SEC v.
Interport
Facts:
Appeal from CA enjoining SEC from filing action against IRC regarding
S8,30,36 of RSA
S8: PED exclusive authority to investigate
30 Insiders duty to disclose dealings
36 beneficial owner of 10%+ any security/equity; Director/officer of the
issuer or security obligation to submit statement regarding ownership,
changes in ownership of the securities
1994: MOA between GHB and Interport
o Acquired 100% of the entire capital stock of GEHI (operate 102
MW gas turbine power-generating barge, 97% complete at that
time)
o 5-year power purchase contract with NAPOCOR
o Interport will issue GHB 55% of its expanded capital stock (40.88B
with 488.44M par value)
o Interport will acquire 67% of entire capital stock of PRCI, where
GHB agrees to help by extending a loan to Interport
Interport: weve faxed our press release announcing agreements with GHB
to PSE and SEC Aug 8 1994, but since they didnt receive it, they made
interport send it again, so they did the following day.
SEC: got reports that Interport DID NOT DISCLOSE DEALINGS with GHB on
time, and that directors heavily traded shares using MATERIAL INSIDER
INFORMATION
SEC Chairman: Directive
o Interport, submit copy of MOA with GHB
o Directors to be present in HEARING before Brokers and Exchange
Dept. to explain failure to disclose info as required by Rules on
Disclosure of Material Facts Interport complies!
SEC Chairman: Order Interport violated Rules on Disclosure of Material
Facts when it failed to disclose negotiations in time, and also Sec 30 and 36
by the directors
Respondents: Omnibus Motion Sec has NO AUTHORITY to investigate
because only PED can(s8 PD902A), and they violated due process when
they ordered us to show cause why no sanction should be imposed,
shifting the burden to them
Motion for Continuance of Proceedings discontinuance of investigations
until undue publicity had abated and the investigating officials become
free from prejudice and public pressure
No more formal hearings but SEC manifested that:
o There would be an investigative panel before PED (Atty Abugan,
Devera, and Aquino) to resolve hearings
o Recall the show cause orders to show why no sanctions should be
imposed
o Deny motion for continuance for lack of merit
Partial Reconsideration creation of investigating panel?? = denied
Issuance of WPI = GRANTED SEC cant file case against them
Motion for Leave to Quash SEC Omnibus Orders so PED can investigate
accdg to SEC Rules and PD902A
CA: Theres no IRR regarding disclosure, insider trading, or any provisions
of RSA
o SEC has no authority to sue them under S8,30,36 RSA
o No proceedings may be held against respondents without
violating rights to due process and equal protection
o Without IRR SEC cant quash omnibus orders
While pending, RA8799 Securities Regulation Code repealed PD902 so no
more PED (s76)
Issues/Held:
1. WN there was need to enact implementing rules for SEC to exercise
authority and hold respondents liable under RSA? -NO!!
In the absence of const/statutory infirmity (declaration of
invalidity/unconstitutionality) concerning S30,36, they are legal and
binding for all intents and purposes
Absence of implementing rules for S30,36 cannot invalidate provisions of
law where reasonable construction that will support the law may be given
Statute contains sufficient standards and unmistakable intent, there should
be no impediment to its implementation
*They claim that the terms under 30 are vague (but theyre not) and need further
definition
*Valid standards: simplicity and dignity, public interest, interests of law and
order
2. Right to cross-examine before PED? NO!! its not absolute
PED rules of practice = INVALID! Bc s8RuleV failed to provide right to cross-
examination
 o S5 submission of documents (position papers, supporting docs,
affidavits of witnesses)
o S6 Determination of necessity of hearing (pertinent facts,
documentary evidence)
o S7 Disposition (inform parties reasons if no more hearing and
ask for acknowledgment of information by signing minutes of
hearing to be submitted)
PED had adjudicative functions s8 (investigative powers)
o Do not have requisite standing to assail validity of rules on
adjudication
o Theyre only being investigated because they failed to disclose
negotiations and transactions

3. SRC repeal 8,30,36 RSA? NO!

They were reenacted! Theyre still in the new law, but just in different
provisions (s8,12,26,27,23)
SRC absolutely repealed the RSA. Generally deprives court authority to
penalize person charged with violation of old law UNLESS repealing law
PUNISHES THE ACT PREVIOUSLY PENALIZED

Concurring Opinion (Tinga jr)

Public interest in securities market
Disclosure (make public large amount of financial info to actual and
potential investors) and financial activity regulation (rules on and off stock
exchange)
Investigation by SEC tolled the running of period of prescription
Filing complaint interrupts period of prescription
Initiation of investigative proceedings against respondents halted the
injunctive orders issued by CA interrupts the period of prescription of SRC

Dissenting Opinion (Carpio) = dismissed petition

Ruling violates S2 Act 3326 because prescription should begin from day of
commission or from the discovery and the institution of judicial
proceedings for its investigation and punishment
Shall be halted on the date the case was actually filed in court and NOT any
date before that
Only institution of judicial proceedings can interrupt
SEC: Only admin investigations and fine imposition and sanctions
All shall be referred to DOJ for preliminary investigation and prosecution