Chapter 17

FINANCIAL SYSTEM
REGULATORS - PART II
SECURITIES AND EXCHANGE COMMISSION (SEC)
AND
INSURANCE COMMISION (IC)
 EXPECTED LEARNING OUTCOMES

• Describe the basic legal mandate of the Insurance

PART II - INSURANCE Commission

• Name the objectives of the Insurance Commission

COMMISSION • Know the basic functions of the Insurance Commission

relative to the regulation of the insurance, pre-need and

HMO industries

• Identify the entities that are regulated by the Insurance

Commission
THE ROLE OF THE SECURITIES AND EXCHANGE
COMMISSION (SEC) IN FINANCIAL REGULATION
The Securities and Exchange Commission ( Filipino: Komisyon sa mga
Panagot at Palitan, commonly known as SEC ) is the agency of the
Government of the Philippines responsible for regulating the securities
industry in the Philippines. In addition to its regulatory functions, the SEC
also maintains the country’s company register.

An agency within Department of Finance, the SEC is

temporarily headquartered at the Philippines International
Convention Center in Pasay City, Metro Manila. It will due to
transfer to a new site in Bonifacio Global City, Taguig City.
 VISION
By 2022, SEC is the champion of investor
protection; the judicious administrator of
an automated, reliable and secured
company registration and information
system; and the progressive overseer of a
robust and inclusive capital market in
the ASEAN and Asia-Pacific Region.
MISSION
We develop and regulate the capital market
and company registration; promote good
corporate governance; empower investors,
corporators, and entrepreneurs; and facilitate
access to financial products and resources.
We shall be guided in this mission by the
values of INTEGRITY, PROFESSIONALISM,
ACCOUNTABILITY, INDEPENDENCE,
INTIATIVE and TEAMWORK.

POWER AND
FUNCTIONS
The Commission shall have the powers and
functions provided by the Securities Regulation
Code, Presidential Decree No. 902-A, as amended,
the Corporation Code, the Investment Houses Law,
the Financing Company Act, and other existing
laws.
Under Section 5 of the Securities Regulation Code,
Rep. Act. 8799, the Commission shall have, among
others, the following powers and functions:
Have jurisdiction and supervision over all corporations, partnerships or associations who are the grantees of
(A) primary franchises and/or a license or permit issued by the Government;
Formulate policies and recommendations on issues concerning the securities market, advise Congress and the
(B) other government agencies on all aspects of the securities market and propose legislation and amendments.
Approve, reject, suspend, revoke or require amendments to registration statement, and registration and licensing
(C) applications;
(D) Regulate, investigate or supervise the activities of persons to ensure compliance;
(E) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs;
(F) Impose sanctions for the violation of laws and the rules, regulations and orders issued pursuant thereto;
Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and
(G)
supervise compliance with such rules, regulations and orders;
Enlist the aid and support of and/or deputize any and all enforcement agencies of the Government, civil or military
(H) as well as any private institution, corporation, firm, association or person in the implementation of its powers and
functions under this Code;
(I) Issue cease and desist orders to prevent fraud or injury to the investing public;
Punish for contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of
(J)
and penalties prescribed by the Rules of Court;
Under Section 5.2 of the Securities Regulation Code, the Commission’s
jurisdiction over all cases enumerated under Section 5 of PD 902-A has
been transferred to the Courts of general jurisdiction over pending cases
involving intra-corporate disputes submitted for final resolution which
should be resolved within one (1) year from the enactment of the Code.
The Commission shall retain jurisdiction over pending suspension of
payment/rehabilitation cases field as of 30 June 2000 until finally
disposed.
Considering that only Sections 2, 4, and 8 of PD 902-A, as amended,
have been expressly repealed by the Securities Regulation Code, the
Commission retains the power enumerated in the Section 6 of said
Decree, unless these are inconsistent with any provision of the Code.
Compel the officers of any registered corporation or association to call
(K) meetings of stockholders or members thereof under its supervision;
Issue subpoena duces tecum and summon witnesses to appear in any
proceedings of the Commission and in appropriate cases, order the
examination, search and seizure of all documents, papers, files and records,
(L) tax returns, and books of accounts of any entity or person under
investigation as may be necessary for the proper disposition of the cases
before it, subject to the provisions of existing laws;
Suspend, or revoke, after proper notice and hearing the franchise or
(M) certificate of registration of corporations, partnerships or associations, upon
any of the grounds provided by law;
Exercise such other powers as may be provided by law as well as those
(N) which may be implied from, or which are necessary or incidental to the
carrying out of the express powers granted the Commission to achieve the
objectives and purpose of these laws.
 SECURITIES AND EXCHANGE COMMISSION ORGANIZATIONAL CHART

