THIRD DIVISION
[G.R. No. 202485. February 22, 2017.]
B.H. CHUA SECURITIES, CORP., petitioner,vs. JOHNSTON SIA-UY AND SECURITIES AND EXCHANGE COMMISSION, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedFebruary 22, 2017, which reads as follows:
"G.R. No. 202485 (B.H. Chua Securities, Corp. v. Johnston Sia-Uy and Securities and Exchange Commission). — This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the Decision 2 dated March 5, 2012 and Resolution 3 dated June 27, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 115762. The CA affirmed the Resolution 4 dated June 17, 2010 and Order 5 dated August 2, 2010 of the Securities and Exchange Commission (SEC) in SEC Case No. AC-11-01-825.
B.H. Chua Securities Corp. (petitioner) is a brokerage firm registered with the SEC on September 13, 1989 under SEC Reg. No. 168291. 6
In January 1997, Johnston Sia-Uy (private respondent) opened a Marginal Account with petitioner and signed the Customer Account Information Form (CAIF) under Account No. 1401. 7 The Margin Account Agreement provided for a ratio of 1:5 and contained the following pertinent terms and conditions: TIADCc
|
Marginal Limit |
P1,000,000.00 |
|
Ratio/Leverage |
1:5 |
|
Initial Collateral |
P200,000.00 |
|
Commission Rate |
1/2% |
|
Interest Rate |
18% |
|
Conditions: |
|
xxx xxx xxx
6. The client's collateral should not fall below the 10% of the marginal amount. (The percentage limit was derived by dividing the valuated market position over the margin balance.)
7. A margin call would be initiated once the percentage limit falls below the 10% requirement. An additional collateral in terms of cash or stocks would be collected from the client to cover at least the 20% of the margin limit.
8. B.H. Chua Securities Corp. will notify the client of his/her margin call through writing and the client has five (5) working days to submit his/her additional collateral.
9. The client can withdraw any proceeds from his/her account provided that the percentage limit exceeds the ratio/leverage.
10. B.H. Chua Securities Corp. [r]eserves the right to liquidate the client's position once the client was not able to comply with above-mentioned requirements. 8
Go Tak Lee, also known as Lito Go (Go), petitioner's General Manager, represented and signed for the petitioner. 9 Private respondent alleged that Go required him to issue postdated checks as security for any liability private respondent may incur. Private respondent issued postdated checks on the condition that they will not be deposited and shall be returned to him upon his instructions. 10
Private respondent's account failed to meet the required margin rate in May 1997, June 2008, August 2008 and September 2008. Instead of issuing a margin call, petitioner deposited the postdated checks to cover the deficit for those months. 11
Private respondent filed with the SEC a letter-complaint 12 dated September 12, 2000 against petitioner, urging the SEC to conduct an investigation to determine any violations petitioner and Go committed in the handling of private respondent's account.
On November 20, 2000, private respondent filed with the SEC another letter 13 alleging that Go committed misrepresentation and deceit in handling and managing private respondent's account. Specifically, private respondent sought from the SEC clarification on the following:
1. Did B.H. Chua Securities Corp. commit violation of law, rules and regulations of SEC in employing Go Tak Lee or Tak Lee Go alias Lito Go as its sales manager and/or account officer, without first obtaining license to do business or employment permit from the Department of Labor and Employment?
2. Whether or not the transactions entered into by Go Tak Lee or Tak Lee Go alias Lito Go with, for, and in behalf of our client, Johnston Sia Uy can be annulled or voided, considering that Go Tak Lee or Tak Lee Go alias Lito Go has no license or permit issued by SEC in 1997 and that his employment with B.H. Chua Securities Corp. is illegal?
