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I: SHORT TITLE: UNION BANK OF THE PHILIPPINES vs SEC

II: FULL TITLE: UNION BANK OF THE PHILIPPINES vs SECURITIES and
EXCHANGE COMMISSION
III: TOPIC: BANKING LAW
IV: STATEMENT OF FACTS: Petitioner, through its General Counsel and
Corporate Secretary, sought the opinion of Chairman Perfecto Yasay, Jr. of
respondent Commission as to the applicability and coverage of the Full
Material Disclosure Rule on banks, contending that said rules, in effect,
amend Section 5 (a) (3) of the Revised Securities Act which exempts
securities issued or guaranteed by banking institutions from the registration
requirement provided by Section 4 of the same Act. Chairman Yasay,
informed petitioner that while the requirements of registration do not apply
to securities of banks which are exempt under Section 5(a) (3) of the Revised
Securities Act, however, banks with a class of securities listed for trading on
the Philippine Stock Exchange, Inc. are covered by certain Revised Securities
Act

Rules

governing

the

filing

of

various

reports

with

respondent

Commission. Petitioner informed Chairman Yasay that they will refer the
matter to the Philippine Stock Exchange for clarification. Respondent
Commission reiterated that petitioner is not exempted from filing certain
reports. Petitioner did not file reports, thus prompting respondent to write to
it to show cause why it should not be penalized for failure to submit a
Proxy/Information Statement in connection with its annual meeting held on
May 23, 1997, in violation of respondent Commissions Full Material
Disclosure Rule. Failing to do so, petitioner was given a 2 nd Show Cause with
Assessment by respondent Commission on July 21, 1997. Petitioner was then
assessed a fine of P50,000.00 plus P500.00 for every day that the report
[was] not filed, or a total of P91, 000.00 as of July 21, 1997.
V: STATEMENT OF THE CASE: Petitioner wrote to respondent disputing the
assessment, thus, respondent issued the assailed Order, imposing to the
petitioner the amount of P91,000.00 as of July 21, 1997, for failure to file SEC
Form 11-A excludes the fine accruing after the cut-off date until the final
submission of the report. Further, the amount of P50,000.00 shall be
collected for the violation of RSA Rule 34(a)-1 or Rule 34 (c)(1). Petitioner
filed a motion for reconsideration which was denied, it then elevated the
case to the Court of Appeals which affirmed the Order. Petitioner comes to
the Suprme Court and posits the following;

These Rules were issued by respondent pursuant to the authority conferred upon it by Section 3 of the RSA. it must adhere not only to banking and other allied special laws. VII: RULING: 1. Whether or not petitioner is required to comply with the respondent SECs full disclosure rules. The said Rules do not amend Section 5(a)(3) of the Revised Securities Act. or a financial institution licensed to engage in quasi-banking. It must be emphasized that petitioner is a commercial banking corporation listed in the stock exchange. 34(a)-1 and 34(c)-1 require the submission of certain reports to ensure full. the requirement of registration under subsection (a) of Section four of this Act shall not apply to any of the following classes of securities: (3) Any security issued or guaranteed by any banking institution authorized to do business in the Philippines. RSA Rules 11(a)-1. YES. 2. Whether or not the SECs full disclosure rules are contrary to and effectively amend section 5(a)(3) of the Revised Securities Act. and is supervised by the Central Bank. the government entity tasked not only with the enforcement of the Revised Securities Act. partnerships or associations which are grantees of government-issued primary franchises and/or licenses or permits to operate in the Philippines. Exempt Securities. fair and accurate disclosure of information for the protection of the investing public. NO. Thus. 2. but also with the supervision of all corporations. the business of which is substantially confined to banking. Sec 5.VI: ISSUES: 1. but also to the rules promulgated by Respondent SEC. This provision exempts from registration the securities issued by banking or financial institutions mentioned in the law. The latter was assessed after . is exempt from complying with the reports required by the assailed RSA Implementing Rules. as a listed corporation. because they do not revoke or amend the exemption from registration of the securities enumerated thereunder. Worth repeating is the CAs disquisition on the matter. (a) Except as expressly provided. They are reasonable regulations imposed upon petitioner as a banking corporation trading its securities in the stock market. VIII: DISPOSITIVE PORTION: We reject the contention of petitioner that it was not heard on the matter of the fine imposed. Nowhere does it state or even imply that petitioner.

the former had failed to respond to the SECs first show-cause letter dated June 17. petitioner sought before the SEC en banc the nullification of the fine. . That it received adverse rulings from both respondent and the CA does not mean that its right to be heard was discarded. The matter was raised to the appellate court. which then considered it. Clearly then. 1997. petitioner satisfied the essence of due process notice and opportunity to be heard. In its August 18. 1997 letter.