Hizole v. C & T Global Futures, Inc.

[SEC-SICD * CASE NO. 4254. September 9, 1996.] CELSA HIZOLE , complainant , vs . C & T GLOBAL FUTURES, INC., ET AL. , respondents . D E C I S I O N This is an action for recovery of investment damages, and attorney's fees filed by Celsa Hizole, against respondents C & T Global Futures, Inc. [C& T], Manuel Calsado [Calsado], and Genaro de Lima [De Lima]. cdll Complainant alleges, inter alia, that sometime in February 1992, De Lima persuaded and convinced complainant to invest with respondent C & T that respondents De Lima and Calsado are not licensed by the SEC to solicit future commodities investment from investors, but, misrepresented themselves as licensed consultants/traders; that complainant was assured that she can withdraw the amount she invested with respondent C & T anytime plus interest/s earned from her investment; that De Lima and Calzado, through cajolery and trickery, persuaded complainant to issue three (3) personal checks of Solid Bank for the amounts of P20,000.00 [No. 154174, 21 February 1992] P30,000.00 [No. 154158, 21 February 1992], and P50,000.00 [No. 142637, 24 February 1990]; that complainant was not given a trading contract to read nor sign before her initial deposit on 21 February 1992, but only a week thereafter; that she was not apprised nor explained of the risk involved in investing her money in futures market; that neither a Risk Disclosure Statement was shown to her; that by reason of complainant's inability to sufficiently cover the checks she had issued, two (2) of her checks [P30,000.00 and P50,000.00] were stopped for payment; that with only P20,000.00 as investment received by respondents still traded the same in violation of the SEC's minimum requirement for trading which is P100,000.00; that on 28 February 1992, De Lima and Calzado required the complainant to sign a trading Contract where complainant saw for the first time the Risk Disclosure Statement; that appalled by it, she immediately demanded from the respondents the return of her money plus profits earned of the investment; that De Lima and Calsado prevailed upon the complainant to sign the contract by showing that her investment although only P20,000.00 on 21 February 1992 had grown to P100,298.44 in 6 days' time; that in order to convince the complainant to replace the check she ordered stopped, De Lima and Calsado brought another confirmation and balance sheet that showed that her investment had already ballooned to P109,556.57; that complainant was told by the respondents that she cannot withdraw the same amount unless, and until, she replaces the checks and/or pay the investment balance of P80,000.00 [amount of the checks which she had stopped for payment]; that on the same date, complainant rediscounted her checks with her friend in the amount of P87,204.90 to be able to generate P80,000.00 to cover the deficiency that De Lima and Calsado required; that banking on the respondents' promise that she can withdraw the amount of P109,556.57 after having the P80,000.00 produced, complainant now repeatedly demanded the same from the respondent; that instead of receiving her money as she had instructed, what complainant received from respondent was only a confirmation contract and balance sheet indicating that her investment was depleting, and an advise that she cannot withdraw the amount because it was tied-up in the market; that respondent Calsado threatened complainant that if she will not deposit an additional margin of P20,000.00 on or before 5 May 1992, her entire investment will be wiped out and she will be liable for whatever cost C & T will incur by her failure; that fearing for the loss of her hard-earned money, complainant sent a formal demand to respondent C & T for the return of her investment/money; that instead of recovering her money, complainant was furnished by respondent C & T a copy of the resignation letter of respondent Calsado, effective on 1 April 1992; and that notwithstanding the effectivity of such resignation, complainant saw that respondent C & T still allowed respondent Calsado to represent C & T and transact business with its clients. Complainants prays for judgment against all respondents. In their answer with counterclaim, respondents denied the allegation of the complainant and contend, among others, that complainant, as speculator, is subject to the rules on commodity trading; that respondent C & T acted in diligentissimi pater familias; that no damages are recoverable, the matter being damnum absque injuria, and for being speculative and baseless; that complaint has no basis and malicious; and that complainant should be adjudged litigation expenses, damages and attorney's fees. The Preliminary Conference was held on 7 September 1992, and the issues, as agreed by the parties, are viz: a. Whether or not there was fraud in the solicitation of the commodity future account/s from the complainant; b. Whether or not respondent C & T Global, Futures, Inc.'s account representatives were duly licensed by the SEC as commodity futures solicitors; c. Whether or not complainant is entitled to the return of her investments. Hearings were conducted wherein complainant presented both oral and documentary evidence in support of her suit. prcd Upon the hand, respondents and counsel's presentation of evidence was scheduled on various dates wherein respondents and/or counsel repeatedly failed to appear. Counsel for the complainant filed a Motion for Decision anchored on the absence and the numerous postponements filed by respondents counsel of the scheduled hearings; which motion was opposed by the latter. The motion was denied on 10 November 1994, premised on a warning and condition sine qua non that respondents' counsel "failure to present evidence on the next hearing date shall not be countenanced, and the provisions of the Rules on the matter shall be strictly construed [Vide: Order, 10 November 1994]". On 15 March 1995, despite the above warning issued and receipt of the notice of hearing dated 15 February 1995, respondents and counsel still failed to appear and present evidence on 15 March 1995. Upon oral motion by complainant's counsel, the respondents and counsel were declared, in open court, to have deemed waived the presentation of their evidence and the case was submitted for decision. On 21 March 1995, counsel for the respondent came to this Forum to orally moved for the reconsideration of the oral Order of waiver and submission of the case for decision; with the information of the possibility of having the case amicably settled. He was advised by his Hearing Officer to see complainant's counsel on the matter and to file the appropriate pleading in the case at bar. No pleading was filed within the requisite period, and up to the present date, to set aside the Order of Waiver. Hence, the above entitled case is now submitted for decision. Considering that no contrary evidence was presented to refute the allegations and claims of complainant, the same stands unrebutted. From the evidence, thus, presented it is apparent that complainant was falsely assured and mislead in entering into futures contract without the benefit of being fully apprised of and/or aware of its technical terms and/or the trading techniques by unregistered investment solicitors, per Certification, issued by the Brokers and Exchanges Department [BED] of this Commission [Exhibit "G" and "G-1"]; that complainant's initial investment in futures market was only P20,000.00 [Exhibit "A"] short of the legal requirement of P100,000.00 investment before any trading can be had, but was, nonetheless, traded by the respondents; that she was not even asked to sign futures contract/agreement till after one [1] week and after her investment of P20,000.00 was traded; and that she was not shown any risk disclosure agreement, but, only, after it was endorsed to her for signature. This Hearing Officer finds, and so holds that the gross misrepresentation and false assurances amounted to fraud in the solicitation of the contract from the complaint; and that the acts of the respondents constitute a grave violation of the Revised Securities Act. Thuswise, the contract having been fraudulently solicited by the defendants from the complainant, the same should be, as it is hereby declared null and void. ACCORDINGLY, premises considered, respondents are hereby DIRECTED to pay complainant the hereunder sum of: a) P100,000.00 as the investment made by complainant; b) P20,000.00 as Attorney's fees; c) Cost of suit. Should the respondents refuse to pay and/or does not have the capacity to do so, let herein judgment be served and effected upon its Cash Bond deposited in any Philippine Bank and/or with the Compensation Fund deposited with the Manila International Futures Exchange. LLjur SO ORDERED. (SGD.) YSOBEL S. YASAY-MURILLO Hearing Officer