Santiago v. Kingly Commodities Traders & Multi-Resources, Inc.

[SEC-SICD * CASE NO. 2327. May 16, 1995.] TOMAS SANTIAGO & ROSARIO GO-SANTIAGO , complainants , vs . KINGLY COMMODITIES TRADERS & MULTI-RESOURCES, INC. , respondents . D E C I S I O N This is a complaint which prayed for the following: 1. On the first cause of action, that respondent be ordered to pay the complainants the sum of P1,023,576.00 plus interest; 2. On the second cause of action: that respondent be ordered to pay to complainants the sum of P422,007.00 plus interest; 3. On the third cause of action: that respondent be ordered to pay to complainants the sum of P4,808.00 plus interest thereon; 4. On the first to the fourth cause of action: that respondent and its responsible officers be meted the maximum penalties under the law, including but not limited to the cancellation of its license as a commodity futures broker and the cancellation of the corporate franchise and its privilege to do business in the Philippines, complainants also pray that respondent be ordered to pay to complainants such damages as will be proved during the hearing; 5. On the fifth cause of action, that respondent be ordered to pay to complainants' by way of attorney's fees such sum as will be established during the hearing. Complainants, in their complaint, alleged inter alia, that sometime in December, 1980, respondent through its authorized officers and/or representatives, enticed complainant, Tomas Santiago to engage in commodities trading through respondent company; that as a result of the solicitations and enticements from the officers and/or representatives of respondent company, complainants opened two (2) accounts with respondent for commodities trading, namely: Account No. CPI-2809 in the name of complainant Tomas Santiago (opened on December 17, 1980) and Account No. CPI-2810 in the name of complainant Rosario Go (opened on January 16, 1981); that in a brief span of about nine (9) months, from December 1980 to August 1981, complainants deposited with respondent a grand total of P5,459,393.00 all by means of check payable to and subsequently encashed by respondents; that it turned out and complainants learned only long afterwards, that not a single centavo of the above-mentioned deposits was deposited to either of the two accounts of complainants; worst, it turned out that the above unaccounted sums were illegally, unlawfully and fraudulently with grave abuse of trust and confidence, diverted to some other accounts, whether fictitious or not only respondent and its corporate records could establish, without any authority from complainants; that respondent, should, therefore, be compelled to return to complainants the amounts diverted and/or misappropriated in the total sum of P1,023, 576.00 and to pay complainants interest of 14% per annum on said amount computed from the respective dates when complainants made the deposits until full payment, plus damages, as well, be proved during the hearing; that without authority from and knowledge of complainants, respondent made or caused to be made and/or allowed to be made the unauthorized withdrawals, in the total amount of P902,760.00, from the aforesaid Account Nos. CPI-2809 and CPI-2810 of complainants on different dates; that it turned out, and complainants learned only long afterwards, that the amount withdrawn without authority from their accounts were illegally, unlawfully and fraudulently and with grave abuse of trust and confidence, diverted to some other accounts, whether fictitious or not only respondent and its records could establish; that in an attempt to conceal the diversion and/or misappropriation of the money of the complainants and to confuse the records so as to make difficult the detection of the fraudulent manipulations, respondent made or caused to be made and/or allowed to be made at various times and from various sources, transfers or deposits to the accounts of complainants, such deposits amounting to a total of P480,753.00; that respondent should therefore be compelled to return to complainants the amount diverted and/or misappropriated in the total sum of P422,007.00 and to pay complainants interest of at least 14% from date of illegal withdrawals until fully paid with damages; that in particular transactions involving red beans made in December 1980, they were short charged of a net profit of P4,808.00 which they seek to be paid by respondent, together with interest at 14% per annum from due date until fully paid and likewise prayed that respondent be penalized for violating their trust and confidence; that respondent committed other irregularities and improprieties by giving complainants liquidation statements which did not reflect the true transactions but rather falsehoods, intended to conceal the diversion and/or misappropriated amount shown in their three causes of action, for which complainants seek the imposition of disciplinary measures against respondent, including the cancellation of its license to operate as a commodity futures broker and its franchise or privilege to do business in the Philippines; and that compliance seek the payment of attorney's fees. Respondent, in its answer with a counterclaim for exemplary damages and attorney's fees, denied the material allegation of the complainant and averred, among other things; that complainant Tomas Santiago agreed voluntarily to engage in commodities trading through respondent after properly evaluating the merits of commodities trading; that complainants opened five (5) accounts namely; Account No. CPI-2809 in the name of Tomas Santiago. Account No. CPI-2810 in the name of Rosario Go. Account No. CPI-2811 in the name of Victor Erfe Account No. CPI-2813 in the name of Ricardo Santiago; that there were no illegal, unlawful and fraudulent diversion of complainants funds; that the withdrawals made from CPI No. 2809 were upon instruction of complainant Tomas Santiago while the withdrawals made from CPI No. 2810 were upon instruction of complainant Rosario Go; that all transfers made to CPI No. 2809 were with the Conformity of Tomas Santiago while all transfers made to CPI No. 2810 were with the conformity of Rosario Go; that the Trading Balance Sheet of complainant Tomas Santiago clearly indicates a buying price of P953.66 and a