4/6/2019 Lim vs Queensland Tokyo Commodities Inc : 136031 : January 4, 2002 : J.

Quisumbing : Second Division

SECOND DIVISION

[G.R. No. 136031. January 4, 2002]

JEFFERSON LIM, petitioner, vs. QUEENSLAND TOKYO COMMODITIES, INC.,

DECISION
QUISUMBING, J.:

[1]
Before us is a petition for review assailing the June 25, 1998, decision of the Court of Appeals in
CA-G.R. CV No. 46495 which reversed and set aside the decision of the Regional Trial Court of Cebu,
Branch 24, dismissing the complaint by respondent for a sum of money as well as petitioners
counterclaim.
Private respondent Queensland Tokyo Commodities, Incorporated (Queensland, for brevity) is a
duly licensed broker engaged in the trading of commodities futures with full membership and with a
[2]
floor trading right at the Manila Futures Exchange, Inc..
Sometime in 1992, Benjamin Shia, a market analyst and trader of Queensland, was introduced to
[3]
petitioner Jefferson Lim by Marissa Bontia, one of his employees. Marissas father was a former
[4]
employee of Lims father.
Shia suggested that Lim invest in the Foreign Exchange Market, trading U.S. dollar against the
Japanese yen, British pound, Deutsche Mark and Swiss Franc.
Before investing, Lim requested Shia for proof that the foreign exchange was really lucrative. They
conducted mock tradings without money involved. As the mock trading showed profitability, Lim
decided to invest with a marginal deposit of US$5,000 in managers check. The marginal deposit
represented the advance capital for his future tradings. It was made to apply to any authorized future
transactions, and answered for any trading account against which the deposit was made, for any loss
[5]
of whatever nature, and for all obligations, which the investor would incur with the broker.
Because respondent Queensland dealt in pesos only, it had to convert US$5,000 in managers
check to pesos, amounting to P125,000 since the exchange rate at that time was P25 to US$1.00. To
accommodate petitioners request to trade right away, it advanced the P125,000 from its own funds
while waiting for the managers check to clear. Thereafter, a deposit notice in the amount of P125,000
was issued to Queensland, marked as Exhibit E. This was sent to Lim who received it as indicated by
his signature marked as Exhibit E-1. Then, Lim signed the Customers Agreement, marked as Exhibit
F, which provides as follows:

25. Upon signing of this Agreement, I shall deposit an initial margin either by personal check, managers check
or cash. In the case of the first, I shall not be permitted to trade until the check has been cleared by my bank and
credited to your account. In respect of margin calls or additional deposits required, I shall likewise pay them
either by personal check, managers check or cash. In the event my personal check is dishonored, the company
has the right without call or notice to settle/close my trading account against which the deposit was made. In
such event, any loss of whatever nature shall be borne by me and I shall settle such loss upon demand together
with interest and reasonable cost of collection. However, in the event such liquidation gives rise to a profit then

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such amount shall be credited to the Company. The above notwithstanding, I am not relieved of any legal
[6]
responsibility as a result of my check being dishonored by my bank.