3. Can our client Johnston Sia Uy hold B.H. Chua Securities Corp. and Go Tak Lee or Tak Lee Go alias Lito Go responsible for the damages and losses that he suffered as a consequence and result of his transactions with them? 14 (Emphasis in the original.) cSEDTC
Meanwhile, on May 3, 2001, the SEC penalized petitioner with a fine of P10,000.00 for violating the "Margin Rule" under Batas Pambansa Blg. 178 known as the Revised Securities Act (RSA) Rule 23(b)-1, now Rule 48.1.3 of the Implementing Rules and Regulations of Republic Act No. 8799 known as the Securities Regulation Code (SRC). The Margin Rule requires that whenever there is an insufficiency of margin, a call for additional margin shall be issued promptly by the broker dealer to the customer. The SEC found that petitioner eliminated the need for a margin call when it required private respondent to issue postdated checks which will be deposited in case the balance of private respondent's account became insufficient to maintain the required margin. 15
On September 13, 2001, Jose P. Aquino, Director, Market Regulation Department (MRD) of the SEC, resolved private respondent's complaint and absolved petitioner from any liability. 16
Through a letter-appeal 17 dated September 28, 2001, private respondent appealed to the Office of the General Counsel (OGC) of the SEC the findings of the MRD. The appeal was docketed as SEC Case No. AC-11-01-825.18
Private respondent filed a manifestation and motion 19 dated July 17, 2006 and prayed that: (1) the investment contracts entered into by petitioner and private respondent be declared null and void; and (2) petitioner be held liable for the refund of the investments private respondent made as well as any accrued income. Despite Order 20 from the SEC, petitioner did not file any comment on the manifestation and motion. 21
On June 17, 2010, the SEC En Banc issued its Resolution 22 granting private respondent's appeal. The SEC En Banc held that: (1) Go acted as a salesman of securities without the necessary license as required by Section 19 of the RSA; (2) Go failed to comply with private respondent's instruction to dispose or sell his Interport shares in October 1999; (3) the transactions entered into by private respondent with petitioner should be annulled and the full amount of investments recovered by private respondent. The dispositive portion of the SEC En Banc's Resolution reads: AIDSTE
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Appellee corporation is hereby directed to refund appellant the amount of (1) Two Million Three Thousand Eight Hundred Sixteen and Twenty Four Centavos (P2,003,816.24) constituting payment by appellant of his margin account covered by twenty-six (26) postdated checks and encashed by appellee; and (2)Two Hundred Thousand Pesos (P200,000.00) representing the initial collateral under the terms and conditions for entering into a margin account. For knowingly allowing its unlicensed salesman to engage in stock transactions in violation of Section 19 of the RSA, the appellee corporation is hereby imposed a fine of Fifty Thousand Pesos (P50,000.00) with a stern warning that a subsequent similar violation thereof shall be subject to appropriate sanction at the discretion of the Commission. Further, if appellant's shares have already been disposed, appellee corporation is also hereby directed to deposit the proceeds of the sale with the Commission pending the final resolution of the case.
SO ORDERED.23 (Emphasis in the original, citation omitted.
Although a motion for reconsideration is a prohibited pleading, 24 petitioner moved for a reconsideration 25 of the Resolution which the SEC En Banc denied through its Order 26 dated August 2, 2010.
Petitioner appealed to the CA via a petition for review 27 under Rule 43 of the Rules of Court end argued that: (1) the Customer Account Information Form had the signatures of both Go and Michael Li Chua, petitioner's marketing head; thus, there is no proof that Go is the sole salesman servicing private respondent's account; (2) Go did not violate private respondent's instructions regarding the latter's shares; and (3) the margin account agreement is valid and not in violation of the RSA and private respondent had nothing to recover from petitioner since it was the latter which used its funds to purchase shares on behalf of private respondent. SDAaTC
Through its Decision 28 dated March 5, 2012, the CA dismissed the petition and held that it was filed out of time. The erroneous filing of the motion for reconsideration did not toll the running of the period to appeal to the CA. It thus affirmed in toto the findings of the SEC.
On March 27, 2012, petitioner filed a motion for reconsideration 29 which the CA denied in its Resolution 30 dated June 27, 2012. Hence, this petition.
We deny the petition.
Petitioner avers that that the letter-complaint private respondent filed before the SEC and his letter-appeal before the SEC En Banc did not conform with the prescribed form under the SEC's 2006 Rules of Procedure; thus, they should not have been acted upon.
We point out that this is the first time petitioner raised the alleged defects in private respondent's letter-complaint and letter-appeal filed with the SEC. Issues raised for the first time on appeal and not raised in the proceedings in the lower court are barred by estoppel. Points of law, theories, issues, and arguments not brought to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal. To consider the alleged facts and arguments belatedly raised would amount to trampling on the basic principles of fair play, justice, and due process. 31
During the proceedings in the SEC and the CA, petitioner never questioned the procedural defects it now alleges private respondent to have committed. Thus, we cannot take cognizance, much less consider, this argument as a ground to reverse the findings of the SEC En Banc and the CA.
At any rate, we emphasize the well-settled rule that in proceedings before administrative bodies, the general rule has always been liberality. Strict compliance with the rules of procedure in administrative cases is not required by law. Administrative rules of procedure should be construed liberally to promote their object of assisting parties in obtaining a just, speedy and inexpensive determination of their respective claims and defenses. The crucial point of inquiry in cases involving violation of administrative rules of procedure is whether such violation disregards the basic tenets of administrative due process. 32
The essence of due process is to be heard, and, as applied to administrative proceedings, this means a fair and reasonable opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained of. 33
Here, petitioner participated in the proceedings before the SEC. It filed its memorandum 34 and motion for reconsideration 35 and prayed that the September 13, 2001 Decision of the SEC-MRD absolving it from any liability be affirmed.
As there is no denial of petitioner's due process rights, it cannot now complain about private respondent's non-compliance with the form prescribed for complaints filed with the SEC. AaCTcI
Petitioner also contends that it was erroneous for the SEC En Banc and the CA to declare the transactions between petitioner and private respondent void and order the refund of the total value of the 26 postdated checks and the initial collateral under the Marginal Account. Petitioner argues that private respondent did not assail the latter's validity and prays for the refund of these amounts. It finally advances that the RSA does not provide for the payment or refund of any money in the event a contract is declared null and void.
