ACLC COLLEGE OF ORMOC
Name: Lonelyn C. Caliwan
Subject: Banking and Financial Institutions
Course: BSBA-1
Instructor: Mr. Robert Jay Caindoc
A. BANGKO SENTRAL NG PILIPINAS
I.
History of the Banko Sentral ng Pilipinas
A group of Filipinos had conceptualized a central bank for the Philippines as early as 1933. It came up with
the rudiments of a bill for the establishment of a central bank for the country after a careful study of the
economic provisions of the Hare-Hawes Cutting bill, the Philippine independence bill approved by the US
Congress.
During the Commonwealth period (1935-1941), the discussion about a Philippine central bank that would
promote price stability and economic growth continued. The country’s monetary system then was
administered by the Department of Finance and the National Treasury. The Philippines was on the
exchange standard using the US dollar—which was backed by 100 percent gold reserve—as the standard
currency.
In 1939, as required by the Tydings-McDuffie Act, the Philippine legislature passed a law establishing a
central bank. As it was a monetary law, it required the approval of the United States president. However,
President Franklin D. Roosevelt disapproved it due to strong opposition from vested interests. A second
law was passed in 1944 during the Japanese occupation, but the arrival of the American liberalization
forces aborted its implementation.
Shortly after President Manuel Roxas assumed office in 1946, he instructed then Finance Secretary Miguel
Cuaderno, Sr. to draw up a charter for a central bank. The establishment of a monetary authority became
imperative a year later as a result of the findings of the Joint Philippine-American Finance Commission
chaired by Mr. Cuaderno. The Commission, which studied Philippine financial, monetary and fiscal
problems in 1947, recommended a shift from the dollar exchange standard to a managed currency system.
A central bank was necessary to implement the proposed shift to the new system.
Immediately, the Central Bank Council, which was created by President Manuel Roxas to prepare the
charter of a proposed monetary authority, produced a draft. It was submitted to Congress in February1948.
By June of the same year, the newly-proclaimed President Elpidio Quirino, who succeeded President
Roxas, affixed his signature on Republic Act No. 265, the Central Bank Act of 1948. The establishment of
the Central Bank of the Philippines was a definite step toward national sovereignty. Over the years,
changes were introduced to make the charter more responsive to the needs of the economy. On 29
November 1972, Presidential Decree No. 72 adopted the recommendations of the Joint IMF-CB Banking
Survey Commission which made a study of the Philippine banking system. The Commission proposed a
program designed to ensure the system’s soundness and healthy growth. Its most important
recommendations were related to the objectives of the Central Bank, its policy-making structures, scope of
its authority and procedures for dealing with problem financial institutions.
Subsequent changes sought to enhance the capability of the Central Bank, in the light of a developing
economy, to enforce banking laws and regulations and to respond to emerging central banking issues.
Thus, in the 1973 Constitution, the National Assembly was mandated to establish an independent central
monetary authority. Later, PD 1801 designated the Central Bank of the Philippines as the central monetary
authority (CMA). Years later, the 1987 Constitution adopted the provisions on the CMA from the 1973
Constitution that were aimed essentially at establishing an independent monetary authority through
increased capitalization and greater private sector representation in the Monetary Board.
The administration that followed the transition government of President Corazon C. Aquino saw the turning
of another chapter in Philippine central banking. In accordance with a provision in the 1987 Constitution,
President Fidel V. Ramos signed into law Republic Act No. 7653, the New Central Bank Act, on 14 June
1993. The law provides for the establishment of an independent monetary authority to be known as the
Bangko Sentral ng Pilipinas, with the maintenance of price stability explicitly stated as its primary objective.
This objective was only implied in the old Central Bank charter. The law also gives the Bangko Sentral
fiscal and administrative autonomy which the old Central Bank did not have. On 3 July 1993, the New
Central Bank Act took effect.
II.
CHRONOLOGY OF EVENTS OF BANGKO SENTRAL NG PILIPINAS
YEAR
 1900
EVENTS
 Act No. 52 was passed by the First Philippine Commission placing all banks
under the Bureau of Treasury. The Insular Treasurer was authorized to
supervise and examine banks and banking activities.
