Belma Bunggo vs. Lorelie Gotinga, et al.

[SEC-SICD * CASE NO. 3261. March 14, 1991.] BELMA BUNGGO , plaintiff, vs . LORELIE GOTINGA, ET AL. , defendants . D E C I S I O N Plaintiff allege, inter alia, that sometime on July 29, 1987, defendants Lorelie Gotinga and Marilou Rodriguez represented themselves as authorized brokers of Mitsui Futures Int'l., Inc.; and by skillful talks and persuasions, offered the plaintiff to invest money in the said company for a guaranteed profit without losses with an assured profit of 100% and no occasion as to losses whatsoever; that having been repeatedly assured of 100% guaranteed profit and with the desire to earn extra income, the plaintiff withdrew her family savings and gave an initial deposit of P50,000.00, and an alleged buffer of another P50,000.00 thus making a total of P100,000.00; that the said amount of money was received by defendants Lorelie Gotinga and Marilou Rodriguez, together with the two (2) cashiers of the company in cash on July 29, 1987, at the conference room of the company, in the presence of Mrs. Tess Aguilar; that thereafter, plaintiff was made to sign a contract to which the plaintiff was reluctant because the contract was long and consisted of several pages and printed in very small letters containing technical words which plaintiff did not understand; that accordingly, plaintiff demanded that before signing the contract, it has to be explained first by their executive officer and their legal officer, who will notarize the same; that defendants Lorelie Gotinga and Marilou Rodriguez and the two (2) cashiers agreed that after signing the contract, an officer of the company will explain the meaning of said contract, but later on, as plaintiff was waiting in the presence of Mrs. Tess Aguilar, the plaintiff was told that the officer was busy and the lawyer had not come yet to the office and this can be done later, to which plaintiff reluctantly consented; that since then, despite repeated demands, plaintiff was not accorded an audience by the company officer for them to explain the contract and get a copy of said contract which shall serve as plaintiff's guidelines regarding her investment in the company. cdll Moreover, plaintiff alleged that four (4) weeks later, after she made an initial deposit, defendants Lorelie Gotinga and Marilou Rodriguez came to see her at Greenhills and handed the amount of P20,000.00, alleging that she had made a profit of P12,500.00 but the P7,500.00 goes to the said defendants as their shares. That at first, plaintiff was reluctant to believe since the contract has not yet been explained to her and notarized and she was not yet furnished a copy of the contract, but the aforesaid defendants told the plaintiff that inasmuch as the money were already received by the defendant company, said money started to earn profit already just like when they are deposited in the bank; that at about the middle of the month of September, plaintiff called up the company and was able to talk to defendant Marilou Rodriguez and inquired about the copy of the contract so that she could show it to her husband and for referral to her lawyer for explanation; that plaintiff was told that there was no problem since the money are in good hands in the company; that despite demands, defendants refused and failed to give plaintiff a copy of the contract. On September 16, 1987, defendants Lorelie Gotinga and Marilou Rodriguez went to see plaintiff at Greenhills with a certain Mr. Nakpil, who claimed to be the boss of the company, and told plaintiff that her P100,000.00 were gone and finished, for which she strongly protested; that defendant Steve Ding persistently tried to persuade the plaintiff to give another P100,000.00 in order to recover her previous investment of P100,000.00. Defendants filed their Amended answer with special and affirmative defenses and averred that defendants Gotinga and Rodriguez were introduced to plaintiff by their common friend, Tess Aguilar, also an investor of the company, sometime in July 1987; that plaintiff was informed that defendants Gotinga and Rodriguez are Investment Consultant-Trainees of the company which is engaged in commodity futures trading; that as such Investment Consultant-Trainees, Gotinga and Rodriguez invited plaintiff to come to the company's office to talk to Ding, who was the licensed consultant, and the one who supervises Gotinga and Rodriguez; that Gotinga and Rodriguez had explained to plaintiff the nature and mechanics of commodity futures trading and plaintiff was given a set of brochures on commodity futures trading, such as sugar and soybeans trading and she was made to understand that investments in futures trading may produce great profit but since trading entails risks and speculation, substantial losses are also possible, and she was never assured of a sure profit and no loss investment. Plaintiff came to the company's office on July 29, 1987, and then and there, Ding explained to her the nature of commodity futures trading in the same way that Gotinga and Rodriguez did. The provisions of the trading contract were likewise explained to her. Never was there a sure profit, no loss assurance given to the plaintiff; that after the nature of commodity futures trading and the provisions of the trading contract were explained to the plaintiff, she expressed conformity and willingness to place an investment of P 100,000.00; that she apparently came to the company with said amount which she immediately delivered on the same day, July 29, 1987, under Account No. 1045; that plaintiff was never informed of the need for a P50,000.00 "initial" deposit and P50,000.00 "buffer" deposit. The amount of