RTC's jurisdiction.
Order.
2. WoN the trial court acquired jurisdiction despite
The CA reversed and dismissed Ku’s complaint, on the ground of payment of insufficient docket fees
lack of jurisdiction by Branch 63. Thus, the case should have been
dismissed. YES/NO. In the present case, the Court does not agree with the
CA when it ruled that "the intention of [Ku] Ku to evade payment of
the correct filing fees[,] if not to mislead the docket clerk in the
assessment of the filing fees[,] is manifest." The fact alone that Ku
failed to indicate in the body of his Complaint as well as in his
prayer, the value of the shares of stocks he wishes to recover
from RCBC Securities is not sufficient proof of a deliberate intent
to defraud the court in the payment of docket fees. On the
contrary, there is no dispute that upon filing of his Complaint, Ku
paid docket fees amounting to P1,465,971.41, which was based
on the assessment made by the clerk of court.

In a number of cases, this Court has ruled that the plaintiff's

payment of the docket fees based on the assessment made by
the docket clerk negates bad faith or intent to defraud the
government. There is, likewise, no dispute that, subsequently,
when ordered by Branch 149 to pay additional docket fees
corresponding to the value of the shares of stocks being
recovered, Ku immediately paid an additional sum of
P464,535.83.

Moreover, unlike in Manchester where the complainant specified

in the body of the complaint the amount of damages sought to be
recovered but omitted the same in its prayer, Ku in the instant
case consistently indicated both in the body of his Complaint and
in his prayer, the number of shares sought to be recovered, albeit
without their corresponding values. The foregoing circumstances
would show that there was no deliberate intent to defraud the
court in the payment of docket fees.

NOTES: 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. ·