A local court has upheld the market manipulation convictions of two former top officers of delisted Calata Corp., linked to a misleading 2016 disclosure about a casino project.
The Makati Regional Trial Court Branch 148, in an order promulgated on May 19, denied the motion for reconsideration filed by Joseph Calata, former chairman and Jose Marie Fabella, former corporate secretary. Both were found guilty of market manipulation in 2024.
The court’s May 31, 2024 decision sentenced both officers to pay fines of P4 million each, or serve prison time if they are unable to pay due to insolvency.
Section 24(d) of the Securities Regulation Code (SRC) prohibits making false or misleading statements on any material known or reasonably believed to be false or misleading, for the purpose of inducing investors to buy a security listed or traded on an exchange.
The court rejected the officers’ claim that they did not violate Section 24(d) of the SRC, arguing instead they only violated Section 17, which pertains to administrative reportorial requirements and does not involve penal sanctions.
“The fact that [Calata and Fabella] may have also committed an administrative violation of Section 17 of the SRC is not a bar to prosecution under Section 24 of the [SRC],” the court held.
The court also dismissed the officers’ argument that there was insufficient evidence to prove their guilt beyond reasonable doubt, citing a lack of actual injuries or witnesses testifying to losses from the alleged misleading disclosures.
“Actual loss or harm, much less actual public harm, is not an element of the offense. Thus, the Court reiterates that the evidence presented by the prosecution proves beyond a reasonable doubt the criminal liability of the accused,” the court ruled.
The convictions stemmed from a surge in trading volume of Calata’s shares after it disclosed a partnership with Sino-America Gaming and Macau Resources Group Limited for the development of a $1.4-billion integrated resort and casino project called Mactan Leisure City.
Calata claimed the project was expected to start operations in 2020 and would generate gross annual revenues of P55.74 billion. This led to a 2,455-percent surge in its share trading volume on the same day, followed by a 196.41-percent increase on the next trading day.
The court ruled that the disclosures contained “unfounded promises and exaggerations,” as the company had not filed for a license application with the Philippine Amusement and Gaming Corp. (PAGCOR) for the project.
