SEC En Banc Case No. 07-13-296 JOVITO ONG, Appellant, -versus- R. NUBLA SECURITIES, INC. and CAPITAL MARKETS INTEGRITY CORPORATION, Appellees.

Securities and Exchange Commission CoMMISSIoN en BANC Republic of the Phitippines Department of Finance

JOVITO ONG, Appellant.

-versus-

INTEGRITY CORPORATION, R. NUBLA SECURITIES, INC. and CAPITAL MARKETS Appellees. SEC En Banc Case No. 07-13-296

DECISION

for violation of existing trading rules and other securities law. Letter-Order of the Capital Markets Integrity Corporation dated 1 July 20131 (the "Order") dismissing Appellant Ong's complaint against Appellee RNSI Appellant Jovito Ong on 18 July 2013 before this Commission to assail the This resolves the Memorandum of Appeal dated 16 July 2013 filed by

THE PARTIES

age, and a resident of 6 Harding Street, Greenhills West, San Juan, Metro Manila. Appellant JOVITO G. ONG (Appellant Ong), is a Filipino, of legal

Investment Building, 23 1 Juan Luna Street, Binondo Manila. duly organized under Philippine laws, with principal office at Room 300 CNC Appellee R. NUBLA SECURITIES, INC. ("RNSI") is a corporation

reinforcing the confidence of the investing public in capital market institutions and promoting a more active and vibrant market participation. Accordingly, CMIC acts as the independent audit, surveillance and compliance arm of the Philippine Stock Exchange.? Philippine Stock Exchange, Inc. is a self-regulatory organization, duly organized and registered in the Philippines with the primary purpose of ("CMIC"), formerly known as the Board of Market Integrity of the Appellee CAPITAL MARKETS INTEGRITY CORPORATION

2 http://www.cmic.com.ph/main/aboutUs.html. (Visited 23 July 2019). ' Memorandum of Appeal, Annex "Aj

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STATEMENT OF FACTS

securities law. In support of his allegations, Appellant Ong attached the Letter-Complaint dated 8 September 20123 before the CMIC against RNSI on December 2011, in violation of several trading rules on settlement and other following documents to his Letter-Complaint: the ground that the latter failed to turn over the proceeds of the sale of the nine hundred twenty-two thousand one hundred seventy-six (922,176) Philippine Bank of Communications shares ("the PBCom Shares") under his name last In his Memorandum of Appeal, Appellant Ong alleged that he filed a

d) Official Receipt No. 46867 dated 26 December 20118 issued by RNSI c) the Daily Trading Transaction Report of RNSI dated 23 December a) Invoice No. 44972 dated 23 December 20114 to show that appellee b) the Sales Confirmation Invoice dated 23 December 20115 issued by to Appellant Ong showing that the former was paid its commission for actually sold, a Debit Memorandum dated 23 December 20117 issued by RNSI to Appellant Ong; and the sale of the subject PBCom Shares. 2011 showing that the subject PBCom Shares of Appellant Ong were RNSI to Appellant Ong, which shows that the PBCom Shares were successfully sold in the market, RNSI received the PBCom Shares from Appellant Ong for sale;

where the latter replied, through its counsei, that his claims had no basis. that he sent several demand letters' to Appellee RNSI, through his counsel, Prior to the institution of the letter complaint, Appellant Ong alleged

by Appellant Ong containing the terms of sale of the PBCom Shares, in Ralph Nubla, Jr. by virtue of a "Special Power of Attorney" allegedly issued accordance with the Financial Assistance Agreement between the PDIC and CMIC proceedings, RNSI averred that the PBCom Shares were transacted by In its Answerl and Rejoinderl2, which were filed in the course of the

9 Id., pp. 28-29; 3 1-32 : Memorandum of Appeal, Annex "D" S Id., p. 37. 12 Id., Annex "E: and "E-1". 3 Memorandum of Appeal, Annex "B" 7 Id., p. 34. 8 Id., p. 33. 4 Records, p. 38. 6 Id., pp. 35-36 1o Id. p. 30

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the controlling shareholders of PBCom, as well as the Custodianship Agreement dated 15 March 2004 and 23 March 2004, respectively.

