San Miguel Corporation vs. Mark Securities Corporation

[SEC-SICD * CASE NO. 3955. February 19, 1993.] SAN MIGUEL CORPORATION , plaintiff, vs .MARK SECURITIES CORPORATION , defendant . MARK SECURITIES CORPORATION , third-party plaintiff, vs .DANILO HERNANDEZ , third-party defendant . D E C I S I O N Before this Commission is a verified complaint for revocation of license and damages filed by San Miguel Corporation (SMC) against defendant Mark Securities Corporation (Mark). llcd In its complaint, SMC alleged that it maintains its own Stock Transfer Office, while Mark is a stockbroker duly licensed by this Commission to engage in stock brokerage business in the Philippines, and as such, is regulated by, and is under the complete control and supervision of this Commission; that Mark, in the course of its business, issued a transfer instruction letter dated June 5, 1990, directing the Stock Transfer Office of SMC to cancel Stock Certificate No. B0006801 of a certain Grace Tsao of 66,618 SMC shares of Stock and to issue a new stock certificate in favor of Danilo Hernandez and/or Marcelo Hernandez that aside from the instruction, the defendant also delivered the Stock Certificate No. B0006801 of Tsao to plaintiff's Stock Transfer Office; bearing on the reverse side of the certificate, the signature of Tsao as well as the Indorsement Guaranty of Mark wherein the latter guaranteed the genuineness of the indorsement and the signature of Tsao; that although the guaranty and transfer instruction were all that were needed for the Stock Transfer Office of SMC to cancel the stock certificate of Grace Tsao, SMC, before complying with said instructions, in the exercise of prudence, proceeded to check if there were liens on the stock certificate of Tsao, i.e., whether or not the certificate had been earlier reported lost, under garnishment or pledged in the banks; and to compare the signature of Grace Tsao appearing at the back of Stock Certificate No. B0006801 with those appearing on the specimen Signature Card on file with SMC; that finding no liens and because the signature of Grace Tsao on said Stock Certificate No. B0006801 was similar to that of her specimen signature on file, SMC cancelled the said stock certificate of Grace Tsao and issued Stock Certificate Nos. B011172, B011173, B011174, B011175, B011176, B011177, and B011178 covering the said shares in favor of Marcelo Hernandez and/or Danilo Hernandez; that sometime in November, 1990, SMC received a letter from Grace Tsao stating that she did not sell or authorize anybody to sell or alienate the shares covered by Certificate No. B0006801, for which reason she demanded from SMC the immediate restoration of her stock certificate for the same number of shares and to pay whatever cash dividends that are due her, that SMC conducted a thorough investigation on the claims of Grace Tsao which subsequently confirmed the truth of her claim and that her signature on the traded Certificate No. B0006801 had been forged; that SMC was then constrained to issue, as it actually issued, on December 14, 1990, in favor of Tsao a new Stock Certificate No. B012959 for the same number of shares of 66,618 SMC class "B" shares as replacement for the Stock Certificate No. B0006801; that as a consequence thereof, SMC suffered actual damages in the amount of P2,578,532.96 representing the replacement cost plus commission fees and other charges, exemplary damages in the amount of P1,000,000.00 attorney's fees equivalent to P500,000.00, and litigation expenses of P100,000.00; that SMC put the blame on Mark as the cause of all the trouble since Mark sent to SMC the Transfer Instruction Letter of June 5, 1990 and guaranteed the genuineness of the indorsement on Stock Certificate No. B0006801 as well as the genuineness of Tsao's signature thereon; that SMC anchored its claims on Section 10 of the SEC Rules to Avoid Delays in the Issuance of Stock Certificate; that moreover, it is the duty of Mark as broker to identify and verify the endorser of the certificate and the legitimacy of the transaction before guaranteeing the endorsement of the certificate pursuant to Section B-4 and B-8 of the SEC Rules and Regulations Governing Securities Exchanges And Their Members, Brokers, Salesmen and Customers. On April, 1991, Mark filed its answer with counterclaim and relied for its defense on the pre-verification of the stock certificate of Grace Tsao by SMC before Mark put the shares for sale and guaranteed the endorsement. In dealing with stockbrokers involving transfer of shares, Mark alleged that the practice adopted in the industry with respect to SMC shares follows certain procedure, to wit: (1) when a stock certificate is delivered to a stockbroker for transaction, the same is sent to the SMC stock transfer office for verification or authentication. SMC properly responds by affixing initial on the said stock certificate, indicating that the certificate is genuine, the endorsement valid and there are no liens and encumbrances on the shares; (2) thereafter, the stockbroker puts the shares covered by the