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ONAPAL PHILS. COMMODITIES, INC. vs.

CA (068)  She was made to understand that she could withdraw her
G.R. No. 90707 (1993); Campos Jr., J. deposit/investment anytime, but was not made to understand
what the business was all about
Summary:  When she tried to withdraw her investment, she was told by
FACTS OPCI that she could not get out because there are some
 Petitioner Onapal Phils. Commodities, Inc. (OPCI), a duly licensed accounts hanging on the transactions
commission merchant/broker, 1 and Susan Chua entered into a  She stopped trading in commodity futures when she realized
“Trading Contract”, which operates as follows: that she was engaged in gambling.
 OPCI regularly furnished Chua with “Commodities Daily  TRIAL COURT: ruled that the Trading Contract on “futures” is a
Quotations” showing daily movements of prices of specie of gambling and therefore null and void
commodity futures traded and of market reports indicating  CA: upheld TC. Ordered OPCI to refund Chua the losses incurred in
the volume of trade in different futures exchanges in HK, the trading transactions
etc.;  OPCI’s arguments:
 Every time a customer enters into a trading transaction with  Commodity futures trading is a legitimate business practiced
OPCI as broker, the trading order is communicated to in the US, recognized by the SEC and permitted under Art.
OPCI’s principal, Frankwell Enterprises of HK; 1462 of the Civil Code
 If the transaction (either buying or selling of commodity  Art. 2018 NCC is inapplicable since in a commodity futures
futures) is consummated by the principal, OPCI issues a transaction, the broker is not the direct participant and cannot
document called “Confirmation of Contract and Balance be considered as winner or loser, and the contract itself, from
Sheet” to the customer; its very nature, cannot be considered as gambling
 An order of OPCI’s customer is supposed to be transmitted  a commodity futures contract,2 being a specie of securities, is
to OPCI’s Manila office, then forwarded to Hongkong, and valid and enforceable, as its terms are governed by special
from there, transmitted to the Commodity Futures Exchange laws i.e., the Revised Securities Act and the Revised Rules
in Japan. and Regulations on Commodity Futures Trading hence, Civil
 Chua filed a case against OPCI to recover her loss worth P470k. She Code is not the controlling piece of legislation
alleged the following:
 She was invited by OPCI’s account executive to invest in the ISSUE
commodity futures trading by depositing P500k What is the nature of the transaction of the parties under the trading contract?
 She was made to sign the Trading Contract and other
documents without making her aware of the risks involved RULING
 She was initially told of a profit of P20,480 but was later The transaction under the trading contract is in the nature of a gambling
asked to deposit another P300k to “pay the difference” in agreement and falls under Art. 2018 of the Civil Code (not Art. 1462) and
prices, otherwise she will lose her original deposit of P500k neither under the Revised Securities Act nor the Rules and Regulations and
Commodity Futures Trading laid down by the SEC

1 Under the Revised Rules and Regulations on Commodity Futures Trading, a money, securities or property (or extends credit in lieu thereof) to margin,
futures commission merchant/broker refers to a corporation or partnership, guarantee or secure any trade or contract that results or may result therefrom.
which must be registered and licensed as a Future Commission Merchant/Broker 2 Under the Revised Rules and Regulations on Commodity Futures Trading, a

and is engaged in soliciting or in accepting orders for the purchase or sale of any commodity futures contract refers to an agreement to buy or sell a specified
commodity for future delivery on or subject to the rules of any contract market quantity and grade of a commodity at a future date at a price established at the
and that, in connection with such solicitation or acceptance of orders, accepts any floor of the exchange
DISCUSSION  Art. 1462 NCC does not apply because said article requires that there
 The contract signed by Chua purports to be for the delivery of goods be delivery of goods, actual or constructive. Here, there was no such
with the intention that the difference between the price stipulated and delivery neither was there intention to deliver.
the exchange or market price at the time of the pretended delivery shall  The contract between the parties falls under the definition of “futures”.
be paid by the loser to the winner The payments made under said contract were payments of difference
 As held by the CA, the parties never intended to make or accept in prices arising out of the rise or fall in the market price above or
delivery of any particular commodity but the parties merely made a below the contract price thus making it purely gambling and declared
speculation on the rise or fall in the market of the contract price of the null and void by law.
commodity subject of the transaction on the pretended date of  Under Art. 2018 NCC, Chua is entitled to refund from OPCI what she
delivery, so that if the forecast was correct, one party would make a paid. Having received the money and orders of Chua under the trading
profit, but if the forecast was wrong, one party would lose money contract, OPCI has the burden of proving that said orders and money
 The trading contract signed by Chua and Albert Chiam (representing of Chua had been transmitted. Here, there is no evidence of
OPCI)) is a contract for the sale of products for future delivery, in transmission to OPCI’s principals in Hongkong and Tokyo. There was
which the seller or buyer may elect to make or demand delivery3 of no arrangement made by OPCI with the Central Bank for the purpose
goods agreed to be bought and sold, but where no such delivery is of remitting the money of its customers abroad. The money which was
actually made. The trading contract bears all the indicia of a valid supposed to be remitted to Frankwell Enterprises was kept by OPCI in
trading contract because it complies with the Rules and Regulations a separate account in a local bank.
on Commodity Futures Trading as prescribed by the SEC. But when
the transaction which was carried out to implement the written DISPOSITIVE
contract deviates from the true import of the agreement as when For lack of merit, the petition is DISMISSED and the judgment sought to be
no such delivery, actual or constructive, of the commodity or reversed is hereby AFFIRMED. With costs against petitioner.
goods is made, and final settlement is made by payment and
receipt of only the difference in prices at the time of delivery from
that prevailing at the time the sale is made, the dealings in futures
become mere speculative contracts in which the parties merely
gamble on the rise or fall in prices.
 The written trading contract in question is not illegal but the
transaction between the OPCI and Chua purportedly to
implement the contract is in the nature of a gambling agreement
and falls within the ambit of Art. 2018 of the NCC.4 There was no
evidence that the orders and money were transmitted by OPCI to its
principal Frankwell Enterprises Ltd. in Hongkong nor were the orders
forwarded to the Tokyo Exchange. Hence, the conclusion is that no
actual delivery of goods and commodity was intended and ever made
by the parties. The parties merely speculated on the rise or fall in the
price of the goods/commodity subject of the transaction.

3 By delivery is meant the act by which the res or subject is placed in the actual the difference between the price stipulated and exchanged or market
or constructive possession or control of another price at the time of the pretended delivery shall be paid by the loser to the
4 Art. 2018 New Civil Code: If a contract which purports to be for the delivery winner, the transaction is null and void. The loser may recover what he has
of goods, securities or shares of stock is entered into with the intention that paid.