Torres v. The Manila Yacht Club, Inc.

[SEC-SICD * CASE NO. 4116. May 23, 1995.] RAMON T. TORRES , complainant , vs . THE MANILA YACHT CLUB, INC., ET AL. , respondents . D E C I S I O N This is a suit filed by complainant, Ramon Torres (Torres) against the respondents Manila Yacht Club, Inc. (Club) Jose M. Zaldarriaga (Zaldarriaga) and Donald Jones (Jones) for illegal collection, and the posting of complainant's name as a delinquent debtor in the Bulletin Board of the Club, for which he is claiming from all the respondents, jointly and severally, the following: a) The sum of P19,300.00 paid under protest, as mooring fees; b) The sum of P700,000.00 as moral damages; c) The sum of P150,000.00 as exemplary damages; and d) The sum of P150,000.00 as attorney's fees. Complainant Torres, a member and former Director and Commodore of the Club originally initiated the complaint before the Regional Trial Court of Manila. However, upon motion of respondents, who argued that jurisdiction pertains to the Securities and Exchange Commission (Commission), the Regional Trial Court (after already receiving evidence from Torres and after Torres had made a Formal Offer of Exhibits), dismissed the case, ruling that jurisdiction belongs to the Commission. Torres elevated the matter, by appeal, to the Court of Appeals, which sustained the Regional Trial Court. Thereafter, Torres, elevated the matter to the Supreme Court which sustained the position of the Regional Trial Court and the Court of Appeals, Vis-a-vis the issue of jurisdiction. Hence, Torres filed the instant case with this Commission. Respondents filed their Answer with Counterclaim and alleged therein special and affirmative defenses, which are anchored, among other grounds, and contrary to their previous legal posture, that the Commission has no jurisdiction over the action and that jurisdiction pertains to the Regional Trial Court. This Hearing Officer, upon respondents' motion, conducted a preliminary hearing on the special and affirmative defenses and after considering the evidence and arguments of the parties, denied the "Motion to Dismiss" (special and affirmative defenses) in the Order of September 9, 1992. The Order was elevated by the respondents to the Commission en Banc which dismissed the appeal in its Order of March 4, 1993, holding that: " Even if we take cognizance of this appeal, it still is subject to dismissal, in view of the pronouncement of the Supreme Court, that the subject matter of the suit properly falls, within the exclusive jurisdiction of the Securities and Exchange Commission and as the Hearing Officer correctly held, we cannot be more popish than the Pope ." During the hearings of this case, the parties presented testimonial and documentary evidence. However, rather than testify again on matters already testified to before the Regional Trial Court, the parties agreed that the various transcripts of "Stenographic Notes" (taken when Torres testified before the Regional Trial Court) be marked as Exhibits and would constitute complainant's direct testimony. Torres, also testified on additional matters and marked several other documents, as his exhibits. The undisputed facts of this case are as follows: The Club is a non-profit, non-stock, social corporation, organized and existing under the laws of the Republic of the Philippines with its principal offices at Roxas Boulevard, Manila. Sometime in April 1994, while complainant was the Commodore of the Club, his speedboat, "Allegro" was borrowed by the club gratis et amore. Before that, the same was garaged in his residence and away from the corrosive elements of salt, air and water. He personally allowed this speedboat to be used by said Club, for free, in ferrying the various guests and competitors during the China Sea Race events which started from Hongkong and ended in Manila. The competing boats were docked in the Club's basin for a week or two, before going back to Hongkong. Meanwhile, the owners and crew members had to be ferried, to and from the Clubhouse using the complainant's boat. llcd During this period the complainant came to know that the transom of his speedboat, "Allegro", was damaged because the Club changed and removed the original engine of said speedboat and in lieu thereof, fitted a more economical engine without complainant's knowledge/consent. When complainant discovered the damages on "Allegro's transom" he requested the Club to make the necessary and immediate repairs thereon but, after a long time, when the transom damage was finally repaired, complainant discovered that the boat trailer had likewise been damaged from the club