Angel Tactay vs. Primelink Properties and Development Corporation

[SEC-SICD * CASE NO. 11-98-6156. September 20, 1999.] ANGEL TACTAY , petitioner , vs . PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION , respondent . D E C I S I O N On November 25, 1999 Angel Tactay filed a complaint with the Securities and Exchange Commission against Primelink Properties and Development Corporation seeking for the following: rescission of the transaction between him and respondent Primelink; nullification of the transaction, direct Respondent to return and/or refund all payments made with interest thereon at the legal rate from the time of payment; and for Respondent to pay Petitioner P100,000.00 by way of attorney's fees, P10,000.00 litigation expenses, and P100,000.00 as moral damages. cSDIHT Summons were issued to Respondent directing it to Answer within ten (10) days from receipt thereof. Despite receipt of the summons, Respondent failed to file any answer or motions. Upon Motion by Petitioner, this Hearing Panel declared Respondent in default in an Order dated February 4, 1999. Consequently Petitioner presented his case ex-parte. Petitioner Tactay in his Petition and testimony narrated that in December 1996, he became interested in a full page advertisement in national dailies by Respondent about an island resort with yacht berthing facilities dubbed as "Subic Island". During Petitioner's testimony he submitted and identified a copy of the advertisement (Exhibits "I" and "I-1"). Encouraged by the advertisement, he got in touch with respondent Primelink Inc. The Corporation sent its representative Ruth Joy Ragonjan who attested to the truth of the publication. She also explained that the firm is duly licensed by the Securities and Exchange Commission to engage in timeshare transactions. To further convince petitioner and other prospective share buyers, the respondent had a boatshow which Mr. Tactay and some of his invited friends attended. As they toured the project, they were not allowed to see the actual construction allegedly because Company policy does not allow it. Petitioner marked as evidence. pictures of the island during the tour. ( Exhibits W, W-1, W-2). The Respondent through Ruth Joy Ragonja announced that dredging would start in June 1997 and phase I would be completed by the end of 1998. Convinced by the representations of Respondent, Petitioner signed a reservation application for a membership share in the company for nine hundred twenty thousand pesos. (P920,000.00). Petitioner was suppose to pay 25% down payment or Two Hundred Thirty Thousand (P230,000.00). Upon signing, Angel Tactay paid Fifty Thousand Pesos (P50,000.00) evidenced by a provincial receipt dated April 1, 1997 (Exhibit "C"). Subsequently Petitioner made payments to the company until it reached the amount of Three Hundred Forty-four Thousand Nine Hundred Ninety-Nine Pesos and Ninety Nine centavos (P344,999.99). All these payments were evidence by provisional and official receipts. (Exhibits D, F, J, K, and L). Petitioner was made to believe that Respondent will execute a contract to sell after payment of the 25% downpayment. However, despite a continuous follow-up, Respondent failed to execute the promised contract. Due to Respondent's obstinate refusal to heed Petitioner's request, the latter sent through registered mail demand letters, (Exh. M, N, O, and P). Despite Petitioner's efforts, respondent failed to comply with Petitioner's request. Upon verification with the Securities and Exchange Commission, Petitioner learned that Primelink; Inc. was never issued any license to engage in timeshare transaction. ADEHTS The Commission through this Hearing Panel finds that the Petition is impressed with merit and the same was duly supported with documentary evidence. The fact that respondent Primelink sold timeshare despite the fact that it was not authorized to do so is a direct violation of the Revised Securities Act. The Revised Securities Act in Section 4(a) provides that: SECTION 4. (a) No Securities, except of a class exempt under any of the provisions of Section five hereof or unless sold in any transactions exempt under any of the provisions of section 6 hereof, shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold hereinafter provided. The transaction under question is not an exempt Securities as provided for in Sec. 5 of the Revised Securities Act. As a consequence of such violation, the contract entered into is considered void as provided for in Section 53 (b) to wit: b) Every contract made in violation of any provision of this Act or of any rule or regulation thereunder, and every contract, including any contract for listing a security on an exchange heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of any provision of this Act, or any rule or regulation thereunder, shall be void . . . The contract between Petitioner and Respondent as stated in the Reservation application is void since the same was entered in violation of the Revised Securities Act. Accordingly, payments made by Petitioner should be returned to him. WHEREFORE, premises considered judgment is hereby rendered in favor of petitioner. Respondent is ordered to refund all payments made in the amount of Three Hundred Thirty-four Thousand Nine Hundred Ninety-Nine Pesos and Ninety-Nine Centavos (P334,999.99) with legal interest of 6% per annum from the date of the judgment, and attorney's fees of P50,000.00 and P50,000.00 moral damages. HIT AEC SO ORDERED. (SGD.) NATIVIDAD P. QUERIJERO (SGD.) IRENE V.C. ISIDORO TORRES Hearing Officer Hearing Officer