The SEC investigated IRC and its directors for failing to disclose negotiations with GHB and for insider trading of IRC shares. The CA ruled that the SEC did not have authority to file suit since there were no rules implementing the disclosure and insider trading provisions of the Revised Securities Act. However, the Supreme Court held that the Revised Securities Act is binding and effective even without implementing rules, as the requirements are clearly set out in the Act itself. The legislative intent of the Act would be defeated if administrative bodies could render it ineffective through delays in implementing rules.
The SEC investigated IRC and its directors for failing to disclose negotiations with GHB and for insider trading of IRC shares. The CA ruled that the SEC did not have authority to file suit since there were no rules implementing the disclosure and insider trading provisions of the Revised Securities Act. However, the Supreme Court held that the Revised Securities Act is binding and effective even without implementing rules, as the requirements are clearly set out in the Act itself. The legislative intent of the Act would be defeated if administrative bodies could render it ineffective through delays in implementing rules.
The SEC investigated IRC and its directors for failing to disclose negotiations with GHB and for insider trading of IRC shares. The CA ruled that the SEC did not have authority to file suit since there were no rules implementing the disclosure and insider trading provisions of the Revised Securities Act. However, the Supreme Court held that the Revised Securities Act is binding and effective even without implementing rules, as the requirements are clearly set out in the Act itself. The legislative intent of the Act would be defeated if administrative bodies could render it ineffective through delays in implementing rules.
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.
DEVELOPMENT BANK OF THE PHILIPPINES , petitioner, vs. COURT OF APPEALS and the ESTATE OF THE LATE JUAN B. DANS, represented by CANDIDA G. DANS, and the DBP MORTGAGE REDEMPTION INSURANCE POOL, respondents..docx