SEC CDO Case No. 08-17-045 IN THE MATTER OF CAPITOL HILLS GOLF AND COUNTRY CLUB, INC. ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT (EIPD), Movant.

Securities and Exchange Commission Republic of the Philippines Commission En Banc Department of Finance

IN THE MATTER OF CAPITOL CLUB, INC. HILLS GOLF AND COUNTRY SEC CDO Case No. 08-17-045

(EIPD), ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT Movant.

DECISION

the latter is continuing its business despite the pendency of its ongoing liquidation proceedings. dated 29 August 2017 filed by the EIPD on 31 August 2017 against Capitol Hills Golf and Country Club, Inc. ("CAPITOL HILLS) on the ground that This resolves the Urgent motion for Issuance of Cease and Desist Order

THE PARTIES

appropriate enforcement action against them for infractions of the laws, rules Securities and Exchange Commission ("Commission") tasked to ensure the primary authority to conduct investigations and administrative actions involving, among others, the selling, offering or transacting unregistered securities by entities without a secondary license, as well as to initiate and regulations implemented by the Commission. The same is vested with compliance by all market participants, issuers and individuals, and take Movant Appellee EIPD is one of the operating departments of the

("CRMD"). Finally, the EIPD is tasked to investigate, motu proprio or upon original authority of the Company Registration and Monitoring Department petitions for revocation of corporate registration except those under the a verified complaint or referral, violations of laws, rules and regulations

and Desist Orders ("CDO") by the latter. implemented by the Commission, as well as to initiate the issuance of a Cease

Respondent CAPITOL HILLS GOLF AND COUNTRY CLUB INC. (CAPITOL HILLS) is a domestic corporation duly organized and

of operating and maintaining a golf course and with license to offer and sell securities to the public. registered under the laws of the Philippines primarily engaged in the business

In the matter of: Capitol Hills Golf Country Club SEC CDO Case No. 08-17-045 Page 2 of 5

STATEMENT OF FACTS

expiration of its registration, respondent Capitol Hills submitted its 2011 Hence, it only has a corporate life until 25 January 2010. Despite the General Information Sheet (GIS) Development Corporation, registered with the Securities and Exchange Commission on 25 January 1960 with Company Registration No. 000016388. Respondent Capitol Hills, formerly known as International Sports

Moreover, the article stated that the GG&A Club Shares website complaint for liquidation filed by one its stockholders before the Regional Trial Court of Quezon City. Agenda" published at the Philippine Star on 15 April 20152 about the continuous operation of Capitol Hills despite the expiration of its franchise. (www.ggaclubshares.com.ph) shows that it is still offering its shares to the public. Subsequently, the EIPD received another Memorandum3 from the Corporate Governance and Finance Department (CGFD) endorsing the from the Office of the Chairman pertaining to a news article entitled "Hidden The EIPD narrates in its Urgent Motion that it received a Memorandum

presented a Certification' for said matter. Filings and Records Division dated 27 January 20144 that Capitol Hills did have nothing to do with the offer of their shares in GG&A website and even not extend its corporate term. Thus, the EIPD sent a Show Cause Order' on club shares to the public despite the expiration of its primary and secondary 19 May 2015 to Capitol Hills and its officers to answer the alleged selling of license. In their letter-reply dated 9 June 20153, Capitol Hills averred that they Also, the EIPD was able to secure a Certification from the Corporate

Capitol Hills stated that it is in the process of disposing its assets. They even complaint filed one of its stockholders before the Regional Trial Court of presented a copy of their Omnibus Motion dated 21 May 2015 to assail the Quezon City. During the conference of the parties on 15 July 2015, the counsels of

Id., Annex "E". I Urgent Motion, Annex "C" 2 Id.., Annex "D" 4 Id., Annex "F Id., Annex "H" 7 Id.., Annex "I" Id., Annex "J". 5 Id., Annex G

