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08) Union Bank of the Philippines vs. Security and Exchange HELD: Yes.

Commission 1. Sec. 5 of the RSA states:


June 26, 2001 "Sec. 5. Exempt Securities. (a) Except expressly provided,
GR No. 138949 | Panganiban, J. the requirement of registration under subsection (a) of
Digested By: Lopez, A. Section four of this Act shall not apply to any of the following
classes of securities:
TOPIC: Securities Regulation Code xxx xxx xxx
(3) Any security issued or guaranteed by any banking
institution authorized to do business in the Philippines, the
FACTS:
business of which is substantially confined to banking, or a
1. Union Bank, through its General Counsel and Corporate Secretary, financial institution licensed to engage in quasi-banking, and
sought the opinion of Chairman Perfecto Yasay, Jr. of the Securities is supervised by the Central Bank."
and Exchange Commision as to the applicability and coverage of the 2. This provision exempts from registration the securities issued by
Full Material Disclosure Rule on banks. banking or financial institutions mentioned in the law. Nowhere does
2. Union Bank contended that said Rules amended Sec. 5 (a) (3) of the it state or even imply that Union Bank, as a listed corporation, is
Revised Securities Act (RSA) which exempts securities issued or exempt from complying with the reports required by the assailed
guaranteed by banking institutions from the registration provided in RSA Implementing Rules.
Sec. 4 of the RSA. 3. The CA correctly stated that the exemption from the registration
3. Chairman Yasay informed Union Bank that while the requirement of requirement does not necessarily connote that it is exempted from
registration does not apply to securities of banks (since they are the other reportorial requirements. Having confined the exemption to
exempt under the RSA), banks with a class of securities listed for the initial requirement of registration of securities for public offering,
trading in the Philippine Stock Exchange, Inc. are covered by certain and not to the subsequent filing of various periodic reports, SEC, as
RSA Rules governing the filing of various report with the SEC (e.g. of the regulatory agency, is able to exercise its power of supervision
Annual, Quarterly, Current, Predecessor and Successor Reports; and control over corporations and over the securities market as a
Proxy Statements; and Information Statements, among others) whole.
4. Unsatisfied, Union Bank referred the matter to the PSEI. The SEC, 4. [DOCTRINE] Union Bank is a commercial banking corporation listed
however, sent a letter requiring Union Bank showing cause why it in a stock exchange. Thus, it must adhere not only to banking and
should not be penalized for its failure to submit a Proxy/Information other allied special laws, but also to the rules promulgated by
Statement in connection with its annual meeting, in violation of the Respondent SEC, the government entity tasked not only with the
Full Material Disclosure Rule. enforcement of the RSA, but also the supervision of all corporations,
5. Since Union Bank failed to respond, SEC assessed Union Bank of a partnerships or associations which are grantees of government-
fine of P91,000 plus P500 per day that the report is not filed. This issued primary franchises and/or licenses or permits to operate in the
assessment was disputed by Union Bank, and appealed but was Philippines.
denied. 5. Consequently, the Implementing Rules do not amend Section 5(a)(3)
6. Union Bank appealed to the CA, which affirmed the SEC decision. of the RSA, because they do not revoke or amend the exemption
7. Hence, this petition by Union Bank. It argued that because its from registration of the securities.
securities are exempt from the registration requirements under 6. The fact that Union Bank is under the supervision of the BSP and
Section 5(a) (3) of the RSA, it argues that it is not covered by RSA PSE does not exempt it from complying with the continuing
Implementing Rule 11 (a)-1, which requires the filing of annual, disclosure requirements embodied in the assailed Rules. Petitioner,
quarterly, current predecessor and successor reports, proxy as a bank, is primarily subject to the control of the BSP; and as a
statements, and information statements. corporation trading its securities in the stock market, it is under the
supervision of the SEC. Even PSE is under the control and
ISSUE: W/N the Implementing Rules of RSA applies to Union Bank supervision of the SEC.
7. These regulations are meant to assure full, fair and accurate
disclosure of information for the protection of investors in the stock
market. Imposing such regulations is a function within the jurisdiction
of the SEC. Since petitioner opted to trade its shares in the
exchange, then it must abide by the reasonable rules imposed by the
SEC.

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision of


the Court of Appeals AFFIRMED. Costs against petitioner.