selling price of P962.33 with a net profit after Commission of P14,808.00; and that respondent did not divert and/or misappropriate any fund of the complainants nor did respondent commit any irregularity, misdeeds and falsifications. LLpr This case has been belatedly decided considering the confluence of circumstances which resulted in the delay of its resolution. The parties had their own shares of postponements for one reason or another, valid as they were. Hearings were conducted by a Hearing Panel, and a departure from this Office of one hearing officer after the other also contributed to a series of postponements of hearings. In the Order of this Commission dated August 21, 1989, the rebuttal evidence of the complainants was admitted and the parties were given a period of twenty (20) days from receipt thereof, within which to file their simultaneous memoranda. With leave of Court, complainants belatedly filed their Memorandum on February 18, 1991. Respondent did not file a Memorandum, despite a motion for extension to file one. During the hearings of this case, the parties presented both testimonial and documentary evidence. Complainants' evidence tends to show that sometime in October or November, 1980, a representative of respondent, when complainant Tomas Santiago came to know as Jimmy San Juan visited Tomas Santiago at the latter's house, convincing him to invest in future commodities trading with respondent. Unaware of the business, Tomas first refused but he was finally convinced by San Juan. He then signed, also in his house, a contract (Account No. CPI-2809) which San Juan later returned to him already complete in its form (Exhibit "A"). Thereafter, he began trading by giving checks to San Juan, payable to respondent. After almost a month of trading, San Juan advised him to open one or more accounts for BIR purposes, to which proposal he later agreed to sign another contract (CPI 2810) in the name of his wife, Rosario Go (Exhibits "B"). On another occasion, San Juan called on Tomas to open another account for Hongkong gold but he did not have a copy of the contract because he invested for a short period only, although he can now recall that the contract was Account No. CPI-1801. Aside from Account Nos. CPI-2809, CPI-2810 and CPI-1801, Tomas did not open any other account. He did not authorize San Juan or anybody to open Account No. CPI-2811 for him; he does not know Victor Erfe in whose name Account No. CPI-2811 is; he did not open Account No, CPI 2812 nor authorize anybody to open said account; he does not know Willy Co in whose name Account No. CPI 2812 is; he did not open Account No. 2813 nor does he know Rosario Santiago who opened Account No. 2813. Sometime on August 4, 1981 San Juan advised Tomas to make more investment for Japanese red beans for which he issued a check for P480,000.00 (Exh. "C") for deposit to Account No. CPI-2809 and for which he was issued a handwritten receipt by San Juan; the check was, however, deposited by respondent to Account No. CPI 2813 in the name of Ricardo Santiago. On January 23, 1981, Tomas issued to respondent a check for P100,000.00 (Exh. "C-1") for which he has issued a deposit notice (Exh. "E") for Account No. CPI 2810 in the name of Rosario Go (Exh. "E-1"); however, the check was deposited to Account No. CPI 2811. On February 9, 1981, Tomas issued a check for P55,000.00 (Exh. "C-2") as additional margin to cover a loss on Account No. CPI 2810 in the name of Rosario Go pursuant to a notice of additional margin (Exh. "F") the check was duly receipted for (Exh. "F-1") and respondent issued a deposit notice (Exh. "F-2") showing that the check was for Account NO. CPI 2810 of Rosario Go (Exh. "F-2-A"); however the check was deposited to Account No. CPI 2811 in the name of Victor Erfe. On February 14, 1981, Tomas issued a check for P60,000.00 (Exh. "C-3") for deposit to Account No. CPI-2810 in the name of Rosario Go (Exh. "G-1-A", "G-1-B"); however the check was deposited to Account No. CPI-2811 in the name of Victor Erfe. On August 21, 1981 Tomas issued a check dated August 24, 1981 for P328,576.00 (Exh. "C-4") as additional investment on Account No. CPI-2809; also on August 21, 1981 Tomas issued another check for P459,608.00 to cover a floating loss on Account No. CPI-2810 pursuant to a notice of additional margin (Exh. "H-2"); however both checks were deposited to Account No. CPI-2813 in the name of Ricardo Santiago, an account which Tomas did not open. Tomas did not authorize the transfer of P122,336.00 on August 8, 1981 from Account No. CPI-2809 and No. CPI-2810 although he pre-signed payment instructions and deposit notices on the advice of San Juan to facilitate transfers of funds from and to his said accounts to Account No. CPI-2811 in the name of Victor Erfe, Account No. CPI-2812 in the name of Willy Co, or Account No. CPI-2813 in the name of Ricardo Santiago. He also did not authorize the transfer of funds to and his wife's account from Account No. CPI-2811 in the name of Victor Erfe because he does not know Victor Erfe. As to the short-change of P4,808.00 on a profit gained on a particular transaction, Tomas presented a balance sheet with erasures (Exh. "U") which was compared to respondent corresponding copy with no erasures (Exh. "V"). He did not receive the check dated January 29, 1981 (Exh. "X") for P4,808.00; the signature at the dorsal side is not his signature, and the account number to which said check was deposited is not his; he did not authorize the deposit of the check elsewhere; nor did he receive its proceeds. Tomas stopped trading by not making new placements or orders in October 1981 because he was already losing more than three million pesos and it appeared to him that it was difficult for him to recover his losses so he just waited for favorable price fluctuations to terminate or liquidate his outstanding placements. He stood firm not to trade anymore despite San Juan's prodding for him to continue trading. San Juan then gave him an informal accounting and they discovered a discrepancy of P180,000.00 which San Juan promised to pay in 2 or 3 days. However, San Juan failed to comply with his promise so Tomas complained by telephone to respondent, Cynthia Tan, the officer he was able to talk to, preferred to see him personally. The next