Remember Joseph Calata? A Court Just Ordered Him and a Colleague to Pay Fines Worth P8 Million
Joseph Calata, the once high-flying entrepreneur who was a regular in the business and society pages of newspapers and magazines, has been ordered to pay a fine worth P4 million after being found guilty of two counts of violation of Section 24(d) of Republic Act No. 8799, or the Securities Regulation Code (SRC).
Calata, the chairman, president, and chief executive officer of the delisted Calata Corporation, was found guilty of making misleading and exaggerated statements about its supposed Mactan Leisure City project, which induced the public to buy the company’s shares in 2016.
Meanwhile, Calata Corporation’s corporate secretary, compliance officer, and corporate information officer Jose Marie Fabella was likewise found guilty of two counts of violation of the same law.
The decision was promulgated on May 28, 2024 by Branch 148 of the Makati City Regional Trial Court.
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Both Calata and Fabella were sentenced to pay fines amounting to P4 million each, or to serve time in prison should they fail to pay the fines on account of insolvency.
A separate case against Michael I. Foxman, CEO of Sino-America Gaming Investment Group LLC, which was Calata Corporation’s partner for the Mactan Leisure City project, has been archived. Foxman was charged with the same violations, but remains at large.
According to a news release from the SEC, “Section 24(d) of the SRC penalizes anyone who directly or indirectly makes false or misleading statements with respect to any material fact, which he knew or had reasonable ground to believe was so false or misleading, for the purpose of inducing investors to buy a security listed or traded on an exchange.”
What Calata did
The SEC first filed charges against Calata Corporation’s top officials in 2017 for allegedly making misleading statements in relation to its planned P65 billion integrated resort and gaming project in Mactan, Cebu that was to be called Mactan Leisure City. The regulatory body started monitoring the market activities of Calata Corporation amid a sudden surge in the daily trading volume of the company’s shares on the Philippine Stock Exchange (PSE) on August 23, 2016.
According to the SEC, Fabella, with the consent and authority of Calata, was found to have made misleading statements in the company’s disclosures to the PSE about its partnership with Sino-America Gaming and Macau Resources Group Limited for the development of Mactan Leisure City.
In the disclosure, Calata Corporation stated that the Mactan Leisure City was expected to start operations in 2020, was “poised to become a game changer in the region’s family leisure tourism and gaming offering,” and was expected to generate a gross annual revenue of P55.74 billion.
Soon after the disclosure, trading volume in Calata shares surged by 2,455 percent on the same day the subject disclosures were made, followed by a 196.41 percent jump in the next trading day.
But PAGCOR later issued a statement saying the project, which was intended to be built on a 14-hectare property on Mactan Island, failed to meet the minimum 50 hectares of land required of applications for new casino licenses. PAGCOR also said that it could not issue a new license to the project because Waterfront Hotel and Casino is already operating in Mactan.
“The August 23, 2016 disclosure contained unfounded promises and exaggerations,” the trial court held, adding that such statements “are not clearly referred to as mere forecasts and are couched and exaggerated to such extent that the public may be misled in thinking that the project would start its operations in 2020, generate a certain amount of revenue, and entail job opportunities.”
The SEC, quoting the trial court decision, said that Calata Corp’s made the disclosure despite the fact that no application for a license had been made to the Philippine Amusement and Gaming Corporation (PAGCOR) for the project.
“Calata Corporation did not disclose, even in general terms, prior correspondence between accused Foxman and PAGCOR, seemingly implying an unlikelihood that the ‘Mactan Leisure City’ project would materialize as projected,” the trial court held.
The PSE then asked Calata Corp. to clarify the company’s partnership agreements for the Mactan Leisure City project. According to the trial court, the subsequent disclosure the company made on August 26, 2026 was likewise “misleading, as it contained no statement as to prior correspondence with PAGCOR and whether or not an application for an integrated resort casino permit was already submitted.”
The trial court further said that Calata and Fabella knew that the statements in the disclosures were misleading. “Thus, intent to induce the trading of Calata Corporation shares may be inferred from the fact that they were disclosed to the public.”
Eight shareholders of Calata Corporation were also indicted for engaging in trading activities that artificially inflated the price of the company’s shares and consequently induced the public to buy them.
Calata Corp. has since been delisted from the SEC and Calata himself banned for life from participating in the bourse.
The Bureau of Internal Revenue also slapped Calata with a P89 million tax evasion case in 2022, but the case was eventually dismissed “for lack of probable cause and due to insufficiency of evidence.