said certificate up for sale in the stock market assured that the certificate they are dealing with is genuine for all required purposes, in accordance with the client's instructions; (3) when a sale is concluded and the client requires transfer of shares, the stockholder sends the stock certificate to the issuing company using a standard form letter adopted by all the stockholders. In the transaction of the shares of Grace Tsao, Mark strictly adhered to the said standard operating procedures, observing in the process the degree of prudence required of it as stockbroker, as no more is required of it. Mark also alleged that the endorsement guaranty on the stock certificate does not make it liable to plaintiff because the same is of limited application. Mark further alleged that it cannot be held liable civilly or otherwise because it transacted business merely as a broker or as an agent of a disclosed principal, namely Danilo Hernandez and/or Marcelo Hernandez. Mark finally stated that assuming there was indeed a forgery of the signature of Grace Tsao, SMC was at the very least remiss in the performance of its duties, if not an active participant in the anomaly, considering that it was the only one who is in a position to verify the signature of its stockholders. Mark asked leave to file a third-party complaint against Danilo Hernandez, which was admitted per Order dated April 12, 1991. In the third-party complaint, Mark alleged that Danilo Hernandez was its client who delivered to Mark the stock certificate of Grace Tsao. Immediately thereafter, in the exercise of prudence, due diligence and as part of its standard operating procedure, Mark sent the aforesaid stock certificate to SMC for pre-verification; that the said stock certificate was returned to Mark thereby completing the process of verification; that on June 5, 1990, upon instruction of Hernandez, Mark delivered Stock Certificate No. B0006801 together with a Delivery Transfer Letter to SMC instructing the latter to cancel the said stock certificate in its corporate books and to transfer the same in the name of Danilo Hernandez and/or Marcelo Hernandez; that consequently thereafter, the shares covered by Stock Certificate No. B0006801 was cancelled by SMC's Stock Certificate Nos. B011172, B011173, B011174, B0011175, B011176, B011177 and B011178 which were issued in favor of Danilo Hernandez and/or Marcelo Hernandez; that the aforesaid shares of stock were eventually sold by Mark for and in behalf of Hernandez; that upon the consummation of the transaction, Mark remitted to Hernandez the proceeds of the sale of the shares; that it was Hernandez who received the proceeds of the sale. On May 22, 1991, SMC filed its Reply with Answer to Counterclaim. SMC denied portions in the answer of Mark and alleged that before Mark could issue a transfer instruction to SMC, the former is required to obtain first, among other things, a customer's specimen signature, i.e.,the seller of the traded stock; which is in this case, that of Grace Tsao who is the true and registered owner; that Mark did not obtain and keep a specimen signature card of Grace Tsao; that the procedures referred to by Mark are not the generally accepted procedures in the industry with respect to SMC shares; that if such were true, then Mark would have all SMC shares traded with them "pre-verified" by SMC unfortunately Mark's contention falls on its face since the 66,618 SMC class "B" shares of stock of Grace Tsao subject matter of this case were not pre-verified; that, at any rate, SMC's conduct of the so called pre-verification (before the sale) or post verification (after the sale and the transfer instruction letter) does not differ in any wise with its task of (1) verifying from its records whether the traded stock certificates was reported lost or stolen, under garnishment or pledge, or has existing lien or encumbrances; (2) comparing the signature of the seller-stockholder on the endorsement with those in the SMC file to determine whether the signature are similar or appear to be similar; and (3) that pre-verification is not the practice of plaintiff; that on occasional instances, if it is allowed, the same is more of accommodation service and that a distinction should be emphasized that when it is the broker that delivers the traded stock, together with transfer instruction, an "indorsement guarantee" is required, lacking hereof, SMC will not process the transfer order. On June 18, 1991, Danilo Hernandez filed a Motion To Vacate Order Granting Leave to File Third Party Complaint and for said Third-Party Complaint to be Stricken Out. Danilo Hernandez anchored his motion on the lack of jurisdiction of this Commission over the subject matter of the action, a controversy which is not covered by P.D. 902-A, as amended, and that, therefore, the grant of leave to file the third-party complaint was improper. Mark filed its opposition to said motion traversing the grounds relied upon by Danilo Hernandez in his motion. Mark claimed that since this Commission has jurisdiction over the principal