We sustain the findings of the SEC En Banc that the transactions between petitioner and private respondent are void pursuant to Section 53 (b) in relation to Section 19 of the RSA. 36 Go acted as a salesman of securities without the necessary license as required by Section 19 of the RSA. The CA correctly held that factual findings of quasi-judicial agencies like the SEC, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence. 37
Regarding the refund of the total value of the 26 postdated checks, as earlier narrated and contrary to petitioner's assertion, the record shows that private respondent filed a manifestation and motion dated July 17, 2006 praying that the investment contracts between him and petitioner be declared void and that his investments be returned to him.
More importantly, we rule that refund of the amounts invested by private respondent is a necessary consequence of the nullity of the Marginal Account executed between petitioner and private respondent. A void or inexistent contract has no force and effect from the very beginning. A void contract is equivalent to nothing and is absolutely wanting in civil effects. 38
Thus, if a void contract has already been performed, the restoration of what has been given is in order. This principle springs from Article 22 of the New Civil Code which states that "every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same x x x." Hence, the restitution of what each party has given is a consequence of a void and inexistent contract. 39 The rule is settled that the declaration of nullity of a contract which is void abinitio operates to restore things to the state and condition in which they were found before its execution. 40
Indeed, as the Marginal Account which created private respondent's obligation to pay petitioner the initial collateral and to issue the postdated checks which petitioner encashed was already declared void, petitioner has the obligation to return the amounts as it no longer has any right to keep them.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated March 5, 2012, affirming the Resolution dated June 17, 2010 of the SEC En Banc, and Resolution dated June 27, 2012 are AFFIRMEDin toto." (Reyes, J.,on official leave;Caguioa, J.,designated as Fifth Member of the Third Division per Special Order No. 2417 dated January 4, 2017.) acEHCD
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITAN
Division Clerk of Court
Footnotes
1.Rollo, pp. 3-12.
2.Id. at 60-73, penned by Associate Justice Danton Q. Bueser with Associate Justices Rosmari D. Carandang and Ricardo R. Rosario, concurring.
3.Id. at 80-81.
4.Id. at 24-33.
5.Id. at 34.
6.Id. at 24.
7.Id.; CA rollo, pp. 113-114.
8.Id. at 109.
9.Rollo, p. 24.
10. CA rollo, p. 110.
11.Rollo, p. 61.
12. CA rollo, pp. 110-111.
13.Id. at 246-248.
14.Id. at 248.
15.Id. at 115-116.
16.Id. at 206-209.
17.Id. at 210-211.
18.Id. at 212.
19.Id. at 259-262.
20.Id. at 266.
21.Id. at 270.
22.Id. at 127-136.
23.Id. at 135-136.
24. 2006 Rules of Procedure of the Securities and Exchange Commission:
Sec. 3-6. Prohibited Pleadings. — The following pleadings or any submission that is filed or made under a similar guise or title shall not be allowed:
xxx xxx xxx
(c) Motion for New Trial, Reconsideration of Judgment or Order, or Reopening of Trial;
xxx xxx xxx
Sec. 11-9. Disposition of the Appeal. — The Commission En Banc may affirm, reverse or modify the Decision, Order or ruling appealed from, or direct further proceedings to be taken thereon. No motion for reconsideration of the Decision of the Commission En Banc shall be entertained.
25. CA rollo, pp. 61-64.
26.Id. at 65-66.
27.Id. at 3-10.
28.Supra note 2.
29.Rollo, pp. 74-79.
30.Supra note 3.
31.Commissioner of Internal Revenue v. Puregold Duty Free, Inc., G.R. No. 202789, June 22, 2015, 760 SCRA 96, 112, citing Ayala Land, Inc. v. Castillo, G.R. No. 178110, June 15, 2011, 652 SCRA 143.
32.Besaga v. Acosta, G.R. No. 194061, April 20, 2015, 756 SCRA 93, 106.
33.Vivo v. Philippine Amusement Gaming Corporation, G.R. No. 187854, November 12, 2013, 709 SCRA 276, 281, citing Office of the Ombudsman v. Reyes, G.R. No. 170512, October 5, 2011, 658 SCRA 626, 640; Ledesma v. Court of Appeals, G.R. No. 166780, December 27, 2007, 541 SCRA 444, 452.
34. CA rollo, pp. 46-50.
35.Supra note 25.
36. Sec. 53. Validity of contracts. — (a) x x x
(b) Every contract made in violation of any provision of this Act or of any rule or regulation thereunder, and every contract, including any contract for listing a security on an exchange heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of, any provision of this Act, or any rule or regulation thereunder, shall be void:
37.Rollo, p. 71.
38.Tan, Jr. v. Hosana, G.R. No. 190846, February 3, 2016, 783 SCRA 87, 98.
39.Id.
40.Filinvest Land, Inc. v. Ngilay, G.R. No. 174715, October 11, 2012, 684 SCRA 119, 128, citing Development Bank of the Philippines v. Court of Appeals, G.R. No. 11053, October 16, 1995, 249 SCRA 331, 337.