SEC CDO Case No. 10-11-247 IN THE MATTER OF MEDICAL DOCTORS, INC. ("MDI")/MAKATI MEDICAL CENTER (2009 CERTIFICATION ON EXTENT OF COMPLIANCE WITH MANUAL ON CORPORATE GOVERNANCE)

Securities and Exchange Commission Republic of the Philippines Department of Finance

IN THE MATTER OF MEDICAL

MAKATI DOCTORS, MEDICAL INC. CENTER ("MDI?) SEC En Banc Case No. 10-11-247 (2009 CERTIFICATION ON EXTENT OF COMPLIANCE WITH MANUAL ON CORPORATE GOVERNANCE)

DECISION

This resolves the Notice of Appeal and Memorandum of Appeal dated

Medical Center ("MDI"), through counsel, on October 18, 2011 to assail the 17 October 2011 filed by Petitioner-Appellants Medical Doctors, Inc./Makati

Letter-Resolution of the Corporation Finance Department (now known as the "Corporation Governance and Finance Department or "CGFD").

THE PARTIES

Iaws of the Philippines with office address at No. 2 Amorsolo Street, Makati City, primarily engaged in the hospital business. Appellant MDI is a corporation duly organized and existing under the

STATEMENT OF THE CASE

the CFGD via registered mail, attaching therein the original copy of the registry receipt and the Corporate Governance Self-Rating Form' (CG-SRF). Subsequently, MDI received a letter2 from the CGFD on 2 July 2010 stating that the latter has yet to file its 2009 Certification. Thus, MDI was ordered to Certification in compliance with the Manual on Corporate Governance before On 29 January 2010, appellant through counsel, filed the required 2009

submit the same within five (5) days from actual receipt of said letter.

6 September 20105 from the CGFD, informing MDI that the latter only submitted the required certification. Again, MDI received4 another letter dated MDI replied through a letter dated 27 July 20103 that it has already

2 Id., Annex C of Annex "A-Appeal" 3 Id., Annex D of Annex "A-Appeal" 4 Received on September 20, 2010. 5 Memorandum of Appeal., Annex E of Annex "A-Appeal". Memorandum of Appeal, Annex B of Annex "A-Appeal".

IN THE MATTER OF MEDICAL DOCTORS, INC SEC En Banc Case No. 10-11-247 Page 2 of 4

submitted the CG-SRF and not the required 2009 Certification, which is SEC Form MCG-2002, ordering the latter to submit the 2009 Certification within five (5) days from receipt thereof. Thus, on 24 September 2010, MDI submitted said Certification in the manner prescribed by the CGFD as per its last letter.

In a letter dated 20 July 20113, the CGFD informed MDI of its non- compliance with the Revised Code of Corporate Governance for its failure to timely file the 2009 Certification. Hence, MDI was assessed the monetary penalty of Two Hundred Eighty-Six Thousand Pesos (Php 286,000.00). MDI asked for a reconsideration of the same with the CGFD through a letter dated 18 August 20117 alleging that MDI exercised diligence in filing the 2009 Certification and that it even submitted the CG-SRF despite not being required to do so under the law. The same was denied by the CGFD through another letter dated 16 September 20118

Hence, this instant Notice of Appeal and Memorandum of Appeal. The CGFD failed to file its Reply-Memorandum despite being ordered to do so

ISSUE/S

Upon perusal of said Notice of Appeal and Memorandum of Appeal. this Commission finds that the sole issue raised by appellant is whether or not MDI violated the rule on the Revised Code of Corporate Governance with respect to the submission of a Certification by Compliance Officers of a Corporation.

DISCUSSION

This Commission finds the Notice of Appeal and Memorandum of Appeal bereft of merit.

Governance ("RCCG") provides that: Article 2, subparagraph M(iii) of the Revised Code of Corporate

directly to the Chair of the Board. He shall perform the following duties: The Board shall appoint a Compliance Officer who shall report

XXX

Memorandum of Appeal, Annex F of Annex "A-Appeal". 7 Id., Annex A of Annex "A-Appeal". 8 Id., Annex "B-Appeal"

IN THE MATTER OF MEDICAL DOCTORS, INC SEC En Banc Case No. 10-11-247 Page 3 of 4

of the corporation's compliance with this Code for the completed year (Emphasis supplied) (iii) Issue a certification every January 30th of the year on the extent and, if there are any deviations, explain the reason for such deviation.

may require them to accomplish annually a scorecard on the scope, nature Moreover, Article 10 of the RCCG also provides that the Commission

and extent of the actions they have taken to meet the objectives of this Code to monitor the compliance of corporations covered under the Code. Otherwise. the Commission may impose a fine of not more than Two Hundred Thousand

prejudice to other sanctions that the Commission may be authorized to impose year that a covered corporation violates the provisions of this Code, without under the law?. Pesos (P200,000) shall, after due notice and hearing, be imposed for every

The RCCG is clear when it stated the Compliance Officer of a corporation shall issue a CERTIFICATION every January 3Oth of the year. Here, MDI consistently alleges that it already submitted said Certification on 29 January 2010. However, appellant failed to observe that what it submitted on said date was the CG-SRF, which was in the nature of a scorecard and not a Certification. It was only 24 September 2010 when MDI submitted the 2009

imposition of a fine against appellant MDI. Certification required under the RCCG despite being given many extensions by appellee. This is already a clear violation of the RCCG and warrants the

its reasoning that said documents cannot be served personally due to time Certification required by the RCCG, it cannot pass the blame to the Post inefficiency of the Postal Service, as stated in its letters and Memorandum of constraint. Office that the SEC belatedly received the same. MDI, knowing of the Appeal, could have served said documents personally to the SEC considering that it still had until 30 January 2010 to do the same. This fact further belies Assuming that what MDI submitted on 29 January 2010 was the proper

deserves scant consideration. This is because the RCCG empowers the SEC to submit CG-SRF Form since it is not a publicly-listed country, the same to require corporations to submit a scorecard in order to meet the objectives of the Code. Finally and with respect to appellant's allegation that it is not required

Revised Code of Corporate Governance, Article I 1.

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With these circumstances at hand, this Commission finds no cogent

comply with the rules despite being given several notices and opportunities to RCCG expressly provides that the Commission may only impose a fine of not reason to relax the rules in favor of appellant considering that it failed to submit the subject Certification by the CGFD through its letters. However, exceeding Two Hundred Thousand Pesos (Php 200,000.00) in case of violation of the provisions of the RCCG this Commission finds the penalty imposed by the CGFD excessive since the

WHEREFORE, premises considered, the Notice of Appeal and Memorandum of Appeal filed by appellants is hereby DISMISSED for lack

violating the provisions of the Revised Code of Corporate Governance. of merit. Appellant MDI is hereby ordered to PAY the amount of TWO HUNDRED THOUSAND PESOS (PHP 200,000.00) as penalty for

and Finance Department for their information and appropriate action. Let a copy of this Decision be furnished to the Corporation Governance

SO ORDERED.

Pasay City, Philippines; 9 July 2019.

EM B. AOUINO

Chairperson

dTMXa a& .Lhe ANTONIETA F. IBE Commissioner EPHYRO LUIS B. AMATONG* Commissioner

JAVEY PAUL D. FRANCISCO Commissioner KELVINLESTER K.LEE Commissioner

*Commissioner on leave.