day, Tan and another higher officer of respondent, Romeo Lao, saw Tomas at the latter's office at San Juan, Metro Manila. Thereat, Tomas informed Tan and Lao of his suspicion that he was being cheated and showed to them balance sheets of his transactions. Lao informed Tomas that about seven balance sheets were suspicious or unusual. Lao then asked for xerox copies of the trading balance sheets but since there was no more available xerox machine as it was already late in the afternoon, Lao asked Tomas to go to respondent's office and bring all his records. Tomas saw Lao at the latter's office the next day, as agreed upon, and there he was shown three internal ledgers in the names of Ricardo Santiago for Account No. CPI-2813, Victor Erfe for Account No. CPI-2811; and CPI-2812 in the name of Willy Co, where his investment went and which accounts he had never known. Lao confronted San Juan in the presence of Tan, and San Juan admitted to have secretly opened the accounts of Ricardo Santiago and Victor Erfe without the knowledge of Tomas, but that the account in the name of Willy Co is a genuine account. Tomas asked for the three ledgers, so that he could verify how these accounts were used without his knowledge but he was politely refused by Lao, saying that these were confidential records, San Juan reiterated his promise to pay but Tomas disagreed, knowing that San Juan has no money to pay him. Lao asked for the original copies of the seven balance sheets for verification purposes and gave xerox copies thereof to Tomas, signing for receipt of the originals. At the same meeting, they discussed about the seven trading balance sheets (Exh. "Y-1 to Y-7") and he was informed about erroneous selling prices, erroneous buying prices, and non-existent buying or selling prices but were manipulated to make it appear that Tomas lost in the buying or selling transactions. In Exh. "Y-1", the correct selling price is P1,233.66 instead of P1,224.00 so that the loss incurred should have been only P609,600.00 instead of P702,336.00; in Exh. Y-4 the correct buying price is P1,179.66 instead of P1,212.66 so that the profit earned should have been P276,000.00 instead of only P12,000.00; in Exh. "Y-7", the correct buying price is P1,053.66 instead of P1,087.00 so that the profit earned should have been P80,272.00, instead of only P26,928.00; the prices in Exh. "Y-3" are out of this world; while no explanation was made as to Exh. "Y-2", "Y-5" and "Y-6". Since the amount involved is too big, Lao informed Tomas that the decision would be made at respondent's Hongkong Office by its Chairman, Mr. Peter Choi, even as Lao promised to recommend payment. Lao then informed Tomas that Choi would be coming to Manila in December 1981, and that the obligation would be settled. On October 21, 1981, Lao called up Tomas for the latter to go to their office the next day, December 22, as Choi would like to see him personally, Tomas did go to respondent's office on December 22, 1981 and he was introduced by Lao to Choi and other officers of respondent and the meeting lasted up to about one o'clock in the afternoon. In their meeting they computed the amount due to be P492,272.00, the details of payment of which would be left to Lao. As they parted, Lao informed Tomas that Choi was leaving for Hongkong that same day and suggested that Tomas call him up the next day. Tomas called up Lao as suggested but he was disappointed because Lao told him that he would not be paid in cash but by means of Commissions credit, meaning that Tomas should continue trading and respondent would no longer collect commissions but would be credited against the amount due of P492,272.00 until it is fully paid. Tomas disagreed because the understanding was payment in cash. Lao promised that he would communicate with Choi and that the latter would come again to Manila but until March, 1982, Choi did not come, hence, Tomas referred the matter to Atty. Gonzales for legal assistance who wrote respondent a demand for settlement but respondent did not comply. cdll On the other hand, respondent's evidence consist in the showing that it is an international broker of commodity futures trading with overseas markets like Japan and Hongkong. Tomas Santiago was a former client and his investment consultant was Jimmy San Juan, Tomas Santiago opened five accounts: CPI-2809 under Tomas Santiago; CPI-2810 under Rosario Go; CPI-2811 under Victor Erfe; CPI-2813 under Ricardo Santiago; and CPI-1801, under Tomas Santiago. The check for P480,000.00 dated August 4, 1981 and another check for P328,576.00 dated August 21, 1981 were not deposited to Account No. CPI-2809 but to Account No. CPI-2811 under the name of Victor Erfe, and neither of complainants complained why said amounts were deposited not to Account No. 2809. Tomas did not deposit the check dated July 27, 1981 for P100,000.00 to Account No. CPI-2810 or the check dated February 11, 1981 for P55,000.00 or the check dated February 14, 1981 because they were deposited to Account No. CPI-2811 and CPI-2813, respectively, and no complaint was made why said checks were not deposited to Account No. CPI-2810 prior to the filing of the complaint. The withdrawals of P122,336.00 on August 8, 1981 from Account No. CPI-2809 was authorized by Tomas through payment instructions. The withdrawal of P60,000.00 on February 26, 1981, from Account No. CPI-2810 was authorized by means of payment instruction as well as the withdrawal of P180,000.00 from the same account on March 5, 1981; the same is true of the transfer of P50,000.00 on June 11, 1981 from Account No. CPI-2810; the withdrawal of P253,000.00 from Account No. CPI-2810 on August 24, 1981 and P187,424.00 from Account No. CPI-2812 on August 15, 1981. Tomas Santiago authorized the transfers, by means of deposit notices of P15,000.00 to Account No. CPI-2809 on March 5, 1981 from Account No. CPI-2811; the transfer to Account No. CPI-2809 of P100,000.00 on March 11, 1981 from Account No. CPI-2811; the transfer of P75,928.00 to Account No. CPI-2810 on March 17, 1981 from Account No. CPI-2811; and the transfer of P75,928.00 to Account No. CPI-2810 on March 17, 1981 from Account No. CPI-2811; and the transfer of P100,000.00 to Account No. CPI-2810 on March 24, 1981 from Account No. CPI-2811. The payment instructions