suit, it has also jurisdiction on the third party complaint which is merely ancillary to the principal suit. On July 24, 1991, an Order was issued denying the motion filed by Danilo Hernandez. On September 30, 1991, SMC filed a motion to declare Danilo Hernandez in default for not filing his responsive pleading within the prescribed period. This Commission, in its Order dated October 9, 1991, granted the motion and declared Danilo Hernandez in default. During the pre-trial conference held on November 21, 1991, SMC and Mark appeared, through their respective counsel, and filed their respective pre-trial briefs as well as the special power of attorney of their clients. LexLib During the trial, SMC presented three (3) witnesses in the person of Enrique Yusingco, the manager of SMC's Shareholders Services Department, Peter Jimenez, the verifier in the said Department, and Grace Tsao, the stockholder whose stock certificate is the subject of this suit. Since Grace Tsao is a permanent resident of Hongkong, upon motion of SMC, her testimony was taken by oral deposition on February 27, 1992 before vice-consul Marlene Agmata of the Office of the Philippine Consul General in Hongkong. This Commission received from the Office of the Philippine Consul General in Hongkong the transcript of stenographic notes on April 24, 1992. In the course of the trial, SMC presented its documentary evidence consisting of Exhibit "A" to "AA" and their submarkings. On its part, Mark presented four (4) witnesses in the person of Anastacio Mercado, the Operations Manager of Mark; Andres Borja, President of Mark; Rustico Ruiz, its messenger, and Antonio Alvarez of Guild Securities, and presented its documentary evidences consisting of Exhibits "1" to "48" with submarkings. After a thorough evaluation of the evidence presented by both parties, this Hearing Officer feels constrained, for reasons which will be shown below, to uphold plaintiff's position as against that of Mark. I find that the participation of SMC in the cancellation of the certificate of Grace Tsao was the mere act of complying with the instruction of Mark to cancel Stock Certificate No. B0006801 of Grace Tsao and to issue new stock certificates in favor of Danilo Hernandez. The stock certificate of Grace Tsao when delivered to SMC bore the signature of Grace Tsao, the genuineness of which was categorically guaranteed by Mark with the words, "ENDORSEMENT GUARANTEED MARK SECURITIES CORPORATION. The function of the stock transfer agent, like that of SMC, is merely ministerial, to wit: "There is a corresponding duty on the part of the corporation to make or permit a transfer on its books, and to issue a new certificate to the transferee, provided the certificate is presented to the company for transfer with blanks properly filled in, including the name of the transferee; it is not obligatory upon the corporation or its agents to fill in the blanks. This duty resting upon the corporation is a ministerial one, and if it refuses to make such a transfer without cause, it may be compelled to do so by a court of equity in a suit instituted for that purpose, or, in some jurisdictions, by mandamus, or the transferee may maintain an action at law against it for damages" (Fletcher, Cyclopedia Corporation, Vol. 12, 1971 edition, p. 384). Similarly, it is a rule that: "If one buys stock and takes a transfer, and present the certificate to the corporation and demands a new one, he thereby impliedly represents that he is entitled to the new certificate. He demands it as his right; this implies that he is the owner and has the right to it. The corporation has the right to understand him as asserting this. It is not bound to question or investigate the genuineness of the transfer. ...When the purchaser presents his transfer and certificate, the transfer office naturally understands that he claims the transfer to be valid, and to have a right to a certificate; he has the right to act as if this had been said in terms. ...(Francis T. Christy and Robert S. Appel, The Transfer of Stock, Vol. 1, 1975 Edition, Section 248, p. 19:19; Mark S. Rhodes, Transfer of Stock, 1985-Sixth Edition, pp. 401-402).(Emphasis ours) prcd The ministerial nature of the duties of Stock Transfer agent finds support under the Rules Governing Transfer Agents, Brokers And Clearing House in Connection with Issuance of Stock Certificates (As Amended) promulgated by this Commission on September 18, 1970. Under par. 2 of the aforesaid rules, the following are explicitly provided; to wit: "2. Duties of Transfer Agents . The Transfer Agents will prepare and issue stock certificate of fully paid subscription duly certified to him by the Treasurer of the issuer company. He will also record transfer of stock for shares which are outstanding or thereafter issued when, from time to time, such certificates are surrendered to the company for that purpose. ...