149. SEC VS.

INTERPORT, 567 SCRA 354

TOPIC: EXCEPTION TO THE GENERAL RULE ON NON-DELAGATION OF LEGISLATIVE
POWERS.
FACTS: The Board of Directors of IRC approved a Memorandum of Agreement with GHB (Ganda
Holdings Berhad). Under said memorandum of agreement, IRC acquired 100% of the entire capital
stock of GEHI (Ganda Energy Holdings Inc.) which would own and operate a 102 megawatt gas
turbine power generating barge. In exchange, IRC will issue to GHB 55% of the expanded capital
stock of IRC. On the side, IRC would acquire 67% of the entire capital of PRCI (Philippine Racing
Club).
It is alleged herein that a press release announcing the approval of the agreement was sent to the
Philippine Stock Exchange through facsimile and the SEC, but the facsimile machine of the SEC could
not receive it. However, the SEC received reports that the IRC failed to make timely public
disclosures of its negotiations with GHB and that some of its directors, heavily traded IRC
shares utilizing this material insider information. For this reason, the SEC required the directors to
appear before the SEC to explain the alleged failure to disclose material information as required by the
Rules on Disclosure of Material Facts. Unsatisfied with the explanation, the SEC issued an order
finding that the IRC violated the Rules in connection with the then Old Securities Act when it
failed to make timely disclosures of its negotiations with GHB. In addition, the SEC found that
the directors of IRC entered into transactions involving IRC shares in violation of the Revised
Securities Act.
Respondents, however, questioned the authority of the SEC to investigate on said matter since
according to PD 902-A, jurisdiction upon the matter was conferred upon the PED (Prosecution and
Enforcement Department) of the SEC however, this issue is already moot since pending the
disposition of the case, the Securities Regulation Code was passed thereby effectively repealing PD
902-A and abolishing the PED. They also contended that their right to due process was violated when
the SEC required them to appear before the SEC to show cause why sanctions should not be imposed
upon them since such requirement shifted the burden of proof to respondents.
The case reached the CA and said court ruled in favor of the respondents and effectively
enjoined the SEC from filing any criminal, civil or administrative cases against respondents. In its
resolution, the CA stated that since there are no rules and regulations implementing the rules
regarding DISCLOSURE, INSIDER TRADING OR ANY OF THE PROVISIONS OF THE REVISED
SECURITIES ACT, the SEC has no statutory authority to file any suit against respondents. The CA,
therefore, prohibited the SEC from taking cognizance or initiating any action against the respondents
for the alleged violations of the Revised Securities Act.
ISSUE:Whether or not the SEC has authority to file suit against respondents for violations of the RSA.
HELD:The Revised Securities Act does not require the enactment of implementing rules to make
it binding and effective. The provisions of the RSA are sufficiently clear and complete by
themselves. The requirements are specifically set out and the acts which are enjoined are
determinable. To rule that absence of implementing rules can render ineffective an act of Congress
would empower administrative bodies to defeat the legislative will by delaying the implementing rules.
Where the statute contains sufficient standards and an unmistakable intent (as in this case, the RSA)
there should be no impediment as to its implementation.