G.R. No. 135808 - Securities and Exchange Commission vs. Interport Resources Corp.

On August 6, 1994, Interport Resources Corporation (IRC) entered into a Memorandum of Agreement (MOA) with Ganda Holdings Berhad (GHB) to acquire Ganda Energy Holdings, Inc. (GEHI) and Philippine Racing Club, Inc. (PRCI), issuing new IRC shares to GHB.
IRC purportedly sent a press release on August 8–9, 1994 to the Philippine Stock Exchange and the SEC announcing the deal; the SEC claimed late receipt and alleged IRC failed timely to disclose material negotiations.

On August 16, 1994, the SEC Chairman directed IRC to submit its MOA and ordered key officers and directors to explain at a hearing why administrative, civil, or criminal sanctions should not be imposed for nondisclosure under the Rules on Disclosure of Material Facts.
IRC sent the MOA and on August 22, 1994 its directors appeared before the SEC’s Brokers and Exchanges Department; on September 19, 1994 the SEC Chairman found violations of the Old Securities Act’s disclosure rules and Sections 30 (insider trading) and 36 (reportorial requirements) of the Revised Securities Act (RSA).

Respondents filed Omnibus and Amended Omnibus Motions (September–October 1994), challenging SEC jurisdiction (PED should investigate), asserting due process violations, seeking joint hearings, and moving for continuance pending public interest concerns.
On January 25, 1995, the SEC:

Created a special investigating panel to handle the case under PED rules, recalled show-cause orders, and denied the continuance.
On March 30, 1995, denied reconsideration of that Omnibus Order.

Respondents petitioned CA-G.R. SP No. 37036 and moved for preliminary injunction; on May 5, 1995 the Court of Appeals granted an injunction enjoining the SEC from civil, criminal, or administrative action against IRC and its directors.
The SEC’s October 23, 1995 Motion for Leave to Quash its own Omnibus Orders (to revert investigation to PED) was denied in the CA Decision of August 20, 1998, which held:

Sections 8, 30, and 36 of the RSA lacked implementing rules and statutory authority for SEC enforcement, rendering any proceedings void for due process and equal protection violations.
PED rules were invalid for denying cross-examination rights.
The preliminary injunction was made permanent; all SEC actions since January 1995 were void.

The need for implementing rules for RSA Sections 8, 30, 36;
SEC’s authority to initiate civil/criminal/admin actions under those provisions;
Validity of PED and SICD procedural rules.

While this petition was pending, Republic Act No. 8799 (Securities Regulation Code) took effect on August 8, 2000, repealing the RSA and abolishing the PED.

Do Sections 8 (registration), 30 (insider trading), and 36 (directors’/officers’ reportorial duties) of the Revised Securities Act require implementing rules to be enforceable?
Was the creation and procedure of the SEC’s Prosecution and Enforcement Department (PED) invalid for denying cross-examination in violation of due process (Administrative Code, Book VII, Ch. 3, Sec. 12(3))?
Did the Securities Regulation Code’s repeal of the RSA extinguish pending or future enforcement of RSA Sections 8, 30, and 36?
After the repeal of the PED by RA 8799, can the SEC (and DOJ) still investigate and prosecute violations of the RSA or its reenacted provisions under the new law?
Has the prescription period for criminal prosecution of insider‐trading‐type offenses under special laws (RSA/Code) already run?
Did the Court of Appeals correctly deny the SEC’s 1995 Motion for Leave to Quash its own Omnibus Orders?