prohibited under the existing trading rules during that time. raising the issue that direct settlements between buyers and sellers are averred that since Appellant Ong was the president of the latter during that pertinent rules and regulations and that he had all the resources to demand for the payment of the amount due to him at the earliest opportunity, which he failed to do. Appellant Ong, in his Reply13, rebutted RNSI's allegations by accordance with the pre-arranged block sale agreement between the buyers and sellers of the same, allegedly consistent with the terms of the Memorandum of Agreement dated 26 July 2011 between the Nubla, Chung and Luy Groups as sellers and Mr. Roberto Ongpin as buyer. Finally, RNSI time, it was his responsibility to ensure that RNSI strictly complied with the Further, RNSI contended that the sale of the PBCom Shares was in

in accordance with the Implementing Guidelines of the Revised Trading of the PBCom Shares and justified such failure on the exercise of its duty to observe confidentiality. After evaluating the positions and documents presented by the parties, the CMIC issued the assailed Letter Order finding no violation of any trading rules on the part of RNSI and dismissing Appellant an informal conference, which was attended by the parties. During the conference, respondent RNSI failed to produce the Special Power of Attorney executed by Appellant Ong in favor of Ralph Nubla, Jr., authorizing the sale Ong's complaint on the ground that the sale of the subject PBCom Shares was Rules of the Exchange. After the parties submitted their respective pleadings, the CMIC held

sales of securities be made within three (3) business days after transaction date and that he was deprived of due process. violated Rule 2.1.5 of the Revised Operating Procedures of the Securities Clearing Corporation of the Philippines, which requires that the settlement of In his Memorandum of Appeal, Appellant Ong alleges that RNSI

ISSUE/S

I Whether or not Jovito Ong was denied due process.

I Whether or not a reinvestigation by CMIC of the transactions involving the instant case is warranted.

I3 Memorandum of Appeal, Annex "D"

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DECISION

the evidence presented by both parties, this Commission hereby resolves to deny the appeal for lack of merit. After careful consideration of the facts and circumstances, as well as

1 AFFORDED DUE PROCESS CONSISTENT APPLICBLE RULES OF THE COMMISSION APPELLANT EXISTING ONG WITH WAS AND

to the operations and dealings of the TPs including, in particular cases, issuers whose securities are listed in the Exchange. Verily, under the CMIC Rules, which took effect in March 2012, one of the main functions of CMIC is to and the Exchange, as well as all related legislative and regulatory requirements. Tasked with regulating and monitoring the activities of market participants, the CMIC enforces rules, guidelines, and provisions of the Securities Regulation Code, or the SRC, and other securities laws, applicable ensure compliance by TPs and Issuers with the securities laws. is to maintain the integrity of the market and to minimize the risk of the comply with all pertinent rules, regulations, and code of conduct of CMIC investing public by ensuring that the Trade Participants (TP) adhere to and CMIC is a self-regulatory organization, the primary mandate of which

circumstances thus negate Appellant Ong's allegation that he was denied due a conferenced and afforded the parties the opportunity to present their respective arguments and positions. The foregoing is supported by the fact considered by CMIC in coming up with the assailed Order. These factual Appellant Ong and RNSI filed their respective pleadings which were duly process even in administrative cases, citing for this purpose, the case of Ang Tibay vs that, as admitted by Appellant Ong in his Memorandum on Appeal, both CIR14 (Ang Tibay Case). The records of the case reveal that CMIC conducted Appellant Ong correctly pointed out that due process must be observed

process after he actively participated in the conference conducted by CMIC, submitted the appropriate pleadings in response to the ones filed by RNSI. In Appellant Ong is in fact estopped from raising this issue of violation of due the parties to submit and present their respective positions and evidence. CMIC sufficiently satisfied the demands of fair play when it afforded

11 96 Phil 635

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the case of Vivo vs PAGCOR'5, the Supreme Court clarified the concept of due process in the context of administrative proceedings, thus:

pleadings, is accorded, there is no denial of procedural due process. reconsideration of the action or ruling complained of. "To be heard" does not mean only verbal arguments in court; one may be heard also thru pleadings. Where opportunity to be heard, either through oral arguments or "The essence of procedural due process is embodied in the basic requirement of notice and a real opportunity to be heard. In administrative proceedings, such as in the case at bar, procedural due process simply means the opportunity to explain one's side or the opportunity to seck a

disclosed to the parties affected." t He is of the position that the foregoing violated one of the requisites prescribed in the Ang Tibay Case i.e. "The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and by going to the extent of emphasizing that he was allegedly not furnished with the documents which were relied upon by CMIC in coming up with the Order. Appellant Ong belabored his position that he was denied due process

be disclosed to the parties. This was complied with by CMIC; and no less than Appellant Ong himself admitted that he received a copy of the assailed Order. Decision which is based on the evidence presented during the hearing should which Appellant Ong quoted would reveal that what is required is that the The Commission is not convinced. A careful reading of the requisite

