SEC EB Case No. 01-11-227 In the matter of the Penalty Imposed against Royale Tagytay Country Club SEC En Banc Case No. 01-11-227Inc., for Non-filling of the Required Annual, (SEC Form 11-Q), and Current Report or Materials Facts/Events Report (SEC Form 11-C), pursuant to SRC Section 17.2(a) Royale Tagaytay Country Club, Inc., represented by its General Manager, Mr. Ruben B. Encinas, Offeror-Appel

Securities and Exchange Commission Republic of the Philippines Department of Finance Pasay City,Philippines

In the matter of the Penalty Imposed against Royale Tagaytay Country Club SEC En Banc Case No. 01-11 227 Inc., for Non-filing of the Re- quired Annual, (SEC Form 11-A) Quarterly (SEC Form 11-Q), and Cur- rent Report or Material Facts/Events SEC En Banc Case No. 01-11-227

SRC Section 17.2(a). Report (SEC Form 11-C), pursuant to

ROYALE TAGAYTAY COUNTRY CLUB, INC., represented by its Gen- eral Manager, Mr. Ruben B. Encinas,

Offeror-Appellant.

DECISION

This resolves the appeal of Royale Tagaytay Country Club, Inc. from the Notice issued by the Enforcement and Prosecution Department, dated 5 January 2011, disapproving the company's Offer of Compromise.

Appellant is a non-stock, non-profit corporation registered with this Commission under SEC Reg. No. 0000197316. On 9 August 2006, the Cor- poration and Finance Department (CFD) imposed the penalty of Eight Million, Six Hundred Ninety-Five Thousand, Eight Hundred Pesos (P8,695,800.00) upon Appellant for its failure to file its annual (SEC Form

facts/event report (SEC Form 11-C)1 from 1997 to 2004. 11-A), quarterly (SEC Form 11-Q), and current reports or material

On 23 October 2006, Appellant sought reconsideration of the above- mentioned imposition of fines. CFD, in its letter dated 16 June 2010, de- nied reconsideration and directed Appellant to pay the assessed penalty within ten (10) days from receipt of the letter.

Appellant filed a Motion for Reconsideration with Offer of Compromise on 16 August 2010. CFD denied the motion, without prejudice to the out- come of the Offer of Compromise, which was endorsed to the Enforce- ment and Prosecution Department (EPD) on 27 August 2010.

Formerly required under Section 1 1 of the then Revised Securities Act and RSA Im. Sections 17, 17.1(a)(b) and 17.2(a) of the Securities Regulation Code. plementing Rule I I (a)-1 of the RSA Full Disclosure Rules, currently required under

In re: Royale Tagaytay Country Club, Inc SEC En Banc Case No. 01-1 1-227

Decision Page 2 of 4

On 18 October 2010, Appellant filed before the EPD an Appeal with Of fer of Compromise and offered to pay the amount of Two Hundred Fifty Thousand Pesos (P250,000.00) in lieu of the total assessed penalty im- posed by CFD. Appellant was required and submitted documents2 in sup port of its appeal. In its Full Compliance for Submission of a) Board Reso- lution for the Appeal with Offer of Compromise and b) 2010 General Infor- mation Sheet with Motion to Approve the Offer of Compromise, Appellant sought approval of its settlement offer in the amount of One Million

(P1,304,370.00). Three Hundred Four Thousand, Three Hundred Seventy Pesos

In its letter, dated 5 January 2011, EPD disapproved Appellant's Offer of Compromise, stating that:

While the settlement offer is not less than fifteen percent (15%) of the total

cedure and the company's Income Tax Returns from 2003 to 2009 reflected imposable penalty required by Section 10-10(b) of the SEC 2006 Rules of Pro-

negative taxable income, we also note that based on its 2009 Financial State- ment, it has Php115,614,000 total assets. Considering this, we find that the

to inform you that your settlement offer is unacceptable. company is in the position to pay the said total monetary penalty. We regret

On 24 January 2011, Appellant filed an Appeal with the Commission En Banc. More than a year later, or on 31 January 2012, Appellant filed its Supplemental Documentary Evidence to Appeal. Then, on 9 May 2012, it

of Serious Losses from the Year 2003 to Present and the Imposition of the Penalty of P8,695,000.00 will push the Appellant to Eventual Closure. filed an Amended Appeal with Prayer for Condonation of Penalty on Ground

Iowing: The issues raised in Appellant's Appeal of 24 January 2011, are the fol-

1. Appellant did not violate any provision of law, nor was it motivated by menting Rules and Regulations. criminal intent or fraud, in failing to comply on time with the reportorial requirements prescribed by the Securities Regulation Code or its Imple-

2. The Notices of Non-Compliance with Reportorial Requirements were not sent to Appellant's principal address; hence, such cannot be considered as due notice to Appellant.