In the matter of: Capitol Hills Golf Country Club SEC CDO Case No. 08-17-045 Page 3 of 5

and that the BPLO issued a Cease and Desist Order dated 11 May 201712 the team was handed a price list' and a memorandum10 for said matter.1i Licensing Office (BPLO) of Quezon City and found that Capitol Hills attempted to apply for a business permit despite the expiration of its franchise to acquire the membership of another in order to avail of the same. Further. Afterwards, the investigating team proceeded to the Business Permit against Capitol Hills. business address of Capitol Hills at Old Balara, Quezon City to conduct a surveillance operation. Thus, they were able to confirm that Capitol Hills was still offering their facilities to the public at a discounted rate and that one has On 7 July 2016, the investigating team of the EIPD proceeded to the

it to cease and desist from the same. Regional Trial Court of Quezon City dated 16 August 2017, ruling the pendency of the same, the Office of the General Counsel called for a clarificatory conference on 20 September 2017. During said conference, the EIPD manifested that it will file a supplemental motion introducing the additional evidence to support their Urgent Motion. Finally on 13 October 2017, the EIPD filed a Compliance, attaching therein the Order of Branch 90 illegality of the continuous operation of Capitol Hills's business and directing Hence, this instant Urgent Motion filed by the EIPD. During the

ISSUES:

jurisdiction to issue a Cease and Desist Order against Capitol Hills despite the pendency of liquidation proceedings before the Regional Trial Court. Whether or not the Securities and Exchange Commission has

DISCUSSION

the Issuance of a Cease and Desist Order against Capitol Hills due to lack of This Commission finds for the denial of the EIPD's Urgent Motion for

jurisdiction.

for Insolvent Debtors ", the venue and jurisdiction of Petition for Involuntary the "Financial Liquidation and Suspension of Payments Rules of Procedure Under Sec. 4, Rule 2 of A.M. No. 15-04-06-SC, otherwise known as

1o Id., Annex "M" I1 Id., Annex "J" ' Urgent Motion, Annex "L". I2 Id, Annex "N"

In the matter of: Capitol Hills Golf Country Club SEC CDO Case No. 08-17-045 Page 4 of 5

jurisdiction to regulate the transactions of said juridical debtor or corporation. debtor or corporation is not yet being liquidated, it is the SEC who has Liquidation is with the Regional Trial Court of the city or municipality where the head office of the juridical debtor is located. However, if the juridical

dated 16 August 2017, the RTC found the continuous operation of Capitol Pertinent portion of said Order reads: pending liquidation proceedings of respondent Capitol Hills before Branch 90 regarding respondent corporation are within the jurisdiction of said Court and outside of this Commission. In fact, based on the Omnibus Order of the RTC Hills illegal and thus, ordered the latter to cease-and-desist from the same. of the Regional Trial Court (RTC) of Quezon City. As such, all incidents Here, the evidence presented by the EIPD shows that there is already a

as provided under Section 133 of the Corporation Code.. memorandum, a dissolved corporation has no more legal capacity to transact business except to liquidate and to wind up its affairs should cease and desist from further continuing its business for against the properties of the CHGCCI. CHGCCI cannot anymore sell shares because as lengthily discussed in the above-quoted submissions/arguments of Aliling and Madrid which this Court finds to be impressed with merit, this Court is of the considered and humble view that CHGCCI through its Board of Liquidators which it was established and from further contracting loans "Considering the relevant foregoing and above-cited

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of the CHGCCI, and, from selling shares... Inc. (CHGCCI) is DIRECTED to cease and desist from further is, from operating and maintaining the golf course, from further contracting loans and/or from further mortgaging the properties The Board of Liquidators of Capitol Hills Golf and Country Club. continuing the club's business for which it was established, that

respondent corporation considering that an involuntary liquidation proceedings involving the latter is already pending before the Regional Tria Commission to rule upon this instant case since jurisdiction over the liquidation and the other incidents of respondent Capitol Hills has been Court of Quezon City. Further, there is no longer any need for this assumed by the RTC. In view thereof, this Commission no longer has any jurisdiction over

In the matter of: Capitol Hills Golf Country Club SEC CDO Case No. 08-17-045 Page 5 of 5

jurisdiction. of a Cease-and-Desist Order is hereby DENIED on the ground of lack of WHEREFORE, premises considered, the Urgent Motion for Issuance

SO ORDERED.

Pasay City, Philippines; 16 July, 2019

EMILI6 B. AOUINO wM

airperson

Qnineeadeo-d 1W ANTONIETA F. IBE Commissioner EPHYRO LUIS B. AMATONG Commissioner

JAVEY PAUL D. FRANCISCO Commissioner KELVIN LESTER K. LEE Commissioner