 February 1929
 The Bureau of Banking under the Department of Finance took over the task
of banking supervision.
 1939
 A bill establishing a central bank was drafted by Secretary of Finance
Manuel Roxas and approved by the Philippine Legislature. However, the bill
was returned by the US government, without action, to the Commonwealth
Government.
 A joint Philippine-American Finance Commission was created to study the
Philippine currency and banking system. The Commission recommended
the reform of the monetary system, the formation of a central bank and the
regulation of money and credit.
 The charter of the Central Bank of Guatemala was chosen as the model of
the proposed central bank charter.
 1946
 August 1947
 February 1948
 15 June 1948
 3 January
1949
 November
1972
 A Central Bank Council was formed to review the Commission’s report and
prepare the necessary legislation for implementation.
 President Manuel Roxas submitted to Congress a bill “Establishing the
Central Bank of the Philippines, defining its powers in the administration of
the monetary and banking system, amending pertinent provisions of the
Administrative Code with respect to the currency and the Bureau of
Banking, and for other purposes.
 The bill was signed into law as Republic Act No. 265 (The Central Bank
Act) by President Elpidio Quirino.
 The Central Bank of the Philippines (CBP) was inaugurated and formally
opened with Hon. Miguel Cuaderno, Sr. as the first governor.
 The broad policy objectives contained in RA No. 265 guided the CBP in
the implementation of its duties and responsibilities, particularly in
relation to the promotion of economic development in addition to the
maintenance of internal and external monetary stability.
 RA No. 265 was amended by Presidential Decree No. 72 to make the CBP
more responsive to changing economic conditions.
 PD No. 72 emphasized the maintenance of domestic and international
monetary stability as the primary objective of the CBP. Moreover, the CBP’s
authority was expanded to include not only the supervision of the banking
system but also the regulation of the entire financial system.
 January 1981
 Further amendments were made with the issuance of PD No. 1771 to
improve and strengthen the financial system, among which was the
increase in the capitalization of the CBP from P10 million to P10 billion.
 1986
 Executive Order No. 16 amended the Monetary Board membership to
promote greater harmony and coordination of government monetary and
fiscal policies.
 3 July 1993
 Republic Act No. 7653 was passed establishing the Bangko Sentral ng
Pilipinas (BSP), replacing CBP as the country's central monetary authority.
 14 February
2019
 Republic Act No. 11211 was passed amending RA No. 7653. The charter
amendments bolster the capability of the BSP to safeguard price stability
and financial system stability.
III.
FUNCTIONS
Monetary Board- exercises the powers and functions of the BSP, such as the conduct of monetary policy
and supervision of the financial system. Its chairman is the BSP Governor, with five full-time members from
the private sector and one member from the Cabinet.
Governor- is the chief executive officer of the BSP and is required to direct and supervise the operations
and internal administration of the BSP.
Deputy Governor- heads each of the BSP's operating sectors as follows:
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Monetary and Economics Sector (MES) - mainly responsible for the
operations/activities related to monetary policy formulation, implementation,
and assessment.
Financial Supervision Sector (FSS) - mainly responsible for the regulation
of banks and other BSP-supervised financial institutions, as well as the
oversight and supervision of financial technology and payment systems.
Corporate Services Sector (CSS) – mainly responsible for the effective
management of BSP’s human, financial, and physical resources to support the BSP’s
core functions, including oversight of the operations of the New Clark City – Program
Management Office.
Payments and Currency Management Sector (PCMS) – mainly responsible for
maintaining the safety and integrity of the Philippine currency and ensuring a wellfunctioning payments and cash ecosystem that facilitates the economic activity and
supports long-run economic growth.
Regional Operations and Advocacy Sector (ROAS) - mainly responsible for the
management of activities related to regional operations, consumer empowerment
and advocacy, and communications.
Senior Assistant Governor/Assistant Governor- assists the Governor and/or the Deputy Governor in
formulating and implementing programs and policies, and manages the overall operations of his/her SubSector/Office.