2 REINVESTIGATION IS NOT

INSTANT CASE WARRANTED IN THE

there is thus no reason to disturb the findings of the CMIC in the assailed requirement, we now resolve the question on whether CMIC committed grave the records, the Commission finds that reinvestigation is not warranted and Order. error in appreciating the facts and the law, or serious irregularities in the proceedings that warrants the conduct of a reinvestigation. After review of Having established that CMIC complied with the due process

dismissing the complaint of Appellant Ong for lack of merit. The Commission finds that CMIC did not commit reversible error in

dated 26 July 2011 (the "MOA") is not disputed. Pursuant to the MOA, the The existence and due execution of the Memorandum of Agreement

: See page 19 of the Memorandum on Appeal. 15 GR No. 187854, Novernber 12, 2013.

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Shares of Appellant Ong were among the shares held by the Nubla Group disclosed by PBC to the Exchange on 23 December 2013. which was represented by Mr. Ralph Nubla Jr. (Mr. Nubla). This was in fact Nubla, Chung and Luy groups (the "Sellers") agreed to the disposal via block sale of the PBC shares (consisting of 47,094,807 common shares and 120,000,000 preferred shares), which included the PBCom Shares of Appellant Ong, to the group of Mr. Roberto Ongpin (Buyer). The PBCom

one of his primary functions. transactions considering that overseeing the over-all operations of RNSI is the CMIC proceedings show th: and the validity of the SPA he of evidence on record showing that Appellant Ong had no participation or knowledge of the same leads this Commission to agree with the position of CMIC that Appellant Ong is presumed to be aware and have agreed to these representative of the Nubla Group Commission duly notes of the fact that Appellant Ong was the President of RNSI when the MOA was the Sellers was with PBC, the escrow agent. On account of the foregoing, PBCom Shares was to collect the same from Mr. Nubla, the authorized correct in finding that RNSI was not in any way obligated to settle the proceeds of the sale considering that the parties expressly agreed that the responsibility to settle the proceeds of sale to the designated bank accounts of Appellant Ong's recourse to ensure receipt of the proceeds of the sale of his Moreover, a careful review of the MOA would reveal that CMIC was that Appellant Ong did not deny the existence , and not from RNSI. Furthermore, the and implen ed in favor of Mr. Nubla. The absence iented. Lastly, the records of

was in the nature of special block salel7 sanctioned under the Implementing Guidelines of the Revised Trading Rules of the Exchange. not violate securities laws, rules and regulations on the ground that the block sale of the PBC shares, which included the PBCom Shares of Appellant Ong, The Commission also agrees with the finding of CMIC that RNSI did

the administration and dispensation of justice; it is designed to ensure that Special Hearing Panel or the Self-Regulatory Organization shall not be disturbed by the Commission En Banc, unless serious errors of fact have been committed. This rule is important because it facilitates efficiency in of matters within their competence and "expertise, are afforded the presumption of regularity in the performance of their functions. The foregoing policy is embodied in Sec. 3-11, Part V, Rule III of the 2016 SEC Rules of Procedure which states that findings of fact by the Operating Department, the of policy, the operating departments, special hearing panels, and self- regulatory organizations who have the primary jurisdiction to take cognizance As a final word, the Commission would like to stress that as a matter

Regulation Rules (MRD Rules) I As an exception to the general rule provided in Article VII, Section 5(a) of the Amended Market

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of faith and credit.18 The Commission finds that the Order of CMIC was requisite quantum of proof to the contrary, the presumption stands deserving the evidence presented by the parties. This being the case, the presumption bodies. To successfully overcome such presumption of regularity, case law rendered consistent with applicable rules and regulations, and on the basis of of regularity stands; the Commission thus decides not disturb the Order. courts and quasi-judicial tribunals are not reduced to a mere fact finding demands that the evidence against it must be clear and convincing; absent the

July 2013 is hereby AFFIRMED. The Memorandum of Appeal of appellant Jovito Ong is hereby D ISMISSED for lack of merit. WHEREFORE, premises considered, the Order of the CMIC dated 1

SO ORDERED

Pasay City, Philippines, 3 December 2019.

EMILIO)B. AOUINO N

C hairperson

EPHYRO LUIS B. AMATONG Commissioner JAVEY PAUL D. FRANCISCO Comm

KELVINLESTER K. LEE Commissioner KARLC S. BELLO Commissioner

1 Yap vs Lagtapon. GR No. 196347, January 23, 2017