SEC vs.

Price Richardson Corp

G.R. No. 197032 | 2017-07-26

Doctrine: Selling of stocks without authority or license to engage and/or solicit investments from
clients is a violation of Sections 26.3 and 28 of the Securities Regulation Code.

Facts:
On October 17, 2001, a former employee of Price Richardson Corp, Michelle S. Avelino,
(Avelino) executed a sworn affidavit at the NBI's Interpol Division, alleging that Price Richardson
was "engaged in boiler room operations, wherein the company sells non[-]existent stocks to
investors using high pressure sales tactics." On December 4, 2001, the SEC filed before the DOJ
its complaint against Price Richardson, et. al. The SEC alleged that Price Richardson was neither
licensed nor registered "to engage in the business of buying and selling securities within the
Philippines or act as salesman, or an associated person of any broker or dealer." As shown by the
seized documents and equipment, Price Richardson engaged in seeking clients for the buying and
selling of securities, thereby violating Sections 26.3 and 28 of the Securities Regulation Code.
State Prosecutor Reyes issued a Resolution, dismissing the Securities and Exchange Commission's
complaint "for lack of probable cause. The SEC filed a Petition for Certiorari before the CA. CA
held that there was no grave abuse of discretion on the part of Secretary Gonzalez when he affirmed
State Prosecutor Reyes' Resolutions, which found no probable cause to file an information. Hence,
the present petition by the SEC.
Issue: Whether or not there is probable cause to indict respondents for violation of Sections 26.3
and 28 of the Securities Regulation Code and Article 315(1)(b) of the Revised Penal Code.
Held:
An examination of the records reveals that probable cause exists to file an information against
respondent Price Richardson for violating the laws. Based on the Certification dated October 11,
2001 issued by the Market Regulation Department of the Securities and Exchange Commission,
respondent Price Richardson "has never been issued any secondary license to act as broker/dealer
in securities, investment house and dealer in government securities." Petitioner also certified that
respondent Price Richardson "is not, under any circumstances, authorized or licensed to engage
and/or solicit investments from clients." However, the documents seized from respondent Price
Richardson's office show possible sales of securities. The evidence gathered by petitioner and the
statement of respondent Price Richardson are facts sufficient enough to support a reasonable belief
that respondent is probably guilty of the offense charged.
However, respondents Velarde-Albert and Resnick cannot be indicted for violations of the
Securities Regulation Code and the Revised Penal Code. Petitioner failed to allege the specific acts
of respondents Velarde-Albert and Resnick that could be interpreted as participation in the alleged
violations. There was also no showing, based on the complaints, that they were deemed responsible
for Price Richardson's violations.
SEC vs. Interport Resources Corp
G.R. No. 135808 | 2008-10-06

Doctrine: The Securities Regulations Code absolutely repealed the Revised Securities Act. While
the absolute repeal of a law generally deprives a court of its authority to penalize the person
charged with the violation of the old law prior to its appeal, an exception to this rule comes about
when the repealing law punishes the act previously penalized under the old law.

Facts: On 6 August 1994, the Board of Directors of Interport Resources Corporation (IRC)
approved a Memorandum of Agreement (MOA) with Ganda Holdings Berhad (GHB). The SEC
Chairman issued an Order finding that IRC violated the Rules on Disclosure of Material Facts, in
connection with the Old Securities Act of 1936, when it failed to make timely disclosure of its
negotiations with GHB and it pronounced that some of the officers and directors of IRC entered
into transactions involving IRC shares in violation of Section 30, in relation to Section 36, of the
Revised Securities Act. The respondents sought relief from the Court of Appeals (CA) which
issued a writ of preliminary injunction effectively enjoining the SEC from filing any criminal, civil
or administrative case against the respondents. The CA, in its August 20, 1998 Decision, noted
that it found no statutory authority for the SEC to initiate and file any suit for civil liability under
Sections 8, 30 (Insider's Duty to Disclose) and 36 (Directors, Officers and Principal Stockholders)
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. The SEC moved for reconsideration but the same was denied. Hence, the present
petition by the SEC.

Issue: Whether or not a case may still be filed against the respondents despite the repeal.

Held: Yes, the Securities Regulations Code absolutely repealed the Revised Securities Act. While
the absolute repeal of a law generally deprives a court of its authority to penalize the person
charged with the violation of the old law prior to its appeal, an exception to this rule comes about
when the repealing law punishes the act previously penalized under the old law.

As a rule, an absolute repeal of a penal law has the effect of depriving the court of its authority to
punish a person charged with violation of the old law prior to its repeal. This is because an
unqualified repeal of a penal law constitutes a legislative act of rendering legal what had been
previously declared as illegal, such that the offense no longer exists and it is as if the person who
committed it never did so. There are, however, exceptions to the rule. One is the inclusion of
a saving clause in the repealing statute that provides that the repeal shall have no effect on pending
actions. Another exception is where the repealing act reenacts the former statute and punishes the
act previously penalized under the old law. In such instance, the act committed before the
reenactment continues to be an offense in the statute books and pending cases are not affected,
regardless of whether the new penalty to be imposed is more favorable to the accused.
(see Benedicto v. Court of Appeals)In the present case, a criminal case may still be filed against
the respondents despite the repeal, since Sections 8, 12,26, 27and 23 of the Securities Regulations
Code impose duties that are substantially similar to Sections 8, 30 and 36 of the repealed Revised
Securities Act.