P100,000.00 which plaintiff paid to the company was a minimum deposit; that no buffer was required of plaintiff upon delivery of her initial margin deposit, although she was made fully aware that a "buffer" or additional margin would be needed in the event that her deposit is impaired to the point that it falls below the minimum exchange margin requirement; that she was informed the additional margin deposit would enable her to maintain her position in the futures trading and that it conforms to SEC-mandated margin requirements; that thereafter, she signed the trading contract and an authorization empowering Ding to trade for and in her behalf; that plaintiff knew fully well the nature of the document she signed and was given copies of these documents. Subsequently, plaintiff, through Ding, entered into an initial trading on her margin deposits. This transaction produced a gross profit of P20,000.00, P12,500.00 of which was remitted to plaintiff upon her instruction, with the difference of P7,500.00 being retained by the company as its lawful commission; that plaintiff was fully aware of the status of her investment as progress reports were given to her about it; that new position was taken by plaintiff after she had profited from her initial transaction. The market went against this new position. Hence, on September 16, 1987, plaintiff was informed by Gotinga and Rodriguez that her position in the trading market needed additional margin. Plaintiff was not told that her P100,000.00 investment is gone and finished and neither was she persuaded to give another P100,000.00 investment to recover her original investment in the same amount. Further, defendant averred that Ding merely explained to her the need to make an additional margin to maintain her open position in the market. Plaintiff requested for more time to raise the needed amount. However, despite repeated notices, she failed to deliver the needed additional margin, in view of which and in order to avoid further losses to both plaintiff and the company, the latter deemed it proper to liquidate plaintiff's position and upon liquidation, losses exceeded her deposit, which excess had to be absorbed by the company, to its prejudice. LLjur Hearings were conducted, wherein the plaintiff presented testimonial and documentary evidence which were offered and admitted. On the other hand, defendants failed to present their evidence, notwithstanding sufficient time and opportunity to do so. Thus, on October 12, 1990, upon motion of plaintiff's counsel, respondents were declared to have waived their right to present evidence and the case was considered submitted for decision based on available records and the evidence adduced by plaintiff. The evidence adduced by the plaintiff clearly established that defendants have violated a certain provision of the SEC Revised Rules and Regulations On Commodity Futures Trading when they entered into a trading contract with the plaintiff. In the first place, it was established that defendants Lorelie Gotinga and Marilou Rodriguez made some misrepresentation as they are not licensed trading consultants or brokers. Section 20 of said rules provides that: "SECTION 20. Licensing of person associated with futures commission merchants . It shall be unlawful for any person to be associated with any futures commission merchant as a partner, officer or employee (or any person occupying a similar status or performing similar functions) in any capacity which involves (a) the solicitation or acceptance of customers orders (other than in a clerical capacity) or (b) the supervision of any person or persons so engaged unless such person shall have been registered/licensed by the Commission and such license shall not have expired nor been suspended or revoked, and it shall be unlawful for any futures commission merchant to knowingly permit such person to become or remain associated with him in such capacity." Section 28 of said Rules also provides: "SECTION 28. Prohibit Act . It shall be unlawful for any person to engage in any transaction or solicit, accept orders, or act as a conduit without being duly authorized by either the SEC or the commodity futures exchange under the existing rules." (Emphasis supplied) Likewise, defendants failed to explain to plaintiff the nature of the transaction, more so on the "Risk Disclosure" provision of the contract. The defendants also failed, despite repeated demands, to explain the kind of transaction she entered into and the failure to furnish all copies of the documents, including the trading contract that plaintiff allegedly signed in blanks. The individual defendants also misrepresented to the plaintiff that her investment in Mitsui was a sure gain or profit and no loss transaction and that the said deposit is withdrawable at any time like a savings deposit in a bank. Defendants, likewise, gave the plaintiff a run-around when the latter tried to withdraw her investment after defendants repeatedly and systematically failed to comply with their promises such as to furnish plaintiff copies of all documents relating to her investment and the nature of her investment. On the other hand, since defendants failed to present evidence, for all legal intents and purposes, the evidence for the plaintiff remain unrebutted. WHEREFORE, judgment is hereby rendered as follows: 1. Declaring the contract null and void; 2. Ordering the defendants jointly and severally to pay the plaintiff the amount of P100,000.00 plus interest until fully paid; and LLjur 3. Ordering the defendants jointly and severally to pay the sum equivalent to 25% of the total amount as attorney's fee. SO ORDERED. (SGD.) JAMES K. ABUGAN Hearing Officer