Amparo D. Robles vs. Worldwide Monetary Market, Inc.

[SEC-AC NO. 423. September 17, 1993.] AMPARO D. ROBLES , complainant , vs . WORLDWIDE MONETARY MARKET, INC. , respondent . D E C I S I O N This is an appeal by Worldwide Monetary Market, Inc., respondent in PED Case No. 92-1021 , from the order dated May 5, 1993 rendered against it in the said case. PED Case No. 92-1021 arose from a letter-complaint filed with this Commission on July 9, 1992 by Amparo D. Robles against the Worldwide Monetary Market, Inc. (Worldwide for short). Complainant Robles averred in her letter-complaint that she invested the total amount of P500,000.00 with the respondent Worldwide upon its agents' representation that the corporation was authorized by the Central Bank to engage in foreign currency trading activities and that her contract will be traded with international banks through the Manila International Futures Exchange (MIFE); that the said representations turned out to be untrue; and that respondent Worldwide has been in the practice of divesting innocent clients of their hard-earned money in a matter of days, or weeks at most, through deception and misrepresentations. On July 16, 1992 the hearing officer assigned to the case wrote the respondent requiring it to comment on the complaint. On September 16, 1992 the Prosecution and Enforcement Department (PED) issued an order directing respondent Worldwide to cease and desist from further engaging in foreign currency trading and related activities and to appear before it on October 21, 1992 to show cause why no further action should be taken against it in the light of the allegations of the complaint. On October 9, 1992 respondent Worldwide filed an "Urgent Motion to Lift Cease and Desist Order." On October 21, 1992 the scheduled hearing pushed through but the complainant failed to attend even though she has been duly notified of the same. On October 22, 1992 the hearing officer assigned to the case issued an order lifting the cease and desist order earlier issued and directing respondent Worldwide to file its answer to the complaint within ten days from receipt thereof. On November 11, 1992 the respondent filed its answer to the complaint alleging, among others, that on March 9, 1992 the complainant went to their office accompanied by her son, Dennis Cabreza, who was then a marketing trainee of the respondent; that the complainant expressed her desire to trade in foreign currency; that after the complainant had been thoroughly apprised of the nature, mechanics and risks of foreign currency trading, she signed two customer's agreements representing two accounts and the corresponding risk disclosure statements, guidelines for spot/futures currency trading and special powers of attorney in favor of one Alfredo Santiago; and that the complainant made an initial deposit of P100,000.00 for each account. On December 7, 1992 the complainant filed her comment to the respondent's answer. On February 9, 1993 another hearing was held at which the parties agreed to submit the case for resolution after the submission of their respective memoranda. On March 5, 1993 the complainant filed her memorandum. None was filed by the respondent. On May 5, 1993 the PED issued the order subject of this appeal, the dispositive portion of which states: Accordingly, the Department hereby ORDERS: 1. Declaring as null and void the Trading Contract entered into by and between complainant and the respondent; 2. Declaring as null and void all the trading transactions undertaken by the respondent or its agents in behalf of the complainant; 3. Respondent to pay the complainant the amount invested with it plus legal rate of interest from the date of this instant case within fifteen (15) days from receipt hereof. SO ORDERED. The PED found respondent Worldwide guilty of employing fraud and misrepresentations in inducing the complainant to enter into the trading contracts with it. Such contracts, the PED pointed out, are voidable or annullable pursuant to Article 1338 in relation to Article 1390 of the Civil Code.Quoted below are the pertinent portions of the PED order stating the department's findings: As synthesized from the foregoing and as culled from the records as well as the evidence presented, it appears that complainant initially invested P500,000.00 to the corporation through the corporation's Vice-President, Arlene Ogapong, who represented that the corporation is authorized by Manila International Futures Exchange (MIFE), which is likewise authorized by the Central Bank. Thinking that representation were indeed true and correct, complainant opened an account with the respondent and was made to execute a Special Power of Attorney to a certain Alfredo B. Santiago as her Attorney-in-fact to manage her account, do the trading for her by placing the buy and/or sell orders, and complainant was given Account Nos. KCC-8033 and KCC-8034. Complainant had later on realized that fraud, bad faith, deceptive and gross misrepresentation were perpetrated on her by respondent as gleaned from the foregoing: They (respondent) employed complainant's son as Investment Consultant to get her trust and confidence; that the Vice-President presented a diagram which is different from the contract presented to her for signing. After depositing her account, her son, who does not know or understand the respondent's operation, refused to trade her account as he was afraid that he may lose the amount through some pressure, but was then later handled by respondent's officers. Respondent misrepresented that complainant's account was being traded with international bank through the MIFE, when in truth and in fact no international trading was done through MIFE with international banks and that the Central Bank has not issued any authority to the subject corporation to engage in foreign currency trading activities, as well as from the MIFE where the latter gave information that MIFE does not transact