basin. Further repairs were undertaken but at the expense of complainant. During the board meeting of the Club on March 10, 1986, when the term of Torres as Commodore of the Club had already expired (on August 9, 1985) and he attended said meeting in his capacity as a member of the Board of Directors, Zaldarriaga, the then Rear Commodore/Port Captain of the Club, informed complainant of the mooring and yard space charges, for his "Allegro", for the period covering May 1984 to February 28, 1986 in the total sum of Ninety One Thousand Three Hundred Ninety (P91,390.00) Pesos. Complainant immediately reacted and called the attention of the Board members and all persons who attended the said meeting, more particularly Zaldarriaga that the Club has no legal right to demand and collect from him the said mooring and yard space charges as he just volunteered and offered his "Allegro", free of charge for the use of the guests and competitors during the said China Sea Race events. And if said speedboat was not immediately taken out of the Club basin it was due to the damages it suffered when the Club without his consent, knowledge, and approval changed the engine of the speedboat. Thus, Torres claimed that he could not be required legally and validly to pay the aforesaid mooring and yard space charges. On March 13, 1986, complainant formally wrote Zaldarriaga furnishing copies thereof to all the members of the Board of Directors of the Club, whereby he specifically stated his justification and reasons why he should not be made to pay said mooring and yard space charges. Neither Zaldarriaga nor the Club responded to complainant's letter, verbally or in writing. On April 18, 1986, Complainant received from the Club, a "Statement of Account" for the period ending March 31, 1986 wherein he was still being charged the amount of P91,390.00 notwithstanding his letter to Zaldarriaga, dated March 13, 1986. Thus, complainant on April 21, 1986 formally sent his letter to Jones, Vice-Commodore/Treasurer of the club regarding the protested charges of P91,390.00. LexLib The Club's "Statement of Account" above-mentioned was dated as late as March 31, 1986, even though the mooring and yard space charges at issue, refer to a prior period, as early as May 1984 to February 28, 1986. In effect, it appears that no Statement of Account whatsoever was pre-prepared and much less issued, covering this long period of alleged mooring charges (May 1984 to February 1986) until March 31, 1986, contrary to the normal accounting practices of the Club for that matter) which bills whatever charges there are for one (1) month, in the succeeding month. On April 23, 1986, complainant through his counsel wrote Zaldarriaga, a copy of which was furnished to Jones, to the effect that complainant could not be validly charged for alleged mooring and yard space charges. At the same time telling Zaldarriaga that unless complainant receives satisfactory explanation from Zaldarriaga, complainant's counsel will be constrained to take the necessary legal steps to protect the interests of the said complainant. On April 30, 1986, herein complainant paid the Club, through Jones, the sum of P3,613.94 as reflected in his Statement of Account, up to and including March 31, 1986, without prejudice to his protest (against the illegal and immoral charges of P91,390.00), in order that his standing as a member and director of the Club, will not be prejudiced as shown in his letter dated April 30, 1986. On May 12, 1986, Torres came to know that his name was prominently listed in the big bulletin board, located at the main hall of the Club's office at Roxas Boulevard, Manila, whereby complainant's name appeared to have an outstanding account/arrears, in the sum of P91,390.00. The amount of P91,390.00 was reduced to P19,300.00 not because of the protest of Torres, but because respondents motu proprio, discovered an error in their part in their charges, completely unrelated to the protest of Torres. In effect, respondents were insistently charging Torres the protested charges, inspite of all the foregoing explanations and protest letters of Torres. Following-up his letter of April 30, 1986, Torres, through counsel wrote Jones regarding his payment of P19,300.00, per his Far East Bank and Trust Company Check No., 910620, dated May 27, 1986 in the amount of P19,300.00. In the same letter herein complainant made known to the respondents that his payment of the sum of P19,300.00 as alleged storage charges for his speedboat "Allegro" is being made under protest (in order to avoid embarrassment and prejudice, from complainant's name remaining posted at the