and deposits notices were all pre-signed and received by San Juan from complainants. The purposes of pre-signing is for efficiency as the client cannot go to respondents office all the time. Tomas Santiago cannot recall a pre-signed form before it is actually implemented by respondent. Tomas made withdrawals and payments including the check for P4,808.00. Tomas authorized the transfer of P981,872.00 from Account No. CPI-2813 in the name of Ricardo Santiago, which amounts Tomas withdrew together with sizeable amount from the account of Tomas Santiago. Tomas made profits during their trading and he made withdrawals from said profits. After Tomas liquidated his position they made a computation and checked the final balance which was withdrawn by the client. It is not true that they found a discrepancy in the account of Tomas Santiago, nor a promise was made to pay a discrepancy of P180,000.00. San Juan did not give trading balance sheets to Tomas nor admitted creating accounts in the names of Ricardo Santiago and Victor Erfe without the knowledge of Tomas Santiago, or that the account of Willy Co is fictitious. Complainants' rebuttal evidence is to the effect that Tomas Santiago never signed the contract for Account No. CPI-2811 in the name of Victor Erfe and Account No. CPI-2813 in the name of Ricardo Santiago. Tomas knew those contracts only when San Juan testified. He did not sign the name of Victor Erfe and he did not know a person by that name; he did not sign the name of Ricardo Santiago on Account No. CPI-2813. It was Jimmy San Juan who signed the name of Victor Erfe on Account No. CPI-281 illegible portion and the name of R. Santiago on Account No. CPI-2813. Based on the following and the contrasting evidence of the parties, it appears to us that the basic issues for resolution are: 1. Whether or not complainants opened Account Nos. CPI-2811 in the name of Victor Erfe and CPI 2813 in the name of Ricardo Santiago. 2. Whether or not complainants made deposits of money to accounts other that Account No. CPI-2809 in the name of Tomas Santiago and Account No. CPI-2810 in the name of Rosario Go. 3. Whether or not complainants authorized transfers of funds from their Account No. CPI-2809 in the name of Tomas Santiago and Account No. CPI-2810 in the name of Rosario Go to Account No. CPI-2811 in the name of Victor Erfe, Account No. CPI-2812 in the name of Willy Co, and Account No. CPI-2813 in the name of Ricardo Santiago, and vice versa. 4. Whether or not Tomas Santiago received the amount of P4,808.00 as profit on a particular transaction on Account No. CPI-2809. 5. Who of the parties is/are entitled to damages and attorney's fees, if so, how much? Resolution of the foregoing issues demands a careful study and consideration of the evidence, both testimonial and documentary. It is admitted by the parties that complainants opened Account No. CPI-2809 in the name of Tomas Santiago, Account No. CPI-2810 in the name of Rosario Go, and Account No. CPI-1801 in the name of Tomas Santiago. Crucial to a judicious resolution of this case more particularly as to the complained unauthorized deposits made by the respondent to Accounts other than Account Nos. CPI-2809 and CPI-2810 and unauthorized transfers or withdrawals of funds from or to said accounts from or to Account Nos. CPI-2811 in the name of Victor Erfe, CPI-2812 in the name of Willy Co, or CPI-2813 in the name of Ricardo Santiago - is whether or not complainants opened Account No. CPI-2811 in the name of Victor Erfe and Account No. CPI-2813 in the name of Ricardo Santiago, and if they are aware of Account No. CPI-2812 of Willy Co which is alleged to be a genuine account. LLphil It is the contention of complainants that they did not open Account No. CPI-2811 in the name of Victor Erfe and Account No. CPI-2813 in the name of Ricardo Santiago, Tomas Santiago testified as follows: "Q. Aside from these two accounts CPI-2809 and CPI-2810, and that brief transaction in Hongkong gold which you recall as CPI-1801 did you open any other account? A. No more. Q. Did you authorize Kingly Commodities or Jimmy San Juan to open any other account in your behalf? A. Never Q. Did you open Account No. CPI-2811 with Kingly Commodities? A. No. Sir. Q. Did you authorize the opening of Account No. CPI-2811? A. No. Sir. Q. Did you authorize the opening of Account No. CPI-2811? A. No Sir. Q. Do you know a person by the name of Victor Erfe who opened Account No. CPI-2811? A. No Sir. Q. Did you open Account No. CPI-2812 with Kingly Commodities? A. No Sir. Q. Did you authorize the opening of Account No. CPI-2812? A. No Sir. Q. Do you know a person by the name of Willy Co who opened Account No. CPI-2812? A. I do not know him Sir. Q. Did you open Account No. CPI-2813 with Kingly Commodities? A. No. Sir. Q. Do you know a person by the name of Ricardo Santiago who opened Account No. CPI-2813 with Kingly Commodities? A. No. Sir. (TSN, pp. 45-47) The version of respondent is that complainants opened five (5) accounts including Account No. CPI-2811 in the name of Victor Erfe and CPI-2813 in the name of Ricardo Santiago, San Juan testified that: Q. Although in the complaint the complainants indicated that they only opened two accounts namely, CPI-2809 for Tomas Santiago and CPI-2810 for Rosario Go but in the course of his testimony he also referred to another account which is CPI-1801 for Tomas Santiago. Is it true that the complainants only opened these three accounts with respondent Kingly? A. No Sir. Actually, the client Mr. Santiago maintained five accounts which are CPI-2809, CPI-2810, CPI-2811, CPI-2813 and the last one is CPI-1801. xxx xxx xxx A. CPI-2809 under Tomas Santiago, CPI-2810 under Rosario Go, CPI-2811 under Victor Erfe, CPI-2813 under Ricardo Santiago and then CPI-1810 under Tomas Santiago." (TSN, pp. 12-13; 10-30-85) Tomas Santiago testified as to the circumstances under which he signed the contracts for Account No. CPI-2809 in his name and CPI-2810 in the name of his wife, thus: "Q. Where did you sign these two copies of Exhibit "A"? xxx xxx xxx A. In my house. Q. In whose presence? A. Of course, Jimmy San Juan who brought the contract for me to sign. (TSN, pp. 2-28; 1-10-83) Q. I am showing to you this contract identified as CPI-2810 of Kingly Commodities Traders and Multi