Petitioner Lim was then allowed to trade with respondent company which was coursed through
[7]
Shia by virtue of the blank order forms, marked as Exhibits G, G-1 to G-13, all signed by Lim.
Respondent furnished Lim with the daily market report and statements of transactions as evidenced
[8]
by the receiving forms, marked as Exhibits J, J-1 to J-4, some of which were received by Lim.
[9]
During the first day of trading or on October 22, 1992, Lim made a net profit of P6,845.57. Shia
went to the office of Lim and informed him about it. He was elated. He agreed to continue trading.
[10]
During the second day of trading or on October 23, 1992, they lost P44,465.
Meanwhile, on October 22, 1992, respondent learned that it would take seventeen (17) days to
clear the managers check given by petitioner. Hence, on October 23, 1992, at about 11:00 A.M., upon
managements request, Shia returned the check to petitioner who informed Shia that petitioner would
[11]
rather replace the managers check with a travelers check. Considering that it was 12:00 noon
already, petitioner requested Shia to come back at 2:00 P.M.. Shia went with petitioner to the bank to
purchase a travelers check at the PCI Bank, Juan Luna Branch at 2:00 P.M.. Shia noticed that the
[12]
travelers check was not indorsed but Lim told Shia that Queensland could sign the indorsee portion.
Because Shia trusted the latters good credit rating, and out of ignorance, he brought the check back to
[13]
the office unsigned. Inasmuch as that was a busy Friday, the check was kept in the drawer of
[14]
respondents consultant. Later, the travelers check was deposited with Citibank.
[15]
On October 26, 1992, Shia informed petitioner that they incurred a floating loss of P44,695 on
October 23, 1992. He told petitioner that they could still recover their losses. He could unlock the
floating loss on Friday. By unlocking the floating loss, the loss on a particular day is minimized.
On October 27, 1992, Citibank informed respondent that the travelers check could not be cleared
unless it was duly signed by Lim, the original purchaser of the travelers check. A Miss Arajo, from the
accounting staff of Queensland, returned the check to Lim for his signature, but the latter, aware of his
P44,465 loss, demanded for a liquidation of his account and said he would get back what was left of
[16]
his investment. Meanwhile, Lim signed only one portion of the travelers check, leaving the other half
[17]
blank. He then kept it. Arajo went back to the office without it.
Respondent asked Shia to talk to petitioner for a settlement of his account but petitioner refused
to talk with Shia. Shia made follow-ups for more than a week beginning October 27, 1992. Because
petitioner disregarded this request, respondent was compelled to engage the services of a lawyer,
[18]
who sent a demand letter to petitioner. This letter went unheeded. Thus, respondent filed a
[19]
complaint against petitioner, docketed as Civil Case No. CEB-13737, for collection of a sum of
money.
On April 22, 1994, the trial court rendered its decision, thus:

WHEREFORE, in view of all the foregoing, the complaint is dismissed without pronouncement as to costs. The
defendants counterclaim is likewise dismissed.
[20]
SO ORDERED.

On appeal by Queensland, the Court of Appeals reversed and set aside the trial courts decision,
with the following fallo:

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WHEREFORE, the decision appealed from is hereby REVERSED AND SET ASIDE, and another one is
entered ordering appellee [Jefferson Lim] to pay appellant the sum of P125,000.00, with interest at the legal rate
[21]
until the whole amount is fully paid, P10,000.00 as attorneys fees, and costs.