OFFICE OF THE CHAIRPERSON

OFFICE OF THE COMMISSIONERS

OFFICE OF THE GENERAL OFFICE OF THE COMMISSION

OFFICE OF THE GENERAL COUNSEL
ACCOUNTANT SECRETARY

ENFORCEMENT MARKETS AND CORPORATE COMPANY INFORMATION AND ECONOMIC HUMAN RESOURCE
FINANCIAL
AND INVESTOR SECURITIES GOVERNANCE REGISTRATION AND COMMUNICATIONS RESEARCH AND AND
MANAGEMENT
PROTECTION REGULATION AND FINANCE MONITORING TECHNOLOGY TRAINING ADMINISTRATIVE
DEPARTMENT
DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT

EXTENSION OFFICES
 MANDATE
The Securities and Exchange Commission (SEC) or the Commission is the national government regulatory
agency charged with supervision over the corporate sector, the capital market participants, and the securities
and investment instruments market, and the protection of the investing public. Created on October 26, 1936
by Commonwealth Act (CA) 83 also known as The Securities Act, the Commission was tasked to regulate the
sale and registration of securities, exchanges, brokers, dealer and salesmen. Subsequent laws were enacted
to encourage investments and more active public participation in the affairs of private corporations and
enterprises, and to broaden the Commission’s mandates. Recently enacted laws gave greater focus on the
Commission’s role to develop and regulate the corporate and capital market toward good corporate
governance, protection of investors, widest participation of ownership and democratization of wealth.

With the growing number of corporations and other forms of associations that SEC supervises and monitors,
and given the evolving nature of transactions where the corporate vehicle is being used to defraud the
investing public, as well as the ever dynamic character of the capital market, SEC must progressively perform
its critical role as the prudent registrar and supervisor of the corporate sector and the independent guardian
of the capital market.
Subsequent laws enacted to broaden the Commission’s mandates, power, and functions were:
SEC Reorganization Act or Presidential Decree (PD) 902-A in 1976, as subsequently amended by PD’s 1653, 1758 and 1799.
●

● Corporation Code of the Philippines (CCP) or the Batas Pambansa (BP) 68 in 1980.

Revised Corporation Code (RCC) or RA 11232, signed into law by President Rodrigo R. Duterte on 20 February 2019 and took effect on 23 February 2019.
●

Securities Regulation Code (SRC) or Republic Act (RA) 8799 in 2000 provided for the SEC reorganization to give greater focus on the Commission’s role in capital market development, fostering
● good corporate governance (CG) and enhancing investor protection.

SRC restated the requirements for the submission of an annual report by companies of their operations, together with FS, certified by an independent CPA, and such other requirements as SEC
● may deem necessary.

Section 68 of the SRC on special accounting rules reinforced the power of SEC to make, amend and rescind such accounting rules and regulations as may be necessary to carry out the provisions
● of the SRC and those of the CCO relative to financial reporting.

In line with this, Rule 68, the Special Accounting Rules was issued in 2001 as part of the SRC IRR. Rule 68 specifically provides for the general guides to FS preparation, responsibility to FS,
● qualifications and reports of independent auditors, additional requirements for independent auditors of SEC-regulated entities and other entities, independence of auditors, engagement of
independent auditors, audit reports, including the accreditation of independent auditors as well as review of their quality assurance processes. Rule 68 has undergone several amendments, the
latest of which was in 2011; and is presently in the process of amendments to ensure reliability of the FS and the protection of investors. Financial Reporting Bulletins (FRBs) are also issued by
the Commission as needed to cover additional Financial Reporting Requirements.

