Pineda v. C & T Global Futures, Inc.

[SEC-SICD * CASE NO. 4250. September 9, 1996.] EDUARDO PINEDA , plaintiff, vs . C & T GLOBAL FUTURES, INC., ET AL. , respondents . D E C I S I O N This is an action for the recovery of investments, damages, attorney fees and cost of suit filed by plaintiff against herein defendants, claiming fraudulent representations. llcd Plaintiff avers in his complaint, inter alia , that he was enticed to enter into future commodities contract after Edanio de Jesus [De Jesus] and Miguel Lopez [Lopez] was introduced by his friend, Robert Julve; that Diaz and Lopez assured plaintiff that his investment shall be registered with the SEC; that there is absolutely no risk of loss; that the investment will earn 20-25% profit; that as long as the money remains with C & T, plaintiff will earn huge profits, unlike in a bank; that defendant C & T will only deduct its commission if the investment shall earn profit; that due to these assurances, plaintiff invested the amount of P160,000.00; that plaintiff was informed by De Jesus that the plaintiff's coffee commodity earned P0.05/lb which plaintiff instructed the latter to sell immediately; that De Jesus, again, traded plaintiff's investment for coffee commodity which earned another P0.53/lb; that plaintiff likewise, instructed De Jesus to sell; that sometime in July or Aug. 1990, plaintiff demanded from De Jesus to withdraw the amount of P150,000.00 from his investment because he needed the money but the latter merely referred plaintiff to see defendant Lopez; that Lopez told plaintiff to wait that when he called again, Lopez told him to talk to De Jesus, but when he talked to De Jesus, De Jesus referred him, again, to Diaz; that while his request for withdrawal was made on numerous occasion, defendants merely advised plaintiff to wait that after a week, plaintiff received a notice that what was left of his investment of P160,000.00 was only P800.00; that he was required to deposit the amount of P30,000.00 otherwise the defendants will cancel his account; that when plaintiff inquired Lopez why he lost his investment when Lopez himself said his investment was earning and/or why defendants continued to invest when there was a clear instruction; from him that the same be withdrawn and returned to him, defendants offered no explanation that plaintiff asked Lopez to come to his office to discuss the matter; but none of the defendants ever explained to plaintiff how the loss was incurred; and that defendants never returned his principal investments of P160,000.00. In their Answer, defendants contend that complainant speculated in commodity futures contracts and thus, was subject to risk as well as benefits brought about by market conditions; flat plaintiff has no cause of action; that defendants duly performed all their obligations in diligentissimi pater familias; and that no damages are recoverable, being speculative and baseless. In the Preliminary Conference of the case on 7 September 1992, the following issues were agreed upon by the parties, viz: a) Whether or not there was fraud in the solicitation of the commodity futures accounts from the plaintiff; b) Whether or not defendants C & T's account executive were duly licensed by the Securities and Exchange Commission as commodity futures solicitors; c) Whether or not the plaintiff is entitled to the return of his investment. Hearings were conducted wherein both parties adduced testimonial and documentary evidence. Pursuant to the agreement of the parties, through their counsel, that the SEC Cases Nos. 4250, 4251, 4253, and 4254 having been filed concurrently by several plaintiffs from Olongapo with only one lawyer representing all of them against the common defendants, whose defense is, likewise, handled by a sole lawyer in all cases filed; and that while these cases shall be heard individually, the decision shall be rendered separately, but, simultaneously in all cases so as not to pre-empt any pending cases still on trial, and/or cause any apprehension on both/either parties that the winning or losing of one case shall set a precedent to all others still pending considering that the witness/es of other cases shall also be utilized as witness/es in the other cases. Hence, this decision. On the first issue plaintiff testified that he was a high school graduate that he was not given the opportunity to read and understand the terms and conditions of the trading contract; that neither the same was explained to him; that he was asked to signed blank forms upon the defendants' assurances that he can withdraw his investment anytime, without any risk of loss; that he defendant C & T representatives continued to transact for him despite his specific instructions not to do so; and that defendants refused to return his investment even after several demands. Defendants were not able to rebutt the above to persuade this Hearing Officer that the technical terms of the contract were fully explained to the plaintiff, and/or that assurances of no-loss-investment-withdrawal anytime were really true as claimed. No evidence was shown by the defendants to satisfactorily disprove the plaintiffs claim. The fact that a Risk Disclosure Statement was signed by the plaintiff, the same is not an evidence by itself that the terms and conditions were duly explained, a defense now conveniently interposed by the defendants. After all, in the preparation of the trading contract, as well as in the actual trading of the investment, as admitted even by the defendants, plaintiff has no participation therein. These facts must therefore be construed strictly against defendants. Besides, there was a specific instructions from plaintiff to withdraw his investment but defendant did not heed the same, but continued to trade leading to the loss of investment. Yet, the defendants, offered no explanation on happenstance of the loss to plaintiff; and/or why the investment was still traded by them contrary to plaintiff's specific instructions not to trade the same anymore. Admittedly, Diaz and De Jesus were duly licensed by the SEC, plaintiff, however was able to prove that defendants although licensed, were not only negligent in their performance as required by of the contract, they, likewise, failed to act with prudence as any expert would do on trading futures market considering that they passed themselves off as expert in this field. Considering all the aforegoing, this Hearing Officer is of the belief, and so holds, that there was an apparent misrepresentation and false assurances undertaken by the herein defendants with the sole purpose of facilitating the easy procurement of the commodity futures contract from plaintiff, amounting to fraud, constituting a direct contravention of the Revised Securities Act. Thus, plaintiff is entitled to the return of his investment. Defendants, therefore, adjudged liable to the plaintiff. ACCORDINGLY, judgment is rendered MANDATING defendants a) to pay the plaintiff the sum of P160,000.00 representing the amount of principal investment; b) P50,000.00 as reasonable attorney's fees; and c) Cost of suit. Should the defendants be incapable of paying the above amounts, and/or refuse to do so, let the execution of the judgment be had against the defendants' Cash Bond; and if unavailing, against the Compensation Fund deposited with the Manila International Futures Exchange, Inc. SO ORDERED. (SGD.) YSOBEL S. YASAY-MURILLO Hearing Officer