Monetary Board Members
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Benjamin E. Diokno
Peter B. Favila
Antonio S. Abacan Jr.
V. Bruce J. Tolentino
Anita Linda R. Aquino
Eli M. Remoloma
Governor
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Felipe M. Medalla
Deputy Governors
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Francisco G. Dakila Jr.
o Monetary and Economics Sector
Chuchi G. Fonacier
o Financial Supervision Sector
Mamerto E. Tangonan
o Payments and Currency Management Sector
Eduardo G. Bobier
o Corporate Service Sector
Bernadette Romulo-Puyat
o Regional Operations and Advocacy Sector
Senior Assistant Governors
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Elmore O. Capule
o Office of the General Counsel and Legal Services
Maria Ramona Getrudes T. Santiago
o Financial Markets
Iluminda T. Sicat
o Monetary Policy Sub-sector
Johnny Noe Estanislao Ravalo
o Office of the Systemic Risk Management
Edna C.Villa
o Payments and Currency Development Sub-sector(currently reassigned to the office of the
Governor)
Assistant Governors/Executive Directors II
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Atty. Arifa A. Ala
o Financial Supervision Sub-Sector III.
Lyn I. Javier
o Policy and Specialized Supervision Seb-Sector
Matthew M. David
o Anti-money Laundering Counsel Secretariat
Mary Jane T. Chiong
o Internal Audit Office
Laura L. Ignacio
o BSP Research Academy
B. SECURITY AND EXCHANGE COMMISSION
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:
(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 concerning the secur ities 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 C ode;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
(j) 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;
(l) 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 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;
(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.
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 or the appropriate Regional Trial Court. 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 the Code. The
Commission shall retain jurisdiction over pending suspension of payments/rehabilitation
cases filed 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 powers enumerated
in Section 6 of said Decree, unless these are inconsistent with any provision of the Code.
HISTORY
The SEC was established on 26 Oct 1936 by virtue of the Commonwealth Act No. 83 or the
Securities Act. Its establishment was prompted by the need to safeguard public interest in
view of local stock market boom at that time. Operations began on 11 Nov 1936 under the
leadership of Commissioner Ricardo Nepomuceno. Its major functions included registration of
securities, analysis of every registered security, evaluation of the financial con dition and
operations of applicants for security issue, screening of applications for broker’s or dealer’s
license and supervision of stock and bond brokers as well as the stock exchanges. The
agency was abolished during the Japanese occupation and was rep laced with the Philippine
Executive Commission. It was reactivated in 1947 With the restoration of the Commonwealth
Government. Due to the changes in the business environment under Pres. Ferdinand Marcos,
the agency was reorganized on 29 Sept 1975 as a col legial body with 3 commissioners and
was given quasi-judicial powers under PD902-A.
In 1981, the Commission was expanded to include two (2) additional commissioners and two
(2) departments, one for prosecution and enforcement and the other for supervision and
monitoring. Then on 01 December 2000, the SEC was reorganized as mandated by R. A.
8799 also known as the Securities Regulation Code.
MISSION
We are the gateway to doing business in the Philippines. We provide a competitive and
secure environment for fast and easy company registration, efficient capital formation, broad
investor participation and business innovation.
VISION
By 2025, the SEC with its driven, highly-trained, agile and customer-centric team of
professionals, equipped with digital techn ology and adaptive registration and data
management systems, is the premier investor champion and catalyst of a deep, broad and
informed investor-based capital market and more empowered business sector considered
among the best in the Southeast Asian (SEA) Region.
CORE VALUES
INTEGRITY
We are ethical, honest, fair, and sincere in our private and public lives.
PROFESSIONALISM
We are capable and competent in performing our mandate, we excel in our fields of expertise,
and we possess high ethical principles and standards which are essential in providing timely,
quality, and committed public service.
ACCOUNTABILITY
We are responsible for our actions and decisions.
TEAMWORK
We collaborate to achieve our common goals and tasks in a seamless and ef ficient manner.
