Lopez v. Onapal Philippine Commodities, Inc.

[SEC-SICD * CASE NO. 3698. June 15, 1995.] PABLO P. LOPEZ, ET AL. , complainants , vs . ONAPAL PHILIPPINE COMMODITIES, INC., ET AL. , respondents . D E C I S I O N This is a complaint filed by Pablo P. Lopez & Rowena Laurella Lopez, through counsel, against Onapal Philippine Commodities, Inc., Carlos H. Kapili, Reynaldo Apostol, Adelaida Flores & Josefina Resari, respondents, for the return of their investments in commodity futures in the amount of One Million Two Hundred Forty Eight Thousand Eight Hundred Twenty Eight Pesos (P1,248,828.00). Complainants also prayed for the award of One Hundred Thousand Pesos (P100,000.00) moral damages, Fifty Thousand Pesos (P50,000.00) exemplary damages, and attorney's fees in the amount of One Hundred Thousand Pesos. Furthermore, complainants pray that respondents be held jointly and severally liable to complainants. LexLib To support the aforementioned prayers, Complainants alleged, among other, that on several occasions prior to 19 May 1987, respondent Reynaldo Apostol, who represented himself to be a duly authorized and licensed investments consultant/salesman of the respondent Onapal, enticed complainants to trade in commodity futures, as risk free, well-managed accounts, high-yielding form of investment. Due to the representations, promises and assurances of respondent Apostol in representation of the respondent Onapal, complainant Pablo P. Lopez, in his name and in the name of his daughter, complainant Rowena Laurella Lopez placed with the respondent Onapal, a total investment in the sum of ONE MILLION TWO HUNDRED FORTY EIGHT THOUSAND EIGHT HUNDRED TWENTY EIGHT PESOS (P1,248,828.00), Philippine Currency. Complainants then pre-signed documents and were furnished copies of what they signed after more than a week from dates of signing thereof. When complainants inquired about their investments they were given assurances that they were being well-managed. But after a while, the respondents then reported to the complainants that they allegedly lost in their trading activities. Complainants later found out that respondent Apostol, who solicited their account, is not licensed by the SEC and that the trading activities involving their investment were conducted by respondents Adelaida Flores and Josefina Resari, officers of the respondent Onapal, who were unknown to complainants hence, they could not have authorized them to deal with their investments. Thus, their suspicion that they were victims of fraud, deception, misrepresentation and bad faith of Onapal, for letting an untrained inexperienced and unlicensed solicitor to solicit and unauthorized traders to trade their account was confirmed. It is also the contention of the complainants that Onapal violated SEC requirement that only a licensed investment consultant can solicit and trade an account so that complainants' contract should be declared null and void and should be entitled to a return of her investment. Respondents on the other hand, were not able to present any evidence to refute the claims and allegations of the complainants for reason of their failure to file any answer notwithstanding the lapse of the prescribed period from date of service upon them of the order to file their answer. Although such default order was lifted upon motion to lift order of default; it was again restored because despite the Order of the Honorable Commission dated 27 April 1990, respondents still failed to file their answer warranting their declaration in default. In view of the foregoing, all evidence presented by the complainants are deemed UNCONTROVERTED and hence ADMITTED. After a thorough review of the evidence presented by the complainants, this Hearing Officer to whom the case was re-assigned finds just cause to sustain the view of the complainants. During the presentation of evidence by complainants in support of their application for a writ of preliminary attachment which were later or admitted as their evidence in chief, it has been established that it was Apostol who solicited and enticed the complainants to invest in Onapal. Respondent Apostol was later found out to be NOT a duly licensed investment consultant as evidenced by the certification of this Honorable Commission's Brokers and Exchange Department. Thus, it has been established that Onapal allowed Apostol to violate the SEC Rules on Future Trading when it allowed Mr. Apostol, an unlicensed person to solicit and trade futures account which amount to fraud and misrepresentation. Consequently, Onapal could not escape responsibility for fraud, deception, bad faith and misrepresentation when it allowed an unlicensed person to represent it in soliciting and trading futures account. Respondents Onapal should not have allowed Mr. Apostol to act as solicitor and investment consultant of the complainants' investment inasmuch as Mr. Apostol is not licensed to act as such by the Securities and Exchange Commission. This transaction is considered unlawful pursuant to the Revised Rules and Regulations on Commodity Futures, which provides: "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 solicitations or acceptance of customers orders (other than in a clerical capacity) or (b) the supervision of any person or persons so engaged unless such persons shall have been registered/licensed by the Commission and such license shall not have expired 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 . . . ." (emphasis supplied) Conformably, the subject trading contracts solicited by said respondent are null and void pursuant to the Revised Securities Act and the Revised Rules and Regulations on Commodity Futures Trading. Anent the award of damages, the same is warranted under the premises. In fact, the Supreme Court in the case of Andaya vs. Abadia, et al., G.R. No. 104033, Dec. 27, 1993 clarified the Commission's power to award damages. "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 multiplicity of actions. Consequently, in intra-corporate matters such as those affecting the corporation, . . ., the issue of consequential damages may just as well be resolved and adjudicated by the SEC." Likewise, we find equitable justification to award attorney's fees. A lawyer has the right to be paid for the legal services he has extended to his client (Lorenzo VI, CA, 189 SCRA 217) Further, respondents are jointly and severally liable to complainants. As clearly pointed out by the complainants, the individual respondents are officers of respondent Onapal who acquiesced, approved and acted on the illegally obtained and solicited investments of the complainants. prcd WHEREFORE, in the light of the foregoing, judgment is hereby rendered as follows: 1. Declaring the subject trading contracts as null and void. 2. Directing respondents, jointly and solidarily liable to return and pay complainants investment in the amounts of P1,248,828.00 plus legal interest thereon. 3. Declaring respondents, jointly and solidarily liable to pay complainants the sum of P100,000.00 by way of moral damages and the amount of P50,000 as exemplary damages. 4. Directing respondents, jointly and solidarily liable to pay P100,000.00 as attorney's fees. SO ORDERED. No. costs. (SGD.) ENRIQUE L. FLORES, JR. Hearing Officer