Resources, Inc. Rules for Commodity Trading and Customers Agreement. Will you identify the same? A. Yes, this is the account I opened in the name of my wife. xxx xxx xxx Atty. Gonzales: On the last page of this Exhibit B is the handwritten in block letters Rosario Go who wrote the name Rosario Go? A. I myself. Q. On top of the word signature is a signature Rosario Go who wrote this one? A. I wrote it on behalf of my wife. xxx xxx xxx Q. How many copies of this contract account no. CPI-2810 already marked as Exhibit B did you sign, Mr. Witness? A. Two copies, Sir. Q. And who was present when you signed these two copies? A. Jimmy San Juan. Q. Where did you sign these two copies? A. In my house." (pp. 33-38; Ibid) As discussed earlier San Juan testified that complainants opened five (5) accounts, but did not elaborate on direct testimony as to how the accounts were opened. It was instead on cross-examination that these facts were elicited from him, thus: Q. In fact you were the one who asked Mr. Santiago to sign Exhibit "A" insofar as CPI-2809 is concerned, is that correct? A. Well, upon opening an account in the company, they automatically explain that he has to sign the contract. Q. And he signed in you presence? A. Yes, Sir. Q. So also with respect to Exhibit B, CPI-2810, Rosario Go signed in your presence? A. No, I am not sure." (TSN, pp. 33-34; 7-3-86) Q. There is a signature here of the witness on the lower portion of the last page of Exh. EE, whose signature is this? A. This is my signature and this is one of the supervisors, Miss de Guzman. Q. Would you say that the signature of Victor Erfe here is the signature of Mr. Tomas Santiago? A. That I don't know. xxx xxx xxx Atty. Gonzales: So you were not a witness to the signature by one Victor Erfe on CPI-2811? A. No. because it was forwarded to me. xxx xxx xxx Q. And again, you did not witness the putting of the signature of R. Santiago? A. No, that was only forwarded to me. (TSN, pp. 13, 18-19; 11-6-86) Now, then, if Tomas Santiago did not sign the contracts for Account No. CPI-2811 and CPI-2813, and Jimmy San Juan does not know who signed the names of Victor Erfe on Account No. CPI-2811 (Exh. "EE") and R. Santiago on Account No. CPI-2813 (Exh. "FF") despite his admission that he signed as a witness to the signatures in said contracts, who then, signed the contracts in question? We begin with the preposition that: "Evidence, to be believed, must not only proceed from the mouth of a credible witness but must be credible in itself such as the common experience and observation of mankind can approved as probable under the circumstances. We have no test of the truth of human testimony, except its conformity to our knowledge, observation and experience. Whatever is repugnant to these belongs to the miraculous and is outside of Judicial cognizance" (Daggers vs. Van Dyck, 37 N.V. 130; Villanueva Vda. De Castro vs. Castro, CA-G.R. No. 13043-R, July 1, 1957, cited in Velayo's Digest, Vol. 9, p. 794) With the foregoing premise we are tasked to determine which of the testimony of Tomas Santiago or Jimmy San Juan is more believable, coupled with an examination of documentary evidence presented, to find who signed the name Victor Erfe on Account No. CPI-2811 and the name R. Santiago on Account No. CPI-2813. In doing so, we are further guided by the rule: "The handwriting of a person may be proved by any witness who believes it to be the handwriting of such person because he has seen the person write or has seen writing purporting to be his upon which the witness has acted or been charged, and has thus acquired knowledge of the handwriting of such person. Evidence respecting the handwriting may also be given, by a comparison, made by the witness or the court, with writing admitted or treated as genuine by the party against whom the evidence is offered, or proved genuine to the satisfaction of the judge." (Section 22, Rule 132, Revised Rules of Court in the Philippines) After a careful and judicious analysis of the testimony of Tomas Santiago and Jimmy San Juan on the matter, and a painstaking, examination of the documentary evidence at hand, we are convinced that it was Jimmy San Juan who signed the name of Victor Erfe on the contract for Account No. CPI-2811 and the name R. Santiago for the contract on Account No. CPI-2813. Apropos the foregoing, we have taken note of the following evidence: Q. Now, the documents which you earlier identified from Exhibits I, J, K, L, M, N, O, P, Q, R, S, T, . . . may we take a look at the other annexes. Hearing Officer Garaygay: The originals xxx xxx xxx Atty. Gonzales: The originals. Q. I am asking you, will you take a look again at the handwritten portions and tell us whose handwriting these are except for the signature, of course. A. These were the handwriting of Mr. Jimmy San Juan. Atty. Bustos: Witness referring to the original of Exhibit I Atty. Gonzales: So, which portions here are in the handwriting of Jimmy San Juan in Exhibit I A. Like the CPI-2809 and this word T. Santiago which were being filled up above the blank, like this one hundred twenty six thousand, three hundred thirty six, also in parenthesis the figures and also this word pesos only and this above the blank is CPI-2812 and this W. Co, and also the date August 3, 1981, these were the handwriting of Mr. Jimmy San Juan. Q. And how about the signature of J. San Juan on top of the words adviser's name? A. Yes, this is the signature of Mr. Jimmy San Juan. Q. Why do you know that this the handwriting that you pointed to us is the handwriting of Mr. Jimmy San Juan? A. It is very familiar to me because he used to write a lot of papers in the course of the trading in front of me. xxx xxx xxx Atty. Gonzales: So, we go to Exhibit J, which is Annex 1-A. Now I am showing to you against the original brought by counsel for respondent and tell us who wrote the dates, accounts, number, names, amounts and other things on top of above the blank spaces in the payment instruction form. A. These were the handwriting of Mr. Jimmy San Juan. Q. And the signature Jimmy San Juan? xxx xxx xxx A. Yes, that is his also. xxx xxx xxx Q. Let us go to exhibit K which Annex 2 for respondent. Those dates, account numbers, name of customer and figures appearing above the blank spaces in this exhibit, in whose