bulletin board as a delinquent member and terminate the suspension of his Club privileges), and at the same time, Torres expressly reserved his right to recover the said amount of P19,300.00 in an appropriate legal action that herein complainant may execute against respondents (Vide Exhibit A-SEC; B-SEC; C and C-1-SEC; C-2 and C-3-SEC; Exhibit D-SEC; E-SEC; F-SEC; F-1-SEC; G-SEC; H-SEC; J and J-1 SEC; and the testimony of Irma Estrella, TSN, June 9, 1994). The issues to be resolved in this case are the following: 1. Whether or not the SEC has jurisdiction over the instant case. 2. Whether or not respondents are justified in charging Torres for mooring and yard fees, and upon the refusal of Torres to pay the same, posting him as a bad debtor in the Bulletin Board of the Club. Or whether or not by virtue of the mooring and yard charges Torres was indebted to the Club. 3. Whether or not Torres is entitled to his money claims or damages. LLphil On the first issue of whether this Commission has jurisdiction over this case, the answer is in the affirmative. The matter of jurisdiction had already been decided by the Honorable Supreme Court with finality before this instant case was filed with the Commission. In fact, this has been the legal thesis of respondents, all the way, starting from the Regional Trial Court to the Court of Appeals and finally to the Supreme Court. Strangely enough, respondents took the opposite legal posture before the Commission. This constitute trifling with the Courts, as well as the Commission. This issue has also already been decided, with finality, by the Commission en banc, through its Order of March 4, 1993, dismissing the appeal of respondents, on this point. As to the second issue of whether or not the respondents are justified in charging Torres for mooring and yard fees or whether or not Torres was indebted to the Club for the pertinent mooring and yard charges, answers thereto issues are in the negative. A perusal of the arguments of the respondents indicates that their only justification, for proceeding with the imposition of the mooring and yard charges is that they were allegedly mandated by pertinent provisions of the by-laws, to collect the debts due from members, and to order the posting of their names as bad debtors should they refuse to pay their obligations. In the instant case this Hearing Officer agrees with the complainant that, there simply is no debt to be enforced by the respondents, because: a) It is clear that Torres, at the request of the Club, lent his speedboat "Allegro", to the Club, gratis et amore . for the use of the Club. The Club not only used his speedboat, gratis et amore. It actually damaged this speedboat "Allegro", by removing its original engine and fitting a more economical one. Worse, it damaged the boat trailer of the speedboat "Allegro". All of these facts were sufficiently explained to the Board Members, including respondents Zaldarriaga and Jones, in the Board meeting of March 10, 1986, and in various subsequent letters of Torres. Yet with full knowledge of these facts, respondents maliciously insisted in collecting the alleged mooring and yard charges, and when Torres justifiably refused to pay, listed him as a bad debtor. Worse, the respondents made these charges, retroactive to May 1994. Instead of expressing their gratitude to Torres for his generous actions for the benefit of the Club, they maliciously castigated him by charging him mooring fees and posting his name as a bad debtor. b) But worse for respondents, it was uncovered thru the testimony of their only witness, namely: MS. IRMA ESTRELLA in cross-examination, that in accordance with the Rules of the Club, "Boats below 20 ft. long are free of mooring charges". LibLex This instant ruling was made very clear, by Ms. Irma Estrella, to Zaldarriaga (because precisely the "Allegro" is only 17 ft. long; ergo, should not have been charged mooring and yard charges at all) before he and the Club billed Torres. But Zaldarriaga insisted in charging these illegal charges (Vide pages 14-17, TSN, June 9, 1994). Thus rendering the malice of the respondents overwhelming. No evidence was presented to rebut this testimony of Ms. Irma Estrella. It is the opinion of this Commission, that there could be no mooring and yard charges because: a) The use of the speedboat "Allegro", was a favor, free of charge, made by Torres, to the Club; b) Even if it was not used as a favor to the Club, there was really no mooring and yard charged imposable on boats below 20 ft.; and the speedboat "Allegro" was only 17 ft. long. There is obviously bad faith on the part of the