INDEPENDENCE
We act without fear or favor and render sound judgment in the performance of our duties and
responsibilities.
SEC DEPARTMENTS AND OFFICES
MARKETS AND SECURITIES REGULATION DEPARTMENT
Department’ Functions:
1. Registers securities and grants exemption from registration such as but not limited to
equity securities, bonds, commercial papers issued by issuer of registered equity and bonds,
real estate investment trusts and other alternative investment products, and supervise s and
monitors the compliance by the issuers of such securities with legal and regulatory
requirements.
2.
Registers and supervises securities markets and market institutions such as
exchanges, alternative trading systems, over -the-counter markets and other trading markets,
self regulatory organizations, clearing agencies, securities lending agencies, depositories,
custodians, central trade reporting systems, registrars of qualified buyers and other
securities-related organizations for their compliance wit h legal and regulatory requirements.
3.
Supervises intermediaries and market professionals such as brokers, dealers,
government securities eligible dealers, government securities brokers, associated persons
and salespersons of brokers dealers, transfer ag ents, investment houses, investment
company advisers, mutual fund distributors, compliance officers and certified investment
solicitors of investment company advisers/ mutual fund distributors, and other securities
market participants for their compliance with legal and regulatory requirements.
4.
Reviews proposed rules of self -regulatory organizations (SROs) and other market
participants, and proposed products and services in the market to ensure their consistency
with securities laws, regulations, polici es and global best practices.
5.
Reviews existing regulatory frameworks of the securities industry, conduct market related research and recommends rules and/or reforms.
6.
Establishes linkages with national and international organizations (eg. ASEAN and
APEC) and regulatory agencies with regard to the securities market, including cross -border
products, services and arrangements.
7.
Acts as National Numbering Agency for all securities issued in the Philippines.
8.
Issues show cause orders, assess and imp ose penalties for non compliance with rules
and regulations implemented by the Department.
 SECURITIES REGISTRATION DIVISION
1.Registers securities and grants exemption from registration such as but not limited to
equity securities, bonds, commercial papers issued by issuer of registered equity and
bonds, real estate investment trusts and other alternative investment products.
2.Processes applications for Exemption from Registration/ request for confirmation of
exemption from registration regarding issuance of securities (SRC Sections 10.1 and
10.2 transactions).
3.Monitors and supervises the compliance by issuers with standards of financial
reporting and the administration of fair disclosure and other regulatory requirements.
4.Conducts audits of issuers of securities as warranted and prepares audit reports
and recommends corrective actions or sanctions.
 MARKETS AND INTERMEDIARIES’ DIVISION
1.Monitors and supervises securities markets such as exchanges, alternative trading
systems,
over-the-counter
markets,
other
trading
markets,
self -regulatory
organizations (SROs), clearing agencies, depositories, custodians, transfer agents,
central trade reporting systems and other securities related organizations and
participants, as well as securities brokers, dealers , associated persons and
salespersons of brokers dealers, investment houses, investment company advisers,
mutual fund distributors, compliance officers and certified investment solicitors of
investment company advisers/ mutual fund distributors, securities lending agencies,
registrars of qualified buyers and other securities intermediaries, for their compliance
with legal and regulatory requirements.
2.Reviews periodic reports of SROs, markets, intermediaries and other registered
persons.
3.Conducts audits of SROs, intermediaries and other registered persons and prepares
audit reports and recommends corrective actions or sanctions.
4.Analyzes and collates data and risk -based financial reports to support audit activities.
5.Monitors compliance of PSE relative to its shares with listing and disclosure
requirements.
 INVESTMENT PRODUCTS & SERVICES DIVISION
1. Registers securities markets and market institutions such as Exchanges, Alternative
Trading Systems, Over-the-Counter markets and other trading markets, sel f-regulatory
organizations (SROs), clearing agencies, securities lending agencies, depositories,
custodians, central trade reporting system, registrars of qualified buyers and other
securities-related organizations.
2. Reviews proposed rules of SROs and other market participants, and proposed
products and services in the market to ensure their consistency with securities laws,
regulations, policies, and global best practices.
