Ruling reverses court in BW Resources scandal

MANILA, Philippines - The Philippines’ appellate court overturned a decision which threw out criminal charges for suspects in a stock-manipulation scandal that prompted foreign investors to flee the local bourse. The Pasig City Regional Trial Court Branch 268 erred in dismissing the charges, the Court of Appeals Second Division said in a 14-page ruling. The same decision said that criminal cases against respondents involving then gaming company Best World Resources Corp. remained valid despite a new law amending the Revised Securities Act (RSA). "...(I)t is our considered view that the August 15, 2007 Order and the November 19, 2007 Order of the Regional Trial Court, Branch 268, Pasig City, were issued with grave abuse of discretion and should be annulled and set aside," the decision written by Associate Justice Jose Catral Mendoza said. Associate Justices Portia Alino-Hormachuelos and Ramon Bato Jr. concurred with the ruling. Consequently, the court ordered to reinstate the four criminal charges against Filipino-Chinese businessman Dante Tan and other respondents Federico Galang, Eduardo Lim Jr., Hermogenes Laddaran, Raul de Castro, Emmanuel Eduardo Co, Mario Juan, and Jimmy Juan. The charges indicated that they violated the securities law. The CA also found no merit on the arguments by Tan and others that since Congress enacted the Securities Regulation Code (SRC), which repealed the RSA, they could no longer be prosecuted regarding the 1999 case, which also reportedly involved then President Joseph Estrada. "In any case, there is no alteration of the basic rules on evidence since the degree of proof to convict an accused would still be proof beyond reasonable doubt. There is no showing that the SRC did away with the required quantum of evidence," the decision added. Violations of both the RSA and the SRC calls for a fine or imprisonment of not less than seven years nor more than 21 years or both in the discretion of the court, the court noted. "There is, however, no specific provision in the SRC which directs that the increased penalties were to be applied retroactively. In the absence thereof, it is not an ex post facto law," the CA decision said. “Where there is no indication that the increased penalties provided therein were intended to operate retroactively, there is no ex post facto law (unconstitutional for being a retroactive law)." Next: Tan failed to disclose ownership in BW Resources Tan failed to disclose ownership in BW Resources Tan is reportedly hiding in Australia. Tan violated the securities law for failing to report to regulators the extent of his ownership of BW Resources, prosecutors allege. Under the law, anyone holding more than 10 percent of a listed company must disclose his or her ownership extent to the Securities and Exchange Commission and the Philippine Stock Exchange. In 1999, the stock market was suffering from a bearish trend, but share prices of BW Resources were climbing and even outperformed market heavyweight Philippine Long Distance Telephone Co. as the most traded stock at the time. After the exposure of the BW Resources scandal, foreign investors shunned the local market and that recovery of the tarnished image of the PSE took a while. BW then changed its name to Fairmont Holdings Inc. in 2000 and has recently changed its name again to Suntrust Home Developers Inc. to reflect a change in the company's line of business from a holdings firm to real estate development. The BW case has exposed the vulnerability of the local bourse, prompting the PSE management to put up the market regulation division to monitor trading participants and listed companies through a surveillance system. It also created the market integrity board to oversee compliance with the rules governing market transactions. The PSE has also recently completed the acquisition of a hi-tech surveillance system called the advanced warning and control system that will be able to detect suspicious trading activities. - GMANews.TV