handwriting are they? LLjur A. These were the handwriting of Mr. Jimmy San Juan. Q. And the signature Jimmy San Juan? A. That is his also. xxx xxx xxx Q. Let us go to exhibit "L" which is also Annex 2-A of respondent's Answer. How about the date, the account numbers, the customers name and the amount of P180,000 are the word V. Erfe in whose handwriting are these, Mr. Witness? A. These were the handwriting of Mr. Jimmy San Juan. xxx xxx xxx Q. Now let us go to Exhibit M dated June 11, 1981 and also marked as Annex 2-B of the respondent. How about the date June 11, customer's name, the amount of P50,000.00 and the name Willy Co and the word Jimmy San Juan, in whose writing are these, Mr. Witness? A. These are the handwriting of Mr. Jimmy San Juan. xxx xxx xxx Q. Let us go to Exhibit N. The date appearing here August 24, account numbers, and the name appearing after customer's name, the amount of P253,000, the name Ricardo Santiago, group N and Jimmy San Juan in whose handwriting are these? A. These are the handwriting of Mr. Jimmy San Juan. Q. Now let us go to exhibit O also marked as Annex 2-D of respondent, the entries in ink or ballpen from the date, account number, customer's name, amount of P187,424.00 and the R. Santiago, group of Mr. Jimmy San Juan in whose handwriting are these, Mr. Witness? A. Now, let us go to Exhibit "P" the handwritten entries as to date account numbers; T. Santiago, P15,000, Victor Erfe and J. San Juan, in whose handwriting are these, if you know? A. These were the handwriting of Mr. Jimmy San Juan. xxx xxx xxx Q. Now let us go to Exh. P. The handwritten entries as to date, account numbers T. Santiago, P15,000, Victor Erfe and J. San Juan, is whose writing are these, if you know? A. With this one, the handwriting above the blanks, I am not so sure. Q. Now, let us go to exhibit "Q", also marked as Annex 3-A, in which earlier this afternoon you identified the signature as your signature. How about the entries to fill up the blanks there as to dates, account numbers, the name of T. Santiago, P100,000, Victor Erfe, Group B, and Jimmy San Juan, in whose handwriting are these? A. These were the handwriting of Mr. Jimmy San Juan. xxx xxx xxx Atty. Gonzales: In one of our hearings with reference to exhibit "R" which is Annex "3-B" of the respondent, you stated that the signature therein, R-1 is not your signature. Now, I have here the original of this document. Do you still confirm your earlier statement that this is not your signature? A. Yes, sir, that was not my signature. Q. How about the entries in this deposit notice as to date, account numbers, T. Santiago, P75,928.00 and Victor Erfe, and group B and Jimmy San Juan, are these handwriting of Mr. Jimmy San Juan. This one, I am not sure. xxx xxx xxx Q. Now, let us go to Exhibit S. How about the entries as to the date, account numbers and the name R. Go, P189,825 group B and Jimmy San Juan, could you tell the Honorable Hearing Officers in whose handwriting are these? A. This I am not so sure. xxx xxx xxx Q. Let us go to Exhibit T. How about the entries to fill up the blank in this deposit notice, will you take a look at these and tell us if you know in whose handwritings these are? A. Again, this one, I am not so sure." (TSN, pp. 7-22; 8-1-83) The foregoing testimony of Tomas Santiago on Exhibits I to T stands unrebutted. He also gave unrebutted testimony as to how and when he came to know about the contracts for Account No. 2813 (Exhibit FF), reiterated that he never signed those contracts and expressed the belief that it was Jimmy San Juan who signed these contracts (TSN, pp. 7-11; 6-16-89). Comparing Exhibit EE with Exhibit K, L, P, O, R, S and T (which are also respondent's Exhibits 28, 13, 14, 18, 19 20, 21, and 22 respectively) more specifically as to how the words "Victor Erfe" or "V. Erfe" were written it does not escape the meticulous eye that said words were written by one and the same person, named Jimmy San Juan. Likewise, comparing Exhibit FF with Exhibits D, FF-1, I, N, O, Q and R (which are also Exhibits 29, 6, 11, 16, 17, 19 and 20, except Exh. "F" and "F-1" of complainants), more specifically as to how the words "R. Santiago" was signed in Exhibit "FF" and how the words "T. Santiago" and "R. Santiago" were written in the latter exhibits, it is clear even to the naked eye that the same were written by only one person and admittedly Jimmy San Juan. Our conclusion is bolstered by the admission of San Juan of his handwriting or other evidence on record (TSN, pp. 22-27; 11-6-86). The manner with which the word "Santiago" is written in the documents identified by San Juan, all the handwriting entries of which were written in his own handwriting is similar to the way the word "Santiago" is signed in Exhibit FF. The next issue is whether or not complainants deposited the checks (Exhs. C, C-1, C-2, C-4, H) or authorized the deposit of said checks to account other than Account No. CPI-2809 in the name of Tomas Santiago or Account No. CPI-2810 in the name of Rosario Go. Complainant Tomas Santiago testified in detail on the circumstances under which he issued the above-mentioned checks and he categorically mentioned that he never deposited those checks or authorized the deposit of said checks to account other than the Account No. CPI 2809 in his name Tomas Santiago) or Account No. CPI-2810 in the name of Rosario Go. Tomas Santiago further identified all those checks were given to Jimmy San Juan and were deposited either in Account No. CPI-2811 in the name of Victor Erfe or Account No. CPI-2813 in the name of Ricardo Santiago without his consent or authority (TSN., pp. 3-55; 3-15-83). All that respondent could state, however, is that based on the dorsal sides of the checks, said checks were deposited to either Account No. CPI-2811 in the name of Victor Erfe or Account No. CPI-2813 in the name of Ricardo Santiago (TSN, pp. 16-24, 10-30-85; see also TSN, pp. 12-21, 6-22-87). The act of respondent in depositing the checks to Account Nos. CPI-2811 or CPI-2813 is unjustified, not only because of our earlier findings that complainants did not open said accounts but also it is not only contrary to the intention of complainants to deposit the checks in question to either Account No. 2809 or Account No. CPI-2810, as testified to by Tomas