3. Reviews existing regulatory frameworks of the securities industry, conducts marketrelated research and recommends rules and/or reforms.
4. Establishes linkages with national and international organizations (eg. ASEAN and
APEC) and regulatory agencies with regard to the securities market, includ ing crossborder products, services and arrangements.
5. Acts as National Numbering Agency for all securities issued in the Philippines.
(prospective)
CORPORATE GOVERNANCE AND FINANCE DEPARTMENT
Department’ Functions:
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Registers or grants exemption from registration securities of Mutual Fund Companies
(MFCs) and Exchange-Traded Funds (ETFs); issuers of proprietary and non proprietary membership certificates/shares; timeshares; and commercial papers
offered or sold by unlisted or unregistered issuers.
Licenses Investment Companies (lCs).
Accredits Corporate Governance Training Providers (CGTPs).
Monitors Public Companies (PCs), Mutual Fund Companies (MFCs) , Exchange Traded
Funds (ETFs), Financing Companies (FCs), Lending Companies (Les), Issuers of
Membership Certificates/Shares,
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Timeshares/Commercial Papers and Foundations’ compliance with existing laws and
regulations.
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Monitors covered companies’ compliance with the Revised Code of Corporate
Governance (RCCG) and other governance issuance of the Commission;
Promotes good corporate practices and principles.
Updates the status of some pre-need corporations by virtue of the Commission’s
residual power and resolves claims filed with the SEC before the enactment of the Pre Need Code.
Acts as Credit Information Corporation (CfC) help desk.
Participates in Congressional hearings on proposed bills affecting the SEC.
Participates in inter-agency and private sector meetings or consultations.
Performs such other functions as may be directed by the Chair and Commissioners.
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COMPANY REGISTRATION AND MONITORING DEPARTMENT
Department’ Functions:
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Registers domestic corporations and partnerships.
Processes applications for amendment of articles of incorporation/articles of
partnership, by-laws, mergers and other corporate reorganizations that require the
prior approval of the Commission.
Licenses foreign corporations doing business In the Philippines and multinational
companies.
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Licenses lending, financing companies and capital market participants.
Monitors compliance by registered domestic/licensed foreign corporations with their
reportorial responsibilities under the Corporation Code and other existing laws.
Maintains custody over registration documents and documents that it has acted upon
or directly filed with it.
Verifies and reserves proposed company names and issues certification on corporate
filings and information.
Revokes certificates of incorporation/license to do business for non -compliance with
reportorial requirements and other pertinent laws implemented by the Commission.
Attends court hearings and processes as witness and as resource person in inter agency meetings and provides corporate records to other government agencies.
Hears/decides administrative cases within the Department jurisdict ion.
Acts on Petition for Change of Corporate Name.
Undertakes special studies on corporate problems relating to registration and
monitoring of corporations submitted to the Commission by the public and government
agencies and instrumentalities and develop s, recommends policies on registration and
monitoring of corporations and licensed foreign corporations.
Attends to public queries.
Performs such other functions as may be directed by the Chair and Commissioners.
ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT
Department’ Functions:
 Investigation and Prosecution Division (IPD)
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Investigate and hear, motu propio or upon complaint or referral, all cases involving
violations of the laws, rules and regulations being implemented by the
Commission;Issues Orders for the imposition of fine and/or other administrative
penalties.
