Do-All Metals v. Security Bank

G.R. No. 176339 (January 10, 2011)

Do-All Metals won damages for harassment from Security Bank; property loss claims denied for lack of evidence.

Facts:

From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioners Domingo Lim and Lely Kung Lim (the Lims), borrowed a total of P92,454,776.45 from respondent Security Bank Corporation (the Bank). Due to their inability to repay the loans, the Lims assigned several real properties, including a building and the lot on which it stands, to the Bank as collateral. In 1998, the Bank offered to lease the property to the Lims through their company, Do-All Metals Industries, Inc. (DMI), for business purposes, while allowing the Lims to use part of the property as their residence. A two-year lease contract was executed, which included a right of first refusal for DMI in case the Bank decided to sell the property.

On December 3, 1999, the Bank notified DMI of its intention to pre-terminate the lease effective December 31, 1999. DMI attempted to negotiate the purchase of the property, initially offering P8 million, which the Bank rejected, suggesting P15 million instead. A subsequent offer of P10 million was also declined. During this period, the Lims claimed they continued to use the property for business, but the Bank had posted security guards from the Philippine Industrial Security Agency (PISA) who allegedly barred the Lims and DMI's employees from entering the premises, even resorting to intimidation, including pointing firearms at employees.

The Lims filed a complaint with the Regional Trial Court (RTC) of Pasig City for damages and sought a temporary restraining order (TRO) against the Bank and its representatives. The Bank countered that the lease allowed it to sell the property and that DMI had failed to vacate the premises, which led to a buyer backing out. The RTC initially allowed DMI and the Lims to present evidence ex parte after the Bank's counsel failed to attend a scheduled pre-trial. The RTC later ruled in favor of DMI and the Lims, awarding them substantial damages.

The Bank subsequently filed a motion for reconsideration, arguing that the RTC lacked jurisdiction to award damages due to the plaintiffs' failure to pay the filing fees for their supplemental complaint. The RTC denied this motion, leading the Bank to appeal to the Court of Appeals (CA), which ultimately reversed the RTC's decision and dismissed the complaint.

Legal Issues:

  1. Did the RTC acquire jurisdiction to hear and adjudicate the plaintiffs' supplemental complaint despite their failure to pay the corresponding filing fees?
  2. Is the Bank liable for the alleged intimidation and harassment against DMI and its representatives?
  3. Is the Bank liable for the loss of the machineries, equipment, and other properties claimed by the Lims after they were barred from the property?

Arguments:

  • Petitioners (DMI and the Lims): They argued that the RTC had already acquired jurisdiction over their case when they filed the original complaint with the required filing fees. They contended that the non-payment of additional fees for the supplemental complaint did not divest the RTC of its jurisdiction. They also presented eyewitness accounts of harassment and intimidation by the Bank's guards, asserting that the damages awarded were justified.

  • Respondent (Security Bank): The Bank contended that the failure to pay the filing fees for the supplemental complaint was fatal to the plaintiffs' action, arguing that the RTC lacked jurisdiction to award damages. The Bank denied the allegations of harassment and intimidation, asserting that it had the right to protect its property and that the plaintiffs had vacated the premises peacefully.

Court's Decision and Legal Reasoning:

  1. Jurisdiction: The Supreme Court held that the RTC had acquired jurisdiction over the case when the original complaint was filed with the appropriate filing fees. The failure to pay additional fees for the supplemental complaint did not divest the RTC of its jurisdiction. The Court emphasized that the plaintiffs' non-payment of additional fees was not a ground for dismissing the case.

  2. Liability for Harassment: The Court found sufficient evidence of harassment and intimidation by the Bank's representatives and guards. The testimonies of the Lims and their employees were credible and corroborated by police investigations. The Court ruled that the Bank could not escape liability for the actions of its agents and affirmed the RTC's award of moral and exemplary damages.

  3. Liability for Lost Properties: The Court ruled that the plaintiffs failed to prove the loss of specific properties and that the supplemental complaint's lack of filing fees was a significant issue. The Court noted that the plaintiffs did not provide adequate evidence to substantiate their claims regarding the lost properties, leading to the dismissal of the actual damages claim.

The Supreme Court partially granted the petition, reinstating the RTC's decision with modifications, specifically reducing the damages awarded and deleting the actual damages claim.

Significant Legal Principles Established:

  • The jurisdiction of a court is established upon the filing of a complaint with the required fees, and failure to pay additional fees for a supplemental complaint does not divest the court of its jurisdiction.
  • A party cannot benefit from its own lack of diligence in attending court proceedings, and the credibility of evidence presented ex parte cannot be dismissed solely on the basis of the absence of the opposing party.
  • The burden of proof lies with the plaintiffs to establish their claims for damages, particularly in cases involving lost properties.