2 Letter-Engagement signed by Atty. Melchor Monsod and "Mariza & Mr. Sarayba" promise; and 2010 General Information Sheet. of Melchor Monsod, worth P1,361.79; Check Voucher, dated 1 June 2004, under the name of Melchor Monsod; Board Resolution for the Appeal with Offer of Com- dated 6 March 1998: Letter, dated 6 March 1998, signed by Atty. Melchor Monsod. requesting an increase of his basic legal retainer's fee; Statement of Account as of June 2004; Photocopy of Bank of the Philippine Islands check payable to the order

In re: Royale Tagaytay Country Club, Inc. SEC En Banc Case No. 01-1 1-227

Page 3 of 4 Decision

3. The offer to settle the imposed penalty from Eight Million, Six Hundred

Ninety-Five Thousand (P8,695,800.00) to One Million, Three Hundred Four Thousand, Three Hundred Seventy Pesos (P1,304,370.00), which is fifteen percent (15%) of the total imposed penalty, is authorized by Sec- tion 10-10(b) of the 2006 Rules of Procedure of the SEC and in principle

2010. was agreed upon per the minutes of the conference held on 26 October

As to the first issue, we will not rule on such as the Appeal Order only pertains to the propriety of the denial of the settlement offer, and not as to the merits of the violation committed by the Appellant warranting the penalty.

As to the second issue, Notices of Non-Compliance with Reportorial Requirements were not duly served upon it. It alleges that the notices were not sent to its principal address at Emilio Aguinaldo Highway, Buck Estate, Alfonso, Cavite, but instead to the office of Sta. Lucia Development Corporation, its developer, at G/F State Financing Center Building, Orti- gas Avenue, Mandaluyong City. However, aside from these averments, Appellant failed to present any evidence that it failed to receive the no- tices. CFD, in its letter to Appellant dated 16 June 2010, pointed out that:

the Commission on 28 February 1994. Records show that the Commission previously sent notifications to the com- the principal business office indicated in its (then Royale Tagaytay Estates Sports and Country Club, Inc.) Registration Statement which was received by pany at G/F State Financing Center Bldg., Ortigas Avenue, Mandaluyong City,

ident, Atty. Mariza Santos-Tan, at G/F State Financing Center Bldg., Ortigas Av- thereat. enue, Mandaluyong City, and that the company responded to notices sent Records likewise show that the notices were addressed to the company's Pres-

It bears stressing that reporting companies are strictly mandated to faith-fully leged failure to receive the aforesaid notices is not an excuse from compliance comply with their obligations under the SRC and its IRR. The company's al- with the law.

ficers and Appellant relative to the approval of the offer of compromise Pesos (P8,695,800.00) to One Million, Three Hundred Four Thousand, Three Hundred Seventy Pesos (P1,304,370.00). The Summary of Pro- from Eight Million, Six Hundred Ninety-Five Thousand, Eight Hundred ceedings/Conference states, that: not reflect any so-called "agreement in principle" between the hearing of As to the last issue, The Summary of Proceedings/Conference3 does

3 Annex "G", Reply Memorandum.

In re: Royale Tagaytay Country Club, Inc SEC En Banc Case No. 01-1 1-227 Decision

Page 4 of 4

offer acceptable to this Commission is 15% of the total assessed monetary [Atty. Norman M. Verzosa] was also informed that the minimum settlement penalty. He promised to take up the matter with their Board of Directors.

cedure, and not assured that such minimum amount shall be approved by settlement offer prescribed by Section 10-10(b) of the 2006 Rules of Pro EPD, contrary to its claim. Hence, it appears that Appellant was merely informed of the minimum

regarding requests for reduction of penalty. SEC Office Order No. 183, Se In the course of the appeal, the Commission has formalized the rules

ries of 2014 provides for criteria for reduction of penalties that may be applied by the Corporate Governance and Finance Department.

uated as a Request for Reduction of Penalty dorsed to the Corporate Governance and Finance Department to be eval- nied. The Settlement Offer within the Appeal of the Appellant is en- WHEREFORE, premises considered, the instant Appeal is hereby de-

SO ORDERED

Pasay City, Philippines, 3 November 2017.

TERESITA J. HERBOSA

Chairperson

Tataie hoan ANTONIETA F. IBE Commissioner 0 EPHYRO LUIS B.AMATONG Commissioner NuM

3 yAMES G/VITERBO e EMILIG AQUINO

Commissioner Comn fioner