THE Philippine Stock Exchange (PSE) decided to keep the P19 million which the Litonjua group had remitted to it as payment for a membership seat owned by Trendline Securities Inc. Did it have the right to keep the money?
The Litonjuas wanted their money back. Who was right between them and PSE?
The Supreme Court (SC), to which the PSE raised its legal battle over the money, has spoken by ruling against it. Like the Court of Appeals and the Regional Trial Court of Pasig City, the High Court also recognized the Litonjuas as the rightful owner of the money and ordered the PSE to return it plus accumulated interest earnings.
This is the story of a protracted legal battle that began in the lower court in 2006 and ended at the High Court more than 10 years later. While PSE lost the money, the Litonjuas also suffered a “casualty” because businessman Antonio K. Litonjua did not live long enough to experience his victory. When he died, he was replaced in the P19-million claim by his nephew Aurelio K. Litonjua Jr.
The group of Antonio K. Litonjua sued the Philippine Stock Exchange for the return of P19 million which they paid for 85-percent equity in a PSE membership seat owned by Trendline Securities Inc.
In a letter dated July 30, 2006, the Litonjuas “requested PSE to reimburse the P19 million” plus interest because they learned that “transferring the membership seat will no longer be possible.” Trendline Securities was then under rehabilitation.
Rebuffed in their efforts to recover their money, the Litonjuas went to the Regional Trial Court (RTC) of Pasig City and filed their complaint on Oct. 10, 2006 against PSE before the Regional Trial Court of Pasig City.
By going to court, the Litonjuas only wanted to get back their money. However, the PSE continued the fight despite losing at the Pasig City RTC and at the Court of Appeals; it elevated the case to the Supreme Court, where again it lost. It wanted to keep the money, which it said came from Trendline Securities.
Court documents showed the PSE’s admission of having “received three checks amounting to P19 million for the full settlement of Trendline’s outstanding obligation.” However, it told the court that “Trendline, not the Litonjua group, was indicated as the payor of the obligation.”
In short, the Litonjuas remitted P19 million to the PSE, which has refused to return it because their money claim was “without any legal basis.”
The Supreme Court did not agree with the PSE because to paraphrase its ruling, no one should enrich himself at the expense of another.
“Unjust enrichment,” according to the High Tribunal, occurs “when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.”
This definition should prove costly to PSE for keeping P19 million which did not belong to it. The Litonjuas intended the money to pay for 85 percent of the membership seat owned by Trendline Securities.
Unluckily for the Litonjuas, PSE did not easily give up the fight over what it thought it owned, having been paid by Trendline Securities. Luckily for them, they got a favorable ruling from Pasig City RTC, which was eventually affirmed by the Appellate Court.
At the High Court, the PSE was only to be frustrated when the tribunal said the money did not belong to the bourse. And instead of ordering the return of only P19 million, the High Court ordered the exchange to pay the Litonjuas “12 percent to 6 percent per annum” imposable on P19 million “reckoned from the date of demand on 30 July 2006.”
That’s a lot of money that would certainly hurt the PSE’s profitability because P19 million is 3.741 percent of its net profit of P507.928 million in the first nine months of 2016 and 14.05 percent of its net income of P135.23 million in the third quarter.
Note: For the readers of The Manila Times interested in the details of the legal battle between PSE and the Litonjuas, they can access www.sc.judiciary.gov.ph for the SC ruling.