Credit Information System Act (CISA) or RA 9510 in 2008

●

●
Microfinance Nongovernment Organizations (NGOs) Act or RA 10693
Among the laws enacted giving the SEC its legal mandate, the Securities Regulation Code (SRC) (RA 8799) can be considered of utmost
relevance to the Financial Markets and Institutions (FIIs) sector.

While the entire SRC should be complied with, the following provisions are very important for FIIs understanding and compliance :

● Section 3. Definition of Terms. – 3.1.

“Securities” are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate,
contract, instruments, whether written or electronic in character.

● Section 8.1. Requirement of Registration of Securities

Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the
Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made
available to each prospective purchaser.

● Section 9.1. Exempt Securities

The requirement of registration under Subsection 8.1 shall not as a general rule apply to any of the following classes of securities:

Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof, or by any person controlled or
supervised by, and acting as an instrumentality of said Government.
● Section 10.1. Exempt Transactions.
The requirement of registration under Subsection 8.1 shall not apply to the sale of any security in any of the following transactions:

● Section 11. Commodity Futures Contracts.

No person shall offer, sell or enter into commodity futures contracts except in accordance with the rules, regulations and orders the Commission may prescribe in
the public interest. The Commission shall promulgate rules and regulations involving commodity futures contracts to protect investors to ensure the development of
a fair and transparent commodities market.

● Section 16. Pre- Need Plans.

No person shall sell or offer for sale to the public any pre-need plan except in accordance with rules and regulations which the Commission shall prescribe. Such
rules shall regulate the sale of pre-need plans by, among other things, requiring the registration of pre-need plans, licensing persons involved in the sale of pre –
need plans, requiring disclosures to prospective plan holders, prescribing advertising guidelines, providing for uniform accounting system, reports and recording
keeping with respect to such plans, imposing capital, bonding and other financial responsibility, and establishing trust funds for the payment of benefits under such
plans.

● Section 17. Periodic and Other Reports of Issuer. 17.1.

Every issuer satisfying the requirements in Subsection 17.2 hereof shall file with the Commission:

● Section 17.2 The Reportorial Requirements of Subsection. 17.1

I shall apply to the following:
 THE ROLE OF THE INSURANCE COMMISSION (IC) IN FINANCIAL REGULATION
MANDATE
To regulate and supervise the insurance, pre-need, and HMO industries in accordance with the provisions of the Insurance Cod, as amended,
Pre-Need Code of the Philippines, and Executive Order No. 192 (s.2015)

LEGAL BASES:
● RA No. 10607 entitled, “AN ACT STRENGTHENING THE INSURANCE INDUSTRY, FURTHER AMENDING PRESIDENTIAL DECREE NO. 612,
OTHERWISE KNOWN AS “THE INSURANCE CODE” , AS AMENDED BY PRESIDENTIAL DECREE NOS. 1141, 1280,1455, 1460,1814 AND 1981, AND
BATAS PAMBANSA BLG. 874, AND FOR OTHER PURPOSES”; otherwise known as The Insurance Code, as amended.

● RA No. 9829 entitled, “AN ACT ESTABLISHING THE PRE-NEED CODE OF THE PHILIPPINES”, otherwise known as the “Pre-Need Code of the
Philippines”.

● EO No. 192(s. 2015) entitled, “TRANSFERRING THE REGULATION AND SUPERVISION OVER HEALTH MAINTENANCE ORGANIZATIONS FROM
THE DEPARTMENT OF HEALTH TO INSURANCE COMMISSION, DIRECTING THE IMPLEMENTATION THEREOF AND FOR OTHER PURPOSES”

OBJECTIVES
●To promote growth and financial stability of insurance, pre- need, and HMO companies.