Santiago. What respondent did contravenes with our documents. Thus, exhibit C-1 was supposed to be deposited to Account No. CPI-2810 as clearly indicated in the deposit notice, Exhibit E. Exhibit C-2 was supposed to be deposited to Account No. CPI-2810 pursuant to Exhibit F. (Notice of Additional Margin) and Exhibit F-2 (deposit notice); Exhibit G was for deposit to Account No. CPI-2810 as indicated in the deposit notice, Exhibit G-1; Exhibit H was for deposit Account No. CPI-2810 as indicated in the Notice of additional margin (Exhibit H-2). As to Exhibit C and C-3, these were supposed to be deposited to Account No. CPI-2809 as additional investments. Clearly, then respondent's act of depositing the checks to Account No. CPI-2811 or Account No. CPI-2813 instead of to Account No. CPI-2809 or Account No. CPI-2810 was in violation of complainant's instruction's and even respondent's own documents to that effect. The fact that the dorsal sides of the checks show otherwise does not justify respondent's acts because in point of time, the entries there were made after complainants had parted with their checks even as Tomas Santiago denied having written the entries at the dorsal sides of said checks. On the other hand, respondent's witness, Caroll Tang, admitted that it was respondent's employees who wrote the entries at the dorsal side of the checks: "Q: You do not know who made this handwritten entry at the dorsal side of Exhibit "3" which reads CPI-2813? A. Because this is usually done by the people in the operation department." (TSN, pp. 9, 5-2-88) Parenthetically, but significantly, respondent failed to produce evidence showing that Exhibits E, F-1, F-2, G-1 and subsequent documents indicating that the checks in question were eventually intended by complainants to be deposited to Account CPI-2811 or Account No. CPI-2813, instead of to Account No. CPI-2809 or Account No. CPI-2810. We come to the issue of alleged unauthorized withdrawals of funds from Account No. CPI-2809 or CPI-2810 and unauthorized transfers of funds from other accounts to Account Nos. CPI-2809 or CPI-2810. We gather from respondent's own evidence that to effect a transfer of fund from one account to another, the client from whose account an amount is withdrawn signs a payment instruction for respondent to transfer the amount to another account and the client to whose account the transfer of funds is to be made signs the corresponding deposit notice wherein said client agrees to the said transfer of fund. This is as it should be, not only according to the natural course of things among which are for recording and accounting purposes, and to keep the client posted of the status of the funds in his account, be he the one transferring the fund or the recipient of the fund being transferred. It is admitted that payment instructions and deposit notices are blank forms of respondent and that these are pre-signed by the client for efficiency purposes. Q: Why did you pre-sign these blank forms of notices, etc.? A. First, for convenience. Second, to facilitate transfer of one of my accounts to the other if the need arises because in these commodity tradings, the transaction is very fast and very quick so that Mr. Jimmy San Juan advised me to pre-sign these documents so that it would be much easier for him to make transfer of money for my two account. Q. And you complied with the request of Mr. Jimmy San Juan? A. Of course I have to comply. I trusted him completely because if you will not trust him, you better not do any business in commodity futures. Q. How many documents did you pre-sign if you can still recall, Mr. Santiago? A. Many and not only in one occasion but in several occasions. Q. Always in blank? A. Of course, always in blank. Q. When you say in blank, what do you mean? A. Well, I only pre-signed in the blank above the signature, the other blanks were not filled up." (TSN, pp. 39-40; 3-15-83) Respondent's witness, Jimmy San Juan testified to the same effect. He said: Q. Do you know the reason why the complainant pre-signed these documents and delivered them to you? A. Yes, Sir. Q. Can you inform the Honorable Hearing Officer the purpose of a client when he pre-signed these documents which we have been referring to? A. Well, the purpose is for the efficiency since he cannot go to the office all the time. Q. What do you mean by for efficiency? A. Meaning, if there is an instruction or authority from the client to make transfer of payment or deposit that, I will be the one to fill up the forms upon his authority." (TSN, pp. 16-17; 11-22-85) And the client cannot recall the pre-signed forms before it is actually implemented by respondent (pp. 17-18, ibid) In this case of complainants, the pre-signing of deposit notices and payment instructions was expedient because they maintained two (2) accounts namely: Account No. CPI-2809 in the name of Tomas Santiago and Account No. CPI-2810 in the name of Rosario Go, and that the transfer of funds was only for these two (2) accounts. Q. Atty. Gonzales: In paragraph 9-A of your complaint, it is alleged that the withdrawal of P122,336.00 on August 8, 1981 from your Account No. CPI-2809 was not authorized by you. LLpr In paragraph 7 of the Answer, respondent alleges that the said withdrawal was upon your instruction. What do you have to say about this? Did you authorize the transfer? A. First, I never authorized any transfer that is not within my two (2) accounts. Q. When you say within your two (2) account, to what two (2) accounts are you referring to? A. Well, I am referring to Tomas Santiago's accounts and the other one is my wife's account, Rosario Go" (TSN, pp. 36-37; 3-15-83) Examining the term of payment instructions and deposits notices, both are instructions, just the same for obvious reasons, and one could not exist without the other. Both clients are or should be aware of a particular transfer of funds from one account to the other made obvious by the similar words, "Thank you for your immediate attention," appearing in both forms. Further, the recipient of the fund to be transferred has to "agree" to the transfer to his account before the transfer is effected or to make the transfer effective. Respondent through witness, Caroll Tang seemed to agree with our observation. (TSN, pp. 26-28; 5-2-88) Our