Petitioner herein filed a motion for reconsideration before the Court of Appeals, which was denied
[22]
in a resolution dated October 6, 1998.
Dissatisfied, petitioner filed the instant recourse alleging that the appellate court committed errors:
I - IN REVERSING THE DECISION OF THE RTC WHICH DISMISSED RESPONDENTS
COMPLAINT;
II - IN HOLDING THAT THE PETITIONER IS ESTOPPED IN QUESTIONING THE VALIDITY OF THE
CUSTOMERS AGREEMENT AND FROM DENYING THE EFFECTS OF HIS CONDUCT;
III - IN NOT TAKING JUDICIAL NOTICE OF THE LETTER OF RESPONDENT THAT THE SEC HAS
ISSUED A CEASE AND DESIST ORDER AGAINST THE MANILA INTERNATIONAL FUTURES
EXCHANGE COMMISSION AND ALL COMMODITY TRADERS INCLUDING THE RESPONDENT.
Despite the petitioners formulation of alleged errors, we find that the main issue is whether or not
the appellate court erred in holding that petitioner is estopped from questioning the validity of the
Customers Agreement that he signed.
The essential elements of estoppel are: (1) conduct of a party amounting to false representation
or concealment of material facts or at least calculated to convey the impression that the facts are
otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2)
intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other
[23]
party; and (3) knowledge, actual or constructive, of the real facts.
Here, it is uncontested that petitioner had in fact signed the Customers Agreement in the morning
[24]
of October 22, 1992, knowing fully well the nature of the contract he was entering into. The
Customers Agreement was duly notarized and as a public document it is evidence of the fact, which
[25]
gave rise to its execution and of the date of the latter. Next, petitioner paid his investment deposit to
respondent in the form of a managers check in the amount of US$5,000 as evidenced by PCI Bank
[26]
Managers Check No. 69007, dated October 22, 1992. All these are indicia that petitioner treated the
Customers Agreement as a valid and binding contract.
Moreover, we agree that, on petitioners part, there was misrepresentation of facts. He replaced
the managers check with an unendorsed travelers check, instead of cash, while assuring Shia that
[27]
respondent Queensland could sign the indorsee portion thereof. As it turned out, Citibank informed
respondent that only the original purchaser (i.e. the petitioner) could sign said check. When the check
was returned to petitioner for his signature, he refused to sign. Then, as petitioner himself admitted in
[28] [29]
his Memorandum, he used the travelers check for his travel expenses.
More significantly, petitioner already availed himself of the benefits of the Customers Agreement
whose validity he now impugns. As found by the CA, even before petitioners initial marginal deposit (in
[30]
the form of the PCI managers check dated October 22, 1992) was converted into cash, he already
started trading on October 22, 1992, thereby making a net profit of P6,845.57. On October 23, he
[31]
continued availing of said agreement, although this time he incurred a floating loss of P44,645.
While he claimed he had not authorized respondent to trade on those dates, this claim is belied by his
[32]
signature affixed in the order forms, marked as Exhibits G, G-1 to G-13.
Clearly, by his own acts, petitioner is estopped from impugning the validity of the Customers
Agreement. For a party to a contract cannot deny the validity thereof after enjoying its benefits without
outrage to ones sense of justice and fairness.

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It appears that petitioners reason to back out of the agreement is that he began sustaining losses
from the trade. However, this alone is insufficient to nullify the contract or disregard its legal effects. By
its very nature it is already a perfected, if not a consummated, contract. Courts have no power to
relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be
[33]
disastrous or unwise investments. Notably, in the Customers Agreement, petitioner has been
forewarned of the high risk involved in the foreign currency investment as stated in the Risk Disclosure
[34]
Statement, located in the same box where petitioner signed.
Further, petitioner contends that the Customers Agreement was rendered nugatory because: (1)
the marginal deposit he gave was in dollars and (2) respondent allowed him to trade even before the
US$5,000 managers check was cleared. This contention is disingenuous to say the least, but hardly
meritorious.
Petitioner himself was responsible for the issuance of the US$5,000 managers check. It was he
who failed to replace the managers check with cash. He authorized Shia to start trading even before
the US$5,000 check had cleared. He could not, in fairness to the other party concerned, now invoke
his own misdeeds to exculpate himself, conformably with the basic principle in law that he who comes
to court must come with clean hands.
Contrary to petitioners contention, we also find that respondent did not violate paragraph 14 of the
Guidelines for Spot/Futures Currency Trading, which provides:

14. DEPOSITS & PAYMENTS

All deposits, payments and repayments, etc. will be in Philippine Currency. When a deposit with the Company is
not in cash or bank draft, such deposit will not take effect in the account concerned until it has been confirmed
[35]
NEGOTIABLE for payment by authorized management personnel.

Respondent claims it informed petitioner of its policy not to accept dollar investment. For this
reason, it converted the petitioners US$5,000 managers check to pesos (P125,000) out of
[36]
respondents own funds to accommodate petitioners request to trade right away. On record, it
[37]
appears that petitioner agreed to the conversion of his dollar deposit to pesos.
Neither is there merit in petitioners contention that respondent violated the Customers Agreement
by allowing him to trade even if his managers check was not yet cleared, as he had no margin deposit
as required by the Customers Agreement, viz:

5. Margin Receipt

A Margin Receipt issued by the Company shall only be for the purpose of acknowledging receipt of an amount
as margin deposit for Spot/Futures Currency Trading. All checks received for the purpose of margin deposits
have to be cleared through such bank account as may be opened by the Company before any order can be
[38]
accepted.