Directors, led by Zaldarriaga and Jones, in insisting on the illegal billing and blacklisting of Torres, as proven by all the foregoing facts. In fact, even the very counsel of the Club was advising the Club, not to blacklist Torres (Vide Exhibit E; F; F-1-SEC) but the directors with full knowledge of the illegality of their actions, continued to blacklist Torres. It appears that Zaldarriaga had a personal grievance against Torres and was using the Board, as a means of denigrating Torres, before the eyes of the Club members (Exhibit I; I-1; I-2; I-3; I-4; I-5-SEC and Exhibit G and H-SEC). As to whether Torres is entitled to his money claims or damages, the answer is definitely in the affirmative. At the outset, it is settled that this Commission can award damages including moral and exemplary as a consequence in the exercise of its original and exclusive jurisdiction. (Thus, in the case of Noe S. Andaya vs. Lisandro C. Abadia, et al., G.R. No. 104033, December 27, 1993, the Supreme Court held: "The allegations against herein respondents in the Amended Complaint unquestionably reveal intra-corporate controversy cleverly concealed although unsuccessfully by use of Civil Law Terms and phases the Amended complaint implead herein respondents who in their capacity as directors of AFSCH allegedly convened as illegal meeting and voted for the reorganization of management resulting in petitioner's ouster as corporate officer while it may be said that the same corporate acts also give rise to civil liability for damages, it does not follow that the case is necessarily taken out of the jurisdiction of the SEC as it may award damages which can be considered consequential in the exercise of its adjudicative powers. Besides, incidental issues that properly fall within the authority of a tribunal may also be considered by it to avoid a multiplicity of actions. Consequently an intra-corporate matters such as those affecting the corporation, its directors, trustees, officers, shareholders, the issue of consequential damages may just as well, be resolved and adjudicated by the SEC." Torres claim for the refund of the illegal assessment amounting to P19,300.00 paid under protest must definitely be granted, considering that it should never have been charged to start with. cdll With respect to his claims for moral damages, the undeniable fact that he suffered, by having his name posted, as a bad debtor, cannot be denied. We are dealing here with a former Commodore and Director of the Club; well known in his own Club in business and in business and in social circles. It does not need too much perception, to conclude that for a man of his standing, to be branded as "balasubas", in his own Club, before his very social and business peers caused Torres irreparable humiliation. Torres has testified as to his moral sufferings (Vide Exhibit G and H-SEC) and the evidence of bad faith and a concerted plan to malign him, permeates the records of this case. Torres is also entitled to exemplary damages against respondents, considering that this is a Club with many members, and that the directors and the Club should be taught a lesson so that other members will not be made to suffer. Torres is entitled to attorney's fees for the long and bitter litigations, that respondents have compelled Torres to undertake. The facts are clear that respondents have been unjustifiably resisting this case in order to delay judicial relief to Torres. They have caused Torres, to litigate for the last 10 years, all the way, from the Regional Trial Court, to the Court of Appeals, to the Supreme Court, and finally to this Commission. Worse, they have taken contradictory legal postures, (Vis-a-vis jurisdiction) in order to further delay justice to Torres. Perhaps, it was the hope of respondents that Torres would give up, if they delayed long enough. Unfortunately for them, Torres was not discouraged, by the dilatory maneuvers of the respondents. WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. That the illegal assessment against Torres is declared null and void; 2. That respondents, Manila Yacht Club, Inc., Jose M. Zaldarriaga and Donald Jones are ordered to jointly and severally, pay petitioner Ramon Torres, as follows: a) Nineteen Thousand Three Hundred (P19,300.00) Pesos, representing the refund of the illegal mooring charges assessed against him and paid by him, under protest; b) Three Hundred Thousand (P300,000.00) Pesos, as moral damages; c) One Hundred Thousand (P100,000.00) Pesos as exemplary damages; d) One Hundred Thousand (P100,000.00) Pesos as attorney's fees. SO ORDERED. (SGD.) JUANITO B. ALMOSA, JR. Hearing Officer