TEACHER – Constitutional Law

SECURITIES AND EXCHANGE COMMISSION, PETITIONER, VS. INTERPORT RESOURCES CORPORATION,

MANUEL S. RECTO, RENE S. VILLARICA, PELAGIO RICALDE, ANTONIO REINA, FRANCISCO ANONUEVO,
JOSEPH SY AND SANTIAGO TANCHAN, JR., RESPONDENTS.

G.R. No. 135808, October 6, 2008

PONENTE: CHICO-NAZARIO, J.::

TOPIC: General Rule: Non-Delegation of Legislative Power; Exception:

1. Delegation to local governments and administrative bodies

2. Grant of Quasi-Legislative Power; In general: LGU and Administrative Bodies

A petition for certiorari was filed by Security and Exchange Commission (SEC) Petitioner,
assailing the decision made by Court of Appeals from preventing them from taking any action
against the Respondent Interport Resources Corporation (IRC) and members of its board of
directors. With respect to Section 8 ,30, and 36 of the Revised Securities Act.
FACTS
On August 6, Respondent (IRC) entered into a MOA with Ganda Holdings Berhad (GHB)
in which it acquired 100% of capital stock of Ganda Energy Holding Inc. (GEHI) which would:
1. own and operate a 102 Megawatt gas turbine power-generating barge.
2. GEHI would assume a 5yr power purchase contract with the National Power Corporation
3. IRC would issue 55% of capital stock to GHB in exchange for acquiring 67% of Philippine
Racing Club, Inc. (PRCI) which owns real estate property in Makati.
On August 8, IRC alleged that it had issued a press release of the agreement to acquire
PRCI through facsimile transmissions (FAX) to the Philippine Stock Exchange and the SEC but the
SEC Fax machine could not receive said document thus was mailed and received the following
day.
SEC claims petitioner failed to make this information public on time and that Petitions
traded heavily using GHB stocks using this insider information. This prompted the SEC Chairman
to require Petition to submit to the SEC a copy of its alleged MOA with GHB and to appear
before the BROKERS AND EXCHANGE DEPARTMENT (BED) of the SEC to explain its failure to
disclose such information as required by the Rules on Disclosure of Material Facts On the 16th,
complied with the directive and appeared to explain its failure to disclose information.
On the August 19, SEC issued and order declaring Petitioner to be in violation of the
following:
 1. violation of Rules on Disclosure of Material Facts. In relation to the Old Securities Act of
1936
2. Section 30 in relation to section 36 of the Revised Securities Act
Respondents filed an omnibus motion which was later superseded by an amended omnibus
motion (Sec.8, Rule15; Rules of Court – Motion day.) claiming SEC did not have authority to
investigate the matter under P.D 1758. This was conferred by the Prosecution and Enforcement
Department of the SEC. they also added that SEC violated their rights to DUE PROCESS, and
lastly sought to have their cases tried jointly.
Respondents also filed a Motion for Continuance of Proceedings on 24 October 1994,
wherein they moved for discontinuance of the investigations and the proceedings before the
SEC until the undue publicity had abated and the investigating officials had become reasonably
free from... prejudice and public pressure.
No formal hearings were conducted in connection with the motions, but on 25 January
1995, the SEC issued an Omnibus Order which thus disposed of the same in this wise:
WHEREFORE, premised on the foregoing considerations, the Commission resolves and
hereby rules:
1. To create a special investigating panel to hear and decide the instant case in accordance
with the Rules of Practice and Procedure Before PED
2. To Recall show orders requiring respondents cause why no administrative, civil or
criminal sanctions should be imposed on them.
3. to deny the Motion for Continuance for lack of merit.

Under Section 45 of the Revised Securities Act, which is entitled Investigations, Injunctions
and Prosecution of Offenses, the Securities Exchange Commission (SEC) has the authority to
"make such investigations as it deems necessary to determine whether any person has...
violated or is about to violate any provision of this Act” After a finding that a person has
violated the Revised Securities Act, the SEC may refer the case to the DOJ for preliminary
investigation and prosecution
ISSUE/S
The Court of Appeals promulgated a Decision on 20 August 1998. It determined that
there were no implementing rules and regulations regarding disclosure, insider trading, or any
of the provisions of the Revised Securities Acts which the respondents… allegedly violated. The
Court of Appeals likewise noted that it found no statutory authority for the SEC to initiate and
file any suit for civil liability under Sections 8, 30 and 36 of the Revised Securities Act. Thus, it
ruled that no civil, criminal or… administrative proceedings may possibly be held against the
respondents without violating their rights to due process and equal protection. It further
resolved that absent any implementing rules, the SEC cannot be allowed to quash the assailed
Omnibus Orders for the sole… purpose of re-filing the same case against the respondents.
The court of appeals erred when it ruled that there is no statutory authority whatsoever for
petitioner SEC to initiate and file any suit be they civil, criminal or administrative against
respondent corporation and its directors with respect to section 30 (insider's duty to
Disclose information when trading) and 36 (directors officers and principal stockholders) of the
revised securities act; and the court of appeals erred when it ruled that rules of practice and
prosecution before the PED and the Securities Investigation and Clearing Department (SICD)
rules of procedure on administrative actions/proceedings are invalid as they fail to comply with
the statutory requirements contained in the administrative code of 1987.
RULING
YES, respondents filed a Supplemental Motion wherein they prayed for the issuance of a writ of
preliminary injunction enjoining the SEC and its agents from investigating and proceeding with
the hearing of the case against respondents herein.
the Court of Appeals granted their motion and issued a writ of preliminary injunction, which
effectively enjoined the SEC from filing any criminal, civil or administrative case against the
respondents herein.
It is well... established that administrative authorities have the power to promulgate
rules and regulations to implement a given statute and to effectuate its policies, provided such
rules and regulations conform to the terms and standards prescribed by the statute as well as
purport to... carry into effect its general policies. Nevertheless, it is undisputable that the rules
and regulations cannot assert for themselves a more extensive prerogative or deviate from the
mandate of the statute.
Moreover, where the statute contains... sufficient standards and an unmistakable intent,
as in the case of Sections 30 and 36 of the Revised Securities Act, there should be no
impediment to its implementation.