G.R. No. 219491 - Ku vs. RCBC Securities, Inc.

Respondent, RCBC Securities, Inc., is a corporation engaged primarily in the brokerage business for buying and selling securities and other properties both locally and abroad.
Petitioner, Stephen Y. Ku, opened a trade account with RCBC Securities, Inc. on June 5, 2007, for the purpose of engaging in securities transactions.

An unauthorized name (“M.G. Valbuena” abbreviated as “MGV”) was inserted next to that of an existing agent, implying fraudulent representation.
MGV purportedly acted with apparent authority as a Sales Director of RCBC Securities, Inc., inducing petitioner to continue transacting under her representation.

Petitioner’s complaint detailed a series of unauthorized trading transactions spanning approximately four years, marked by:

Repeated unauthorized and unconfirmed buying and selling transactions.
The production of fabricated trade confirmation statements in place of genuine trade documents.

In addition to regular trades, petitioner invested in ARPO funds through representations that such funds offered higher interest rates, amounting to Php38,300,205.00 over more than two years.

In January 2012, petitioner discovered issues of mismanagement and unauthorized transactions in his account.
An audit revealed 467 unauthorized transactions, leading to discrepancies in the trading record compared to the confirmations provided.
The audit report indicated various amounts owed by RCBC, including:

Subsequent to the audit, petitioner demanded payment of these amounts and the return of specified shares of stocks.

Petitioner filed a Complaint for Sum of Money and Specific Performance with Damages on February 22, 2013, docketed as Civil Case No. 13-171.
The RTC of Makati, Branch 63:

Received the complaint but subsequently, on May 29, 2013, respondent filed a Motion to Dismiss raising three primary defenses: lack of jurisdiction due to insufficient docket fees, failure to state a cause of action (especially concerning alleged fraud), and alleged waiver or abandonment of claims by petitioner.
After hearings, Branch 63 issued an Order dated September 12, 2013 ordering the re-raffle of the case to a different branch, based on its view that it lacked jurisdiction due to the nature of the case (trading of securities).

After reassigning, Branch 149 denied the Motion to Dismiss on October 25, 2013, holding that the insufficient payment of docket fees did not warrant dismissal but instead required petitioner to pay additional fees.
Branch 149 maintained that the complaint sufficiently alleged fraud and that any conflicting assertions regarding waiver of claims should be resolved at trial.

Respondent (RCBC Securities, Inc.) challenged the orders issued by RTC Branches 63 and 149 by filing a petition for certiorari under Rule 65, alleging grave abuse of discretion.
On October 9, 2014, the CA issued a Decision reversing and setting aside the questioned orders on the basis that:

Branch 63 had acknowledged its lack of jurisdiction over the subject matter but instead of dismissing the case, it ordered a re-raffle to another branch.
All proceedings under Branch 149 were rendered null and void due to this misstep.

Petitioner’s Motion for Reconsideration was subsequently denied by the CA in a Resolution dated July 14, 2015.

Whether the complaint filed by petitioner is an ordinary civil action for collection, specific performance, and damages, or whether it constitutes an intra-corporate controversy subject to special commercial court jurisdiction.
Whether the alleged insufficient payment of docket fees, as contended by the respondent, affects the inherent jurisdiction of the RTC over the subject matter.

Whether the RTC’s decision to re-raffle the complaint from Branch 63 to Branch 149 constitutes a grave abuse of discretion amounting to lack or excess of jurisdiction.
Whether such procedural lapses (re-raffling) materially affect the substantive jurisdiction acquired by the RTC pursuant to the allegations in the complaint.

Whether petitioner’s failure to initially indicate the value of the shares in his complaint, thus affecting the docket fee assessment, demonstrates an intent to defraud the court or whether it can be remedied through additional payment.