with banks in any currency contracts and that currency contracts transacted by its members-brokers are executed through the trading floor and then registered with the clearing house. In the course of her trading in commodity futures with respondent, complainant was required to make additional deposits of P100,000.00, coupled by a discovery that the power of attorney was in the name of Mr. Santiago as the only licensed broker in the company and that the complainant was informed that all powers of attorney are in the name of Mr. Santiago, so much so that Arlene Ogapong nor the complainant's son are not authorized to trade complainant's account as they are unlicensed traders. From the foregoing and other antecedent facts, it could readily be deduced that respondent was guilty of fraud and misrepresentation in securing complainant's investments which would warrant the nullification of the Trading Contract. On May 10, 1993 respondent Worldwide filed the instant appeal before this Commission en banc assigning the following errors: a) That the hearing officer erred in issuing the appealed order without or in excess of his jurisdiction and to the damage and detriment of the respondent; b) That the hearing officer erred in finding the respondent guilty of fraud and misrepresentation without the benefit of formal hearing; c) That the hearing officer erred in declaring the trading contract between the complainant and the respondent as well as all the trading transactions undertaken by the respondent or its agents in behalf of the complainant as null and void; and d) That the respondent is not liable for the losses incurred by the complainant. Anent its first assigned error, respondent-appellant Worldwide contends that the PED overstepped the limits of its jurisdiction in awarding the monetary claim of the complainant considering that under P.D. No. 1758 the duties and functions of the department are purely investigatory and prosecutory in nature. The respondent-appellant further argues that under the set-up of this Commission, it is the Securities Investigation and Clearing Department (SICD) which is vested with the authority to hear and decide cases and to award monetary claims such as the claim of the complainant below. We find no merit in respondent-appellant's contention. The PED, as a department within this Commission, functions as an alter-ego or extension of this Commission en banc in the exercise of its powers and in the performance of its duties. As such, the PED may exercise the powers and perform the duties that could lawfully be exercised or performed by this Commission en banc. Therefore, if this Commission en banc could lawfully award the monetary claim of complainant Robles, so could the PED as an extension or alter-ego thereof. As regards its second assigned error, respondent-appellant Worldwide expresses puzzlement at how the PED hearing officer could have arrived at the conclusion that it was guilty of fraud and misrepresentation without the benefit of a formal hearing. It hastens to add that the PED hearing officer had no basis whatsoever for his conclusions. Proceedings before the PED are summary in nature and full-blown hearings are not normally conducted by the department in the course of its investigations. Be that as it may, however, it is not correct for the respondent-appellant to assert that the PED hearing officer had absolutely no basis for his conclusions. The records show that there were at least two conferences held on the case during which the parties were afforded the chance to articulate their respective positions and to present evidence in support thereof. The records also show that respondent-appellant Worldwide was given the opportunity to file his answer to the complaint, which it did. Respondent-appellant was furthermore given the chance to submit its memorandum or position paper prior to the resolution of the case but it failed to do so. It could easily be seen that the PED hearing officer arrived at his conclusions in this case after a study and consideration of the allegations and counter-allegations of the parties herein as contained in their pleadings and as articulated during the conferences held thereon. Respondent-appellant Worldwide's third assigned error is closely related to the second. In its third assigned error respondent-appellant claims that the order appealed from failed to clearly state the factual basis for the finding that it employed fraud and misrepresentations in inducing the complainant to invest ;her money therewith, thereby justifying the application of Sections 1338 and 1390 of the Civil Code. Again, we find no merit in this contention. A reading of the order under review will readily show that the finding of the PED hearing officer that respondent-appellant Worldwide was guilty of fraud and misrepresentations was based on the allegation of the complainant that Worldwide assured her of two material things without which she would not have decided to invest her money therewith: that it was authorized by the Central Bank to engage in foreign currency trading activities and that her contracts will be traded with international banks through the MIFE. Complainant Robles found out later that the aforesaid representations were untrue. The records show that respondent-appellant Worldwide never denied ever having made such claims. Nor have they refuted the evidence presented by the complainant to prove that its aforesaid representations were false. The fourth assigned error of respondent-appellant Worldwide would have been meritorious had the trading contracts entered into by the complainant with it not been tainted with deceit. prcd WHEREFORE, the order appealed from is hereby AFFIRMED. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (SGD.) RODOLFO L. SAMARISTA (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner (SGD.) FE ELOISA C. GLORIA (SGD.) PERFECTO R. YASAY, JR. Associate Commissioner Associate Commissioner