Editha Besa vs. Queensland Commodities, Inc.

[SEC-SICD * CASE NO. 3834. August 2, 1996.] EDITHA BESA , petitioner , vs . QUEENSLAND COMMODITIES, INC. , respondent . D E C I S I O N This an action to declare the contracts entered into in petitioner's name, without her authority, as null and void with a prayer for damages; and with the application for the Temporary Restraining Order and Writ of Preliminary Injunction. LLpr Petition alleged, inter alia , through counsel, that in the later part of 1989, she was approached and convinced by a certain Felix "Mike" Gatus (Gatus for Brevity) who belong to the same religious organization she was a member of, and represented himself as an investment consultant in Queensland Commodities, Inc. (QCI), to invest in commodity future market that on 8 March 1990, with a net profit earned of P46,300.00, petitioner withdrew and closed her account with the respondent; that the QCI's general manager and department head offered to appoint petitioner as investment adviser trainee, which she declined; that while petitioner returned her investment and traded again in the market with the respondent, she left specific instruction that no position in her account shall be opened and/or traded as she was leaving for abroad on 18 May 1990, and that she cannot trade any further without investing and putting in additional margin deposit; that respondent having disregarded her specific instructions, petitioner suffered a loss of P74,000.00 for the alleged unauthorized transaction; that while petitioner did sign orders slips at the resumption of her trading activities, for the convenience of the respondent, it was on the understanding that the same will be used only if and when she give specific trading instructions; that the previously signed order slips were used for the unauthorized transactions while she was abroad; that upon petitioner's return to the Philippines on 16 July 1990; she discovered the unauthorized orders executed in her name, that petitioner's counsel demanded for the return of her investment and profit in the amount of P195,600.00 due her if not of the unauthorized transactions; that on 09 July 1990 respondent, through its President Romeo Lau offered as a settlement half of the amount demanded which is P74,000.00, but was formally rejected by the petitioner on 13 July 1990; that respondent did not respond to the said letter; and instead required the petitioner as margin to deposition or before 26 July 1990 for her open position that Gatus was not duly licensed by the Commission to act as an investment consultant/adviser or account executive; and that the actuation's of the respondent, its agents, officers and employees were fraudulent and done in bad faith. Petitioner prays for damages, Attorney's fees and the revocation of the certificate of registration of respondent corporation. No Temporary Restraining Order was issued by the original assigned Hearing Officer, Atty. (now a director) Josefina L. Pasay-Paz, but set the application for the writ of preliminary injunction for hearing. prcd In the hearing of 3 August 1990, the parties agreed that the application for an injunctive writ has become mooted. Petitioner was given time to amend the petition. Respondent, on 15 August 1990 filed a Motion to Dismiss Petition which was opposed by the petitioner on 17 September 1990. On 17 October 1990, the same motion was denied. On 6 November 1990, respondent tendered its answer. On 16 November 1990, respondent filed its preliminary conference brief; while the petitioner submitted her brief, through counsel, on 19 December 1990. A preliminary Conference Order was issued on 18 January 1991 by Hearing Officer Josefina L. Pasay-Paz. The above Order stated "Principally, the first issue to be resolved is whether the petitioner has a cause of action against the respondent to demand for the return of her investment. Corollary, issues are: the issue on who was the account executive or investment consultant that handled the petitioner's account; and the issue on whether or not this account executive or investment consultant is authorized to solicit and handle account; and The second principal issue is whether or not respondent is liable for damages due to the transaction made in behalf of the petitioner without her authority or whether petitioner is liable to pay the respondent damages in the form of attorney's fee on account of the filing of this case." Extensive hearings were conducted wherein the parties presented both testimonial and documentary evidence attesting their corresponding position taken before this case. On the first issue, whether or not the petitioner has cause of action, against the respondent to demand for the return of her investment, this Hearing Officer finds the same in the affirmative considering the existence of Exhibit "A", which is the Customer's Agreement and Guidelines for Commodities Trading, duly admitted by the respondents; and considering further, that the same is in a form printed solely by the respondent for its customers without the participation of the herein petitioner. llcd Moreover, it was proven by the petitioner that as of August 27, 1990, Mr. Gatus was her investment consultant but was never licensed as a commodity futures and solicitor salesman per Certification issued by this Commission marked as Exhibit "B". Yet, the same person solicited and traded the account of the petitioner as shown by Exhibit "A-3". This Hearing Officer was further shown that on day Gatus of Q.C.I. traded the account of herein petitioner, specifically on May 24, 1990 for 5 units of Philippine Copra at the price of P7.70, he was not only licensed to do so, but, the petitioner did not consent thereto since she was not in the Philippines at that time; having left for abroad on May 18, 1990, as shown by Exhibit "B-2", which is her Philippine Passport; and that the unauthorized transaction was thereafter protested by the petitioner upon her knowledge of the same on July 13, 1990 (Exhibit "F" and Exhibit "G"). Due weight was afforded to the Certification issued by this Commission which states that Gatus was never a licensed commodity futures salesman on August 27, 1990, and even during the time/s he traded the petitioner' account. Yet, he was allowed to solicit and trade account with the knowledge and consent of respondent QCI. Considering that all these were duly proven by the petitioner, respondent QCI has therefore committed a violation of the Rules of this Commission insofar as Investment Consultant, soliciting accounts and trading petitioner's account. On the second principal issue whether or not the respondent is liable for damages with the transactions made in behalf of the petitioner without authority, and/or whether or not petitioner is liable to pay respondents damages in the form of Attorney's fees and amount of damages in filing this case, this Hearing Officer is of the belief, and so holds, that the unauthorized transactions made for and in behalf of the petitioner without her knowledge and consent, and while she was abroad, respondents are hereby liable to the petitioner for the resultant damages wherein the latter suffered an actual loss of P 195,000.00, representing the money she actually invested with the respondents and the profits accruing thereto. ACCORDINGLY, judgment is hereby rendered declaring the contracts entered into petitioners' name by an unlicensed commodity trader of respondent Queensland Commodities, Inc., without petitioner's knowledge, consent, authority, and while she was abroad, null and void (2) Ordering respondents to pay petitioner the sum of P195,000.00 as actual damages, and reasonable attorney's fees of P25,000.00. dctai SO ORDERED. (SGD.) YSOBEL S. YASAY-MURILLO Hearing Officer