Prepare draft of Orders, Resolutions or Decisions for the imposition of fines and
other appropriate administrative sanctions for violations of the laws, rules and
regulations enforced by the Commission;
Refer to the Special Operations Division (SOD) cases for the conduct of
surveillance and/or onsite inspections of entities, as may be necessary to an on going investigation;
Initiate the issuance of a Cease and Desist Order (CDO) by th e Commission;
File criminal complaints before the DOJ and actively prosecute or assist the public
prosecutors in prosecuting criminal cases for violations of the Securities Regulation
Code and its IRR and all other criminal cases involving the SEC as compl ainant;
Prepare and file the necessary pleadings as required in administrative and criminal
cases;
Prepare and recommend to the Commission En Banc the posting of advisories on
the Commission’s website on matters required to be immediately publicly
disseminated for the protection and information of the investing public;
Evaluate Settlement Offers proposed in writing by parties being investigated and/or
charged;
9) Act on petitions for revocation of corporate registration in all cases, except those
which fall under the original authority of the CRMD;
Prepare writs of execution to enforce the provisions of Section 54 of the SRC and
to enforce the payment of the fees and other dues collectible under said section;
Attend and render assistance to walk -in clients and acts on or responds to emails,
letters and phoned-in queries and tips from the public and other government
agencies as may be assigned by the Director;
 Market Surveillance Division (MSD)
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Conduct surveillance of the trading of securities in the exchanges and ensure
compliance of market participants and intermediaries with Sections 24, 26 and 27
of the SRC and its IRR;
Prepare Investigation and/or Surveillance Reports with its findings and
recommendations with supporting documentary and other evidence concerning any
violations of Sections 24, 26 and 27 of the SRC and its IRR and refers the same to
the IPD for evaluation and appropriate action;
Prepare Investigation and/or surveillance reports on findings that a person or entity
has engaged in or is about to engage in any act or practice constituting a violation
of any rule of an Exchange, registered securities association, clearing agency or
other self-regulatory organization in the event that such exchange or other selfregulatory organization is unable or unwilling to take action against the person;
Coordinate with the Philippine Stock Exchange (PSE), Philippine Dealing and
Exchange Corporation (PDEx), Capital Markets Integrity Corporation (C MIC) and
capital market participants in gathering evidence or obtaining information on market
manipulation, insider training and/or fraudulent transactions in connection with the
purchase or sale of securities;
Act on requests for assistance from Internati onal Organization of Securities
Commissions (IOSCO) members and other foreign securities regulators;
Prepare and recommend to the Commission En Banc the posting of advisories on
the Commission’s website on matters concerned with the trading of securities i n the
exchanges and violations of Sections 24, 26 and 27 of the SRC;
Assist the IPD in actively prosecuting criminal cases before the DOJ and the Courts;
Attend and render assistance to walk -in clients and acts on or responds to emails,
letters and phoned-in queries and tips from the public and other government
agencies as may be assigned by the Director; and
 Special Operations Division (SOD)
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Conduct undercover and surveillance operations and onsite inspections, upon
request or referral by the IPD or as ass igned by the Director, of entities involved in
violations of the SRC, the Corporate Code and other laws and the rules and
regulations administered by the Commission;
Conduct surveillance of the public offering and exchanges of unregistered
securities in all its forms including commodities futures contracts done through the
internet to determine whether any person has violated or its about to violate any
provisions of the SRC, any rule, regulation, or order thereunder;
Prepare investigation and/or surveillan ce reports with its findings of facts,
conclusions of law and recommendations with supporting documentary and other
evidence of violations of the SRC and its IRR and refers the same to the IPD for
evaluation and appropriate action;
Coordinate with the anti-cybercrime units of other law enforcement agencies in
gathering electronic evidence of violations of the SRC and other laws enforced by
the Commission done through the internet;
Attend and render assistance to walk -in clients and act on and responds to e-mails,
letters and phoned-in queries and tips from the public and other government
agencies as may be assigned by the Director;
Provide investor assistance and develop and undertake programs to promote
investor awareness including recommending to the En Ba nc the issuance of
advisories for posting on the Commission’s website;
Attend the regular meetings of the NALECC as representative of the Commission
and acts on all requests made by the NALECC members;
Assist the IPD in actively prosecuting criminal cases before the DOJ and the Courts;
 Anti-Money Laundering Division (AMLD)