(Emphasis ours) Tested by the above standard, SMC was correct in saying that its stock transfer office had no participation, directly or indirectly, with the parties to the sale, in this case Grace Tsao and Danilo Hernandez or from whomever the latter acquired the stock certificate of Grace Tsao. It was Mark, as stockholder, who actually transacted with Danilo Hernandez and the former ought to have found out whether the shares were actually sold or not. This is borne by the categorical admission of Mark's own witness. (TSN dated July 10, 1992, pp. 11-15) The act of SMC in complying with the instruction of Mark not was irregular. In fact, although its duty is merely ministerial, SMC after receiving from Mark the transfer instruction letter and the stock certificate of Grace Tsao with "endorsement guaranty",still exercised reasonable prudence in verifying from its corporate records if the stock certificate of Grace Tsao had existing liens and encumbrances, and if her signature on the endorsement was similar to her signature in the specimen signature card. The verification turned out that said stock certificate had no existing liens and encumbrances, and the signature on the endorsement was similar to those appearing on her specimen signature card, to which, after a close examination, I agree that the signature of Grace Tsao on the endorsement was similar to the signature on the SMC specimen card. By its aforestated conduct, SMC evinced prudence and care to prevent any irregular or illegal transfer of its shares of stocks. Unfortunately, despite the verification, the signature of Grace Tsao on the endorsement turned out to be a forgery. But SMC definitely cannot be accused of negligence in its verification. I am convinced that SMC is not obliged to determine the genuineness of the signature of Grace Tsao since its duty was merely ministerial and it has no participation in the transaction. Besides, as SMC's witness, Peter Jimenez, pointed out, their verification refers only to the general similarity of the signature-endorsement with the specimen signature card on file with SMC (TSN, January 9, 1992, p. 15).They cannot guaranty the genuineness of the signature-endorsement because (a) they are not handwriting experts; (b) they do not have equipment/instrument to determine the genuineness of a signature; and (c) they do not deal with the stockholder who is selling his shares. ...(TSN, January 9, 1992, p. 12) While Mr. Jimenez said he attended seminar on handwriting examinations, (TSN, January 9, 1992, pp. 11) I agree with him that he cannot guarantee the genuineness of the signature nor is it his duty to do so. He is not an NBI nor a CIS handwriting expert. SMC does not have elaborate instrument which said agencies have. As earlier stated, considering that Mark had direct participation in the transaction, it alone should find out if the signature of Grace Tsao was genuine or not, especially since it had to guarantee the endorsement. If Mark was in doubt, it should have required Grace Tsao to confirm her signature or required Danilo Hernandez to put up more proofs or security as regards the genuineness of the endorsement or of his ownership. Mark miserably failed to do these. I find nothing wrong or irregular with the act of SMC in replacing the 66,618 shares of stock of Grace Tsao. After a thorough investigation determine the merit of the claim of Grace Tsao, SMC was convinced that she did not sell her shares or authorize the sale of her shares, and that her signature was forged. SMC should instead be commended on this selfless act. I consider such gesture as a firm commitment of SMC's policy in readily protecting the interests of its stockholders who were defrauded of their shares. cdll And as correctly stated by SMC, the act of Mark in guaranteeing the genuineness of the signature of Grace Tsao, which in fact turned out to be a forgery, made Mark liable on the same pursuant to the SEC rules and regulations. This is clear from Section 10 of the SEC Rules To Avoid Delay in the Issuance of Stock Certificate. We may add that this (guaranty) was the operative act which resulted in the unauthorized transfer of Mrs. Tsao's certificate to Danilo Hernandez. The claim of Mark that the guaranty pertains to the signature of Danilo Hernandez on the stock power is without basis and illogical. No less than Mr. Andres Borja, the President of Mark, had repeatedly admitted that the stock power and the stock certificate as well as the guaranty of the signature on the stock power and the stock certificate are not the same. The guaranty on the stock power refers to the genuineness of the signature on the stock power, in this case, the signature of Danilo Hernandez, while the guaranty on the stock certificate refers to the genuineness of the signature on the stock certificate, which is the signature of Grace Tsao. (TSN dated August 13, 1992, pp. 8 & 9) This simply means that it was the genuineness of the signature of Grace Tsao on the certificate which Mark actually guaranteed. The argument of Mark that it could not guaranty the signature of Grace Tsao because she was not its customer is flimsy. Since, as a broker, Mark was aware of the consequences of its acts, it should not have stamped and signed the "ENDORSEMENT