But as stated earlier, respondent advanced petitioners marginal deposit of P125,000 out of its own
funds while waiting for the US$5,000 managers check to clear, relying on the good credit standing of
petitioner. Contrary to petitioners averment now, respondent had advanced his margin deposit with his
approval. Nowhere in the Guidelines adverted to by petitioner was such an arrangement prohibited.
Note that the advance was made with petitioners consent, as indicated by his signature, Exhibit E-1,
[39] [40]
affixed in the deposit notice, Exhibit E, sent to him by respondent. By his failure to seasonably
object to this arrangement and by affixing his signature to the notice of deposit, petitioner is barred
from questioning said arrangement now.
Anent the last assigned error, petitioner faults the appellate court for not taking judicial notice of
the cease and desist order against the Manila International Futures Exchange Commission and all
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commodity traders including respondent. However, we find that this issue was first raised only in
petitioners motion for reconsideration of the Court of Appeals decision. It was never raised in the
[41]
Memorandum filed by petitioner before the trial court. Hence, this Court cannot now, for the first
time on appeal, pass upon this issue. For an issue cannot be raised for the first time on appeal. It
must be raised seasonably in the proceedings before the lower court. Questions raised on appeal
must be within the issues framed by the parties and, consequently, issues not raised in the trial court
[42]
cannot be raised for the first time on appeal.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of
Appeals dated June 25, 1998, in CA-G.R. CV No. 46495 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, and De Leon, Jr., JJ., concur.
Buena, J., on official leave.

[1]
Rollo, pp. 37-51.
[2]
RTC Records, pp. 8-10.
[3]
Sometimes spelled as Bertia.
[4]
RTC Records, TSN, November 17, 1993, p. 9.
[5]
Id. at 17.
[6]
Id., Exh. I, at 17.
[7]
Id. at 68-80.
[8]
Id. at 87-91.
[9]
Id., TSN, November 17, 1993, p. 28.
[10]
Id. at 30. P44,465 in the RTC Decision, P44,695 in some parts of the records, P44,645 in the CA Decision.
[11]
Id. at 31-32.
[12]
Id. at 35.
[13]
Id. at 36.
[14]
Id. at 37.
[15]
Supra, note 10.
[16]
Id. at 38-39.
[17]
Id. at 40.
[18]
Id., Exh. I, at 92.
[19]
Id. at 1-7.
[20]
Id. at 139.
[21]
Rollo, p. 51.
[22]
Id. at 64.
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[23]
Philippine National Bank vs. Court of Appeals, G.R. No. 121739, 308 SCRA 229, 235-236 (1999).
[24]
RTC Records, Exhibit F-1, p. 16.
[25]
Sec. 23, Rule 132, Rules of Court.
[26]
RTC Records, Exh. D, p. 11.
[27]
Supra, note 4 at 35.
[28]
Rollo, p. 123.
[29]
RTC Records, p. 55.
[30]
Id., Exh. D, at 11.
[31]
Rollo, p. 49. See note 10.
[32]
RTC Records, pp. 68-80.
[33]
Esguerra vs. CA, G.R. No. 119310, 267 SCRA 380, 393 (1997).
[34]
RTC Records, Exh. F-3, p. 17.
[35]
Id. at 15.
[36]
Supra, note 4 at 22.
[37]
RTC Records, p. 11.
[38]
Id. at 14.
[39]
Id. at 11.
[40]
Ibid.
[41]
Id. at 98-117.
[42]
Sanchez vs. CA, G.R. No. 108947, 279 SCRA 647, 679 (1997).

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