FIFTEENTH CONGRESS OF THE =)
REPUBLIC OF THE PHILIPPINES —}
First Regular Session )

HOUSE OF REPRESENTATIVES
HNO. 517g

Intoduced by Representative TEODORICO HARESCO JR.

EXPLANATORY NOTE

The Securities Regulation Code states that one of the powers and functions of the
Securities and Exchange Commission is to “formulate policies and recommendations on
issues concerning the securities market." (Chapter Il, Sec. 5, Let b) On the other hand, the
General Banking Law of 2000 (RA 8791) states that universal and commercial banks have
‘the inherent banking power to deal in marketable bonds and other debt securities (Sec. 23
and 29}. The same law along with the New Central Bank Act (RA 7653) placed banks under
the regulatory supervision of the Bangko Sentral ng Pilipinas (BSP).

In 2005, the SEC granted Self Regulatory Organization (SRO) status to the
Philippine Dealing and Exchange Corporation (PDEx) over all transactions involving
goverment securities as part of capital market reforms instituted after the 1997 financial
crisis. It was envisioned that PDEx would transform into a Fixed Income Exchange (FIE)

Since it is but natural for Banks to trade in securities (government securities
included), this created problems as to which jurisdiction the regulation of Banks fall. This
amounted to overlap in regulatory functions between the BSP and the SEC through the
PDEx.

This Bill seeks to correct this ambiguity and reaffirm the BSP's regulatory powers
over banks removing them from the SEC.

Av
TEODORIGG T. HARESCO,..
ang Kasangga Partylist


FIFTEENTH CONGRESS OF THE =)
REPUBLIC OF THE PHILIPPINES )
First Reguiar Session )

HOUSE OF REPRESENTATIVES
H.No. 5274

Introduced by Representative TEODORICO HARESCO JR.

AN ACT AMMENDING SECTION 5 OF REPUBLIC ACT 8799, OTHERWISE KNOWN AS:
THE SECURES REGULATION CODE, HARMONIZING THE SAME WITH SECTION 29
OF REPUBLIC ACT 8791, OTHERWISE KNOWN AS THE GERNERAL BANKING LAW
OF 2000.

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 5 of Republic Act. No. 8799 is hereby amended to read, as
follows:

SEC. 5. Powers and Functions of the Commission. - 5.1. The Commission
shall act with transparency and shall have the powers and functions provided by this
Code, residential Decree No. 902-A, the Corporation Code, the Investment Houses
Law, the Financing Company Act and other existing laws. Pursuant thereto the
Commission shall have, among others, the following powers and functions:

(a) Have jurisdiction and Supervision over all corporations, partnerships or
associations who are the grantees of primary franchises and/or a license or permit
issued by the Government;

(b) Formulate policies and recommendations on issues conceming the
securities market, advise Congress and other government agencies on all aspects of
the securities market and propose legislation and amendments thereto;

(c) Approve, reject, suspend, revoke or require amendments to registration
statements, and registration and licensing 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;


(g) Prepare, approve, amend or repeal rules, regulations and orders, and
issue opinions and provide guidance on and supervise compliance with such rules,
regulations and orders;

(h) Enlist the aid and support of and/or deputize any and all enforcement
agencies of the Government, civil or military 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 of injury to the investing
public;

@) Punish for contempt of the Commission, both direct and indirect, in
accordance with the pertinent provisions of and penalties prescribed by the Rules of
Court,

(k) Compel the officers of any registered corporation or association to call
meetings of stockholders or members thereof under its supervision;

(I) 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, tax retums, 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;

({m) Suspend, or revoke, after proper notice and hearing the franchise or
certificate of registration of corporations, partnerships or associations, upon any of
the grounds provided by law; and

(n) Exercise such other powers as may be provided by law as well as those
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
purposes of these laws.

{A new section will be inserted to be numbered as "Section 5.2”)

5.2 THE POWERS AND FUCTIONS GRANTED TO THE COMMISSION
UNDER THIS LAW DOES NOT ENCOMPASS REGULATION OVER THE
ACQUISITION OF MARKETABLE BONDS AND OTHER DEBT SECURMES
GRANTED TO UNIVERSAL AND COMMERCIAL BANKS UNDER SECTION 29
OF REPUBLIC ACT 8791, OTHERWISE KNOWN AS THE GENERAL BANKING
‘LAW OF 2000.

(Ail subsequent sections shal! be re-numbered accordingly)


5.2. The Commission's jurisdiction over all cases enumerated under Section 5
of Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, that the Supreme Court
in the exercise of its authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes submitted for final resolution
which should be resolved within one (1) year from the enactment of this Code. The
commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.

SECTION 2. Repealing Clause - All laws, decrees, executive orders, proclamations,

rules and regulations, or parts thereof inconsistent herewith are hereby repeaked or modified
accordingly

SECTION 3. Separability Clause. - If any provision of this Act is held invalid or

unconstitutional, the other provisions not affected hereby shall remain valid and subsisting.

SECTION 4. Effectivity Clause - This Act shall take effect fifteen (15) days after its

publication in the official gazette or in at least two (2) national newspapers of general
circulation.

Approved.