GUARANTEED" on the stock certificate if its intention was not to guarantee the genuineness of the endorsement of Grace Tsao. In Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., G.R. No. L-46908, May 17, 1980, the Supreme Court ruled that "Generally speaking, where a statute has been adopted from another state and such statute has previously been construed by the courts of such state or country, this statute is deemed to have been adopted with the construction so given it." The American decisions and interpretations on the import of "endorsement guaranty" as adopted in the Philippines are clear. "The only sure way a corporation has of protecting itself against a forged endorsement is ...the guaranty of signature by persons and corporations of responsibility who are familiar with the signature of the assignor. ...Such a guaranty should, therefore, be accepted only from guarantors of responsibility, which is the reason for the general requirement that signatures must be guaranteed by a person or firm having membership on the local stock exchange or by a bank or trust company, ...".(Francis T. Christy and Robert S. Appel, the Transfer of Stock, Vol. 1, 1975 Edition, Section 44, pp. 6:5-6:6, citing "The Signature Guaranty" by Richard B. Tuttle, Jr.,and Rule 20.05 of the Stock Transfer Association) (Emphasis ours) "The leading case on signature guarantees is Jennie Clarkson Home v. M.K. & T.R.Y. Co..In this case, the treasurer of the Jennie Clarkson Home For Children, a corporation, endorsed and sold without authority, bonds registered in the corporate name. He induced one Gibson, a partner in a brokerage firm having membership in the New York Stock Exchange, to sign the name of the firm as a witness, below the endorsement, and procured a transfer of the bonds on the books of the defendant corporations. The Jennie Clarkson Home brought suit against the corporation and Gibson. The Court of Appeals of New York held that ...if stock is held by an individual who executing a power of attorney for its transfer, the member of the exchange who signs as a witness thereto guarantees not only the genuineness of the signatures affixed to the power of attorney, but that the person signing is the individual in whose name the stock stands. ... xxx xxx xxx This case is most important as an authority for the proper meaning of a signature guaranty, and as an authority for placing the duty of verifying the endorsement on the broker guaranteeing the signature and not on the corporation or its transfer agent .Although the case applies expressly to securities standing in the name of a corporation, it is equally applicable to securities standing in any name which requires an endorsement by a representative. It has been suggested that, in view of the decision in the Jennie Clarkson Home case, it is unnecessary for a transfer agent to require supporting documents in the case of transfer of stock by persons in a representative capacity where the signature is guaranteed ." (Francis T. Christy and Robert S. Appel, The Transfer of Stock, Vol. I 1975 edition, Section 44, p, 6:12-6:13) (Emphasis ours) Quite apparent from its posturing, the sole defence of Mark is that it sent the stock certificate of Grace Tsao to SMC for pre-verification before it (Mark) sold the shares and guaranteed the genuineness of the endorsement. Mark spoke of an alleged practice of pre-verification of the endorsement before the sale of any SMC shares. Consistent with this alleged practice, Mark stated that it had Ms. Tsao's endorsement on the certificate pre-verified by SMC before it (Mark) put the certificate for sale. This defence is belied by the evidence adduced during the trial. Firstly, if such pre-verification is a standard practice among brokers particularly those who are members of the Makati Stock Exchange, it is surprising that such standard procedure is not even in the rules of the Makati Stock Exchange nor is it expressly allowed by the Exchange. Secondly and more importantly, the so-called practice was not followed by Mark. Mark's own witness, Mr. Alvarez, admitted this. The only way to determine if the stock certificate is pre-verified or not by SMC is when a seal with words "Endorsement Verified San Miguel Corporation" is stamped by SMC on the certificate indicating that the certificate was pre-verified. This clause, however, is not found on the stock certificate of Grace Tsao (TSN dated August 21, 1992, pp. 31-36).While there are initials on the certificate showing a verification of endorsement, the same refers to the usual post verification, meaning a verification conducted (a) after the sale of the shares, (b) the "endorsement guaranteed" had been stamped by Mark; and (c) the transfer instruction issued thereafter. The testimony of Mr. Jimenez of SMC that the verification was made after the sale and not before, was not controverted by the evidence of Mark (TSN, January 9, 1992, p. 13).It should be noted that Mark was the one who raised the defense of the so-called pre-verification practice and yet the evidence adduced belied the alleged