observation bears added significance in the face of certain admitted transfers of funds from Account Nos. CPI-2809 and CPI-2810 to Account No. 2812 in the name of Willy Co, (Exhibits 1, M: also respondent's Exhibits 11-15), which account even respondent does not profess to have been one of the accounts opened by complainants, nay it is a genuine account of Willy Co. Now, the efforts exerted by respondent to keep us in the dark as to account No. CPI-2812 in the name of Willy Co had not escape our attention. When San Juan testified, he pretended to have no knowledge about this particular account and respondent would not want questions made as to said accounts. (TSN, pp. 38-39, 7-3-86; see also TSN, pp. 27-33, 11-6-86) Respondent's other witness, Caroll Tang was also evasive to answer to Account No. CPI-2812 in the name of Willy Co. (TSN, pp. 27-29; 5-2-88) Be that as it may, San Juan feign ignorance of Account No. CPI-2812 fell flat on his face when he testified that: Q. I am showing to you, Mr. Witness, Exhibit M which is also your Exhibit 15, would you admit that the entries there are your handwriting? Atty. Bustos: Witness referring to a payment instruction dated June ( illegible portion in SEC files ), 1981. Witness: The question is: Atty. Gonzales: The entries there in handwriting, are these your handwriting? A. Yes, sir. Q. Among the handwriting is CPI-2812 in the name of Willy Co, is that correct? A. Yes, sir. Q. So, CPI-2812 is in the name of Willy Co? A. Well, based on the document. Q. I'm also showing to you Exhibit 1 which is also your Exhibit II which is a payment instruction dated August 3, 1981, will you confirm that the entries here are your handwriting? A. Yes, sir. Q. And you will confirm the Account No. CPI-2812 in the name of Willy Co? A. Yes, sir. Q. Also your handwriting? A. Yes, sir." (TSN, pp. 39-41; 7-3-86) More to the point. We do not ascribe to respondent's contention that it is enough that a payment instruction is signed by particular client for the transfer of funds from his account to the account of another client. The execution of the corresponding deposit notice whereby the client whose account the amount is to be transferred "agrees" to the transfer is equally important, if not more, to effect the transfer more so considering that the amounts involved are not unsubstantial. It is significant to note, however, that of the complained unauthorized withdrawals from Account Nos. CPI-2809 and CPI-2810, respondent did not submit deposit notice corresponding to the payment instructions to prove the alleged authorized transfers, to show that the transfers to other accounts were accepted or agreed to. LLjur Our above-finding equally applies to the complained unauthorized transfers of funds to Account Nos. CPI-2809 and CPI-2810 from other Accounts. Respondent failed to submit his evidence payment instructions authorizing the transfer of funds from other accounts that should corresponds to the deposit notices purporting to agree to said transfers of funds. As to the alleged shortchange of P4,808.00 on a particular transaction involving Account No. CPI-2809, it is not denied that the payment instruction (Exh. "W") was pre-signed by Tomas Santiago. On its face, it is an authority for Jimmy San Juan to receive the check for Tomas Santiago and to deliver it to the latter without delay. The bone of contention is whether Tomas Santiago received the check. On the face of the check, the named payee is Tomas Santiago and appears regularly issued. Because of the payment instruction, it is fair to assume that San Juan received the check in question. On the dorsal side of the check, appears a signature and the words, "for deposit to 25-218123". This was the testimony of Tomas Santiago on pages 36-38 of the TSN, 8-1-83. The payee, Tomas Santiago, having denied his signature as indorser of the check and the account number to which it was purportedly deposited, it was incumbent upon respondent to prove otherwise, but it did not. Complainants were indeed shortchanged for not having received the check or its proceeds. The other improprieties complained of consist of false liquidation statements purportedly intended to confuse the records of complainants of their trading transactions. Tomas Santiago testified that when he conferred with the officer of respondent, namely Cynthia Tan and Romeo Lao, he was informed that liquidation statements given to him by respondent contained erroneous selling or buying prices or non-existent prices which resulted in losses or less profits earned by complainants (TSN, pp. 57-67; 8-1-83; pp. 12-15; 9-5-83; pp. 30-49; 2-15-84). This testimony was not rebutted by the respondent. The complained of improprieties are not hard to believe. We take judicial notice of other complaints lodged against respondent by unsuspecting clients who were similarly victimized as complainants herein. To be sure, respondent closed its offices as publicly announced by the Manila International Futures Exchange, Inc. (Manila Bulletin, May 7, 1993 issue) of which respondent is a member. And eventually this Commission placed respondent under Receivership. Based on our earlier findings and the testimony of Tomas Santiago (TSN, pp. 40-42; 9-5-83) Complainants are entitled to damages and attorneys fees, which may, however, be tempered under Art. 2208, Civil Code of the Philippines. Wherefore, premises considered, judgment is hereby rendered in favor of complainants and against respondent as follows: 1. On the first cause of action, ordering respondent to pay complainants the sum of P1,023,576.00 with interest at the legal rate from date of filing of the Complaint; 2. On the second cause of action, ordering respondent to pay complainants the sum of P422,007.00 with interest at the legal rate from the date of filing of the Complaint; 3. On the first to the fourth cause of action, ordering respondent to pay complainants the sum of P25,000.00 as moral damages and P25,000.00 as exemplary damages; 4. On the fifth cause of action, ordering respondent to pay complainants the sum of P50,000.00 as payment for attorney's fees; and 5. Costs against respondent. prLL Respondent's counterclaims are hereby DISMISSED for lack of merit. SO ORDERED. (SGD.) JUANITO B. ALMOSA, JR. Hearing Officer (SGD.) ROGELIO C. SESON Hearing Officer