G.R. No.
182307 June 06, 2018
BELINA CANCIO AND JEREMY PAMPOLINA, Petitioner, vs.
PERFORMANCE FOREIGN EXCHANGE CORPORATION, Respondents.
LEONEN, J.:
FACTS:
This is a Petition for Review on Certiorari assailing the Decision and Resolution of
the Court of Appeals, which overturned the Regional Trial Court Decision. The Regional
Trial Court found Performance Foreign Exchange Corporation (Performance Forex)
solidarity liable with broker Rolando Hipol (Hipol) for unauthorized trade transactions he
made on Belina Cancio (Cancio) and Jeremy Pampolina's (Pampolina) joint trading
account. The Court of Appeals, however, absolved Performance Forex from any liability.
Sometime in 2000, Cancio and Pampolina accepted Hipol's invitation to open a
joint account with Performance Forex. Cancio and Pampolina deposited the required
margin account deposit of US$10,000.00 for trading. They likewise entered into an
agreement for appointment of an agent Hipol, would act as their commission agent and
would deal on their behalf in the forex market. All parties agreed that the trading would
only be executed by Cancio and Pampolina, or, upon instructions to their agent, Hipol.
They stopped trading for more or less two (2) weeks, after which, however, Cancio again
instructed Hipol to execute trading currency orders. Cancio later found out that Hipol
never executed her orders. Hipol confessed to her that he made unauthorized
transactions using their joint account from which resulted in the loss of all their money,
leaving a negative balance of US$35.72 in their Statement of Account.
Performance Forex offered US$5,000.00 to settle the matter but Cancio and
Pampolina rejected this offer. Their demand letters to Hipol were also unheeded. Thus,
they filed a Complaint for damages against Performance Forex and Hipol before the
Regional Trial Court of Mandaluyong City. RTC rendered its Decision finding Performance
Forex and Hipol solidarily liable to Cancio and Pampolina for damages. Performance Forex
appealed this Decision to the Court of Appeals. The CA found that Performance Forex's
non-disclosure of Hipol's prior unauthorized transactions with another client was
irrelevant since he was an independent broker who was not employed with Performance
Forex. Thus, Performance Forex had no legal duty to disclose any prior misconduct to its
clients.
Cancio and Pampolina moved for reconsideration but were denied by the Court of
Appeals in its Resolution. Hence, this Petition.
ISSUE:
Whether or not the Performance Forex Exchange Corporation should be held
solidarily liable with petitioners Belina Cancio and Jeremy Pampolina's broker, Hipol, for
damages due to the latter's unauthorized transactions in the foreign currency exchange
trading market.
RULING:
No. Even if this Court were to liberally review the factual findings of the Court of
Appeals, the Petition would still be denied. A principal who gives broad and unbridled
authorization to his or her agent cannot later hold third persons who relied on that
authorization liable for damages that may arise from the agent's fraudulent acts.
Petitioners conferred trading authority to Hipol. Respondent was not obligated to
question whether Hipol exceeded that authority whenever he made purchase orders.
Respondent was likewise not privy on how petitioners instructed Hipol to carry out their
orders. It did not assign Hipol to be petitioners' agent. Hipol was the one who approached
petitioners and offered to be their agent. Petitioners were highly educated and were
knowledgeable in playing in this foreign exchange trading. They would have been aware
of the extent of authority they granted to Hipol when they handed to him pre-signed
blank purchase order forms. Under Article 1900 of the Civil Code:
Article 1900. So far as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority, if such act is within the terms
of the power of attorney, as written, even if the agent has in fact exceeded the
limits of his authority according to an understanding between the principal and
the agent.
Before a claimant can be entitled to damages, "the claimant should satisfactorily
show the existence of the factual basis of damages and its causal connection to
defendant's acts." The acts of petitioners' agent, Hipol, were the direct cause of their
injury. There is no reason to hold respondent liable for actual and moral damages. Since
the basis for moral damages has not been established, there would likewise be no basis
to recover exemplary damages and attorney's fees from respondent. If there was any
fault, the fault remains with petitioners' agent and him alone.
WHEREFORE, the Petition is DENIED.