practice. At this juncture, it may not be amiss to ask what is the materiality of pre-verification? A glance at the clause "Endorsement Verified San Miguel Corporation" reveals nothing except the fact of verification. It does not guarantee anything. This is totally different from the clause "Endorsement Guaranteed".The meaning of guaranteed is spelled out by the Rules of the Commission as well as the jurisprudence on the matter, to wit: "The Uniform Commercial Code contains a provision on Signature guarantees. ...This provision is as follows: 1. Any person guaranteeing a signature of an endorser of a security warrants that at the time of signing: a) the signature was genuine b) the signer was an appropriate person to indorse; and xxx xxx xxx 3) the foregoing warranties are made to any person taking or dealing with the security in reliance on the guarantee and the guarantor is liable to such person for any loss resulting from breach of warranties." (Francis T. Christy & Robert S. Appel, The Transfer of Stock, Vol. I, 1975 edition, Section 44, p. 6;16) (Emphasis ours) Mr. Yusingco testified on the damages suffered by SMC by gross negligence and gross misrepresentation of Mark (TSN, Dec. 12, 1991, pp. 34-41).I find that SMC incurred P2,513,788.59 to replace the shares of Ms. Tsao. With respect to the prayer for exemplary damages of P1,000,000, attorney's fee of P500,000 and litigation fee of P100,000, I find it reasonable to reduce the claim. Verily, the amount of P500,000 as exemplary damages, P300,000 as attorney's fees, and P46,017.28 as litigation expenses for the cost incurred by SMC in the taking of Ms. Tsao's oral deposition in Hongkong (Exh. "M") appears to be a reasonable award. On the third-party complaint of Mark against Danilo Hernandez, the fact that the latter was declared in default and hence, was not able to present evidence in his favor does not mean that Mark is not liable to SMC and it can shift the liability to Danilo Hernandez alone. This is so because Mark guaranteed the endorsement and was so lax in its functions and duties. The thrust of the third-party complaint was that Danilo Hernandez sent to Mark the stock certificate of Grace Tsao with the latter's endorsement thereon, and the Hernandez represented that he was the owner of the certificate. Thus, Mark remitted to Hernandez the proceeds of the sale of the stocks. (Exhs. "3" to "16-13") I believed that it was incumbent on Mark to determine the truth of the claim of Danilo Hernandez that he was the owner of the stock certificate of Grace Tsao. Mark should not have accepted as true, without investigation or requiring for further proof, that Hernandez was the owner. Mark could have prevented the transfer of the shares. Had it not guaranteed the genuineness of the signature of Grace Tsao, the transfer could not have been carried out. Evidently, the proof was not demanded, the transaction being based merely on trust and confidence (TSN, June 11, 1992, p. 20). Since Mark was able to prove that it was Hernandez who delivered the stock certificate with forged signature of Grace Tsao (TSN dated June 2, 1992, pp. 36-37),received the proceeds of the sales (Exhs. "3","3-A" to "16-B"),and also misrepresented to Mark that he was the owner of Ms. Tsao's certificate, Hernandez is clearly liable to Mark and the latter can proceed against the former. But both Mark and Hernandez are solidarily liable to SMC and the latter can rightfully proceed against either of them. On the issue of the revocation of license, this Commission would want to be so drastic. Corrective measures could still be taken by Mark to avoid future occurrence of similar infractions. Award of exemplary damages to SMC should be enough warning to Mark to be more careful in the future. Both Mark Securities Corporation and Danilo Hernandez should be held liable. "If a corporation suffers loss by reason of a transfer of stock on a forged or unauthorized assignment, it has two sources of reimbursement. These two sources are the person, firm or bank which guaranteed the signature to the assignment ,and the person who presented the certificate for transfer. Both persons are bound to reimburse the corporation and one cannot contend that the corporation relied on the guaranty, or warranty of the other in making the transfer. The duty of reimbursement by the signature guarantor is based on his guaranty, and that of the person presenting the stock for transfer on his warranty of the transfer ..."(Francis T. Christy and Robert S. Appel, The Transfer of Stock, Vol. I, 1975 edition, Section 248, pp. 17:18) (Emphasis ours) LexLib WHEREFORE, this hearing Officer finds for the plaintiff and against the defendant Mark Securities Corporation and third-party defendant Danilo Hernandez, ordering them to pay, jointly and severally, plaintiff the following amount to wit: 1. P2,578,532.96 as actual damages with interest at legal rate from December 14, 1990; 2. P500,000.00 as exemplary damages; 3. P300,000.00 as attorney's fee; 4. P46,017.28 as cost of litigation. SO ORDERED (SGD.) ALBERTO P. ATAS Hearing Officer