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Act as the Anti-Money Laundering (AML)/Combating the Financing of Terrorism
(CFT) Division of the Commission;
Coordinate directly with the Anti-Money Laundering Council (AMLC);
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Review the AML Operating Manuals of applicants for registration and/or secondary
license, as referred to it by the Company Registration and Monitoring Department
(CRMD), Markets and Securities Regulations Department (MSRD) and the
Corporate Governance and Finance Department (CGFD), and make the appropriate
recommendations thereon;
Review and recommend to the En Banc the proposed AML/CFT related rules of
self-regulatory organizations and other market participants;
Plan and conduct AML/CFT audit and examinations in coordination with the MSRD,
CGFD and CRMD and refer its findings of Money Laundering and/or Terrorists
Financing to the AMLC for prosecution and other appropriate action;
Act on all matters pertaining to compliance by SEC covered persons with the Anti Money Laundering Act, as amended, and the rules and regulations issued by the
Commission related to AMLA;
Act on requests for assistance from International Organization of Securities
Commissions (IOSCO) members and other foreign securities regulators on
AML/CFT matters;
Prepare reports of violations committed by entities registered with the Commission
of AML/CFT rules and regulations and refer the same to the IPD for the initiation of
revocation proceedings of their certificates of registration;
Prepare and recommend to the En Banc advisories on AML/CFT related matters for
posting on the Commission’s website;
Act as resource center for investors and other government agencies on AML/CFT
related matters;
Investigate and hear, motu proprio, or upon complaint or referral, violations of the
rules and regulations of the Commission concerning AML/CFT matters;
Prepare Orders or Decisions for the imposition of fines or other administrative
sanctions for violations of the rules and regulations of the Commission on AML/CFT
matters in accordance with Section 54.1 (a) of the SRC;
Prepare and file criminal complaints for violation of the rules and regulations
promulgated by the Commission on AML/CFT matters in accordance with S ection
73 of the SRC;
Actively prosecute criminal complaints for violation of the rules and regulations of
the Commission on AML/CFT matters before the DOJ and the Courts;
Attend and render assistance to walk -in clients and act on and respond to email/written concerns, tips or referrals on AML/CFT -related matters;
Enforce all AML/CFT and Proliferation of Weapons of Mass Destruction rules and
regulations promulgated by the Commission; and
Perform such other AML/CFT-related functions as may be directed by th e EIPD
Director, the SEC Chairperson and Commissioners.
ECONOMIC RESEARCH AND TRAINING DEPARTMENT
Department’ Functions:
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Coordinates the formulation and monitoring of the agency’s strategic and operational
plans.
Prepares the agency’s inputs to government plans and related reports/updates.
Prepares materials on the policies, plans, programs and accomplishments of the SEC
for reporting to government oversight agencies (eg. OBM, DoF, NEDA, Congress).
Publishes the SEC Annual Report.
Acts as the focal SEC department in implementing infomercials and conducting
education programs for the external public.
Acts as the focal SEC department on matters pertaining to performance governance
and quality management programs.
Coordinates with SEC departments the formulation and implementation of the annual
research agenda of the Commission.
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Coordinates statistical compilation activities and represents the Commission in inter agency activities on statistical concerns.
Provides technical support to inter -agency activmes and coordination on matters
relating to multi-lateral, regional and bilateral international trade and economic
partnership agreements on financial services.
Coordinates the conduct of capacity building programs for capital market participants.
Administers certification examinations for capital market participants.
Coordinates with foreign donors on the implementation of SEC capacity building
projects/activities as assigned by the Commission En Banc.
Performs such other functions as may be directed by the Chair and Commissioners.
INFORMATION AND COMMUNICATIONS TECHNOLOGY DEPARTMENT
Department’ Functions:
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Formulates the SEC Information Systems Strategic Plan (ISSP) and coordinates
activities relative to the implementation thereof
Undertakes procurement planning, acquisition, and deployment of thc Commission’s
Information and Communications Technology (lCT) Resources in accordance with the
SEC-ISSP.
Leads and facilitates application systems development activities, including the
administration, maintenance and promotions of the systems developed and deployed
application systems.
Performs capacity planning actrvrties
and administers the network and
communications infrastructure of the Commission including establishment of linkages
between the SEC head office and extension offices.
Ensures the proper maintenance of the computer and network facilities of the
Commission.
Participates in inter-agency electronic linkages and data-sharing arrangements.
Preserves the integrity of SEC electronic data.