●To professionalize insurance, pre-need, and HMO services, and develop insurance, pre-need, and HMO consciousness among the general
populance.

●To establish a sound national insurance market.

●To safeguard the rights and interest of the insuring public, pre need and HMO customers.
 FUNCTIONS
1. Promulgation and implementation of policies, rules and regulations governing the operations of
entities engaged in insurance, pre-need, and HMO activities as well as benevolent features
2. Licensing of insurance, reinsurance companies, its intermediaries, mutual benefit associations, trust
for charitable uses, pre-need companies, pre-need intermediaries, and HMO companies
3. Conducting insurance agent’s examinations, as well as processing if reinsurance treaties and request
for investments of insurance companies
4. Examination/verification of the financial condition and methods of doing business of entities engaged
in insurance business, pre-need, mutual benefit associations, trusts for charitable uses, and HMO
companies
5. Evaluation and preparation of statistical reports, studies, researches, annual report, and position
papers relative to insurance, pre-need matters, and HMO matters
6. Review of premium rates imposed by life and non-life companies, mutual benefit associations;
statistical reports of adjusters to determine compliance with established standards.
7. Adjudication of claims and complaints involving loss, damage or liability incurred by an insurer
under any kind of policy or contract of insurance or surety ship;
8. Review and approval of all life and no-life policies, pre-need, and HMO plans before sale to
prospective clients.
REGULATED ENTITIES
• Life and Non-life Insurance Companies
• Pre-Need Companies
• Health Maintenance Organization
(HMOs)
• Mutual Benefit Associations
• Accredited Actuaries
• Brokers
• Resident Agents
• Insurance Adjusters
 ORGANIZATIONAL STRUCTURE OF INSURANCE COMMISSION AS OF APRIL 24, 2018
OFFICE OF THE INSURANCE COMMISSIONER

INTERNAL AUDIT
DIVISION

OFFICE OF THE DEPUTY INSURANCE OFFICE OF THE DEPUTY INSURANCE

OFFICE OF THE DEPUTY INSURANCE OFFICE OF THE DEPUTY INSURANCE
COMMISSIONER- FINANCIAL COMMISSIONER-MANAGEMENT
COMMISSIONER- TECHNICAL SERVICES COMMISSIONER LEGAL SERVICES
EXAMINATION SUPPORT SERVICES

OFFICE OF THE DIRECTORS FOR OFFICE OF THE DIRECTORS FOR OFFICE OF THE DIRECTORS FOR LEGAL OFFICE OF THE DIRECTORS FOR
FINANCIAL EXAMINATION TECHNICAL SERVICES SERVICES MANAGEMENT SUPPORT SERVICES

NON-LIFE DIVISION ACTUAL DIVISION REGULATION, ENFORCEMENT

ADMINISTRATIVE DIVISION
AND PROSECUTION DIVISION
LIFE/MBA/TRUST DIVISION INVESTMENTS SERVICE DIVISION PUBLIC ASSISTANCE AND
HUMAN RESOURCE DIVISION
MEDIATION DIVISION
PRE-NEED DIVISION RATING DIVISION LICENSING DIVISION BUDGET DIVISION

BROKERS AND INSURANCE POOL CONSERVATORSHIP,

REINSURANCE DIVISION RECEIVERSHIP AND LIQUIDATION ACCOUNTING DIVISION
DIVISION
DIVISION
HEALTH MAINTENANCE INFORMATION TECHNOLOGY
STATISTICS AND RESEARCH CLAIMS ADJUDICATION DIVISION
ORGANIZATIONS DIVISION

ANTI-MONEY LAUNDERING AND

CORPORATE GOVERNANCE INFORMATION SYSTEMS DIVISION
DIVISION

MICRO INSURANCE DIVISION PLANNING AND MANAGEMENT

DIVISION

BAGUIO DISTRICT OFFICE CEBU DISTRICT OFFICE DAVAO DISTRICT OFFICE

 THANK YOU!!!

REPORTERS:

GLENIE JOYCE SOLAYAO

WENIBET SILVANO

BSBA FM-1H