Updates
the
database
entries
relative
to
amendments
to
the
capital
structure/contributed capital of SEC registered companies.
Receives reports and other written communications (mails and walk -in) and releases
SEC documents, except applications processed and approved by CRMD.
Maintains archives and manages electronic copies of documents submitted by
registered companies.
Coordinates with the other departments/ offices In the disposal of records In
accordance with Philippine law and SEC policy.
Provides information of registered companies to SEC internal and external users.
Authenticates corporate/ partnership documents based on elec tronic records.
Performs such other functions as may be directed by the Chair and Commissioners.
HUMAN RESOURCE AND ADMINISTRATIVE DEPARTMENT
Department’ Functions:
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Implements CSC law, rules and regulations, in matters of recruitment and selection,
training and staff development, scholarship grants, performance management, merit
promotion, employee welfare and administrative disciplinary actions.
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Manages the activities of the Medical and Dent al Unit in providing health care to SEC
employees.
Conducts human resource (HR) policy research.
Implements internal and external communications system such as publication of
newsletter, SEC Circulars, Vacant Positions and other publications as may be
assigned from time to time.
Coordinates with the Office of Commission Secretary on media relation matters.
Manages SEC Library.
Provides timely and effective administrative and general services support to the
departments and offices of the Commission.
Provides administrative support and assistance in the procurement process of the SEC
in accordance with Republic Act No. 8194 and its Revised Implementing Rules and
Regulations (IRR) and other applicable laws and rules.
Reviews and submits SALN of employees to app ropriate agencies.
Manages the Citizens Charter and monitors compliance with the Anti -Red Tape Act
of200 1 eRA 8794).
Plans and implements Gender and Development (GAD) programs.
Plans and implements Senior Citizen related concerns.
Administers the internship program.
Performs such other functions as may be directed by the Chair and Commissioners.
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FINANCIAL MANAGEMENT DEPARTMENT
Department’ Functions:
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Prepares and submits the Commission’s budget documents and financial reports to
oversight agencies.
Allocates, processes, and releases SEC funds to different programs, projects and
activities (PAPs).
Processes and releases payments and claims to, and remittances for all SEC
employees and creditors.
Collects all SEC income from its clientele and deposits the same to the National
Treasury on the following working day.
Serves as custodian of promissory notes of registered commercial paper issuers and
deposit substitutes of multinationals and other foreign corporations doing business in
the Philippines.
Pre-audits all disbursements as to accuracy and compliance with rules and regulations
on disbursements.
Confirms GSIS loan applications.
Reconciles subsidiary ledgers against the general ledger.
Manages and operates the Provident Fund.
Processes requests for refund of filing fees, and application/utilization and transfer of
payments of the same corporation as recommended by the operating departments.
Processes requests for authentication of official receipts.
Performs such other functions as may be directed by t he Chair and Commissioners.
SPECIAL OFFICES
OFFICE OF THE COMMISSION SECRETARY
Department’ Functions:
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Maintains the official records of the En Banc.
Prepares the agenda and notices for En Banc meetings.
Maintains custody over documents it has acted on, or are directly filed with it, unless
otherwise directed by the En Banc, including certificates of titles of real estate
properties of the Commission, and other confidential documents as may be determined
by the En Banc.
Prepares minutes of Commission meetings and Executive Sessions, decisions and
resolutions for the approval of the En Banc.
Handles media relations for the Commission.
Develops Rules of Practice that guide the Commission, Departments, Offices, staff and
the public in the Commission’s processes and procedures.
Reviews official documents for dissemination based on established methodology.
Handles appeals from Petitions for Calling of Meeting.
Performs such other functions as may be directed by the Chair and Commissioners.
OFFICE OF THE GENERAL COUNSEL
Department’ Functions:
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Hears Petitions for Calling of Meeting.
Acts on the following for the En Banc:
Appeals to the En Banc from decisions of the operating departments, SRO, etc.
Petition for Voluntary Dissolution with Creditors Affected under Section 119 of the
Corporation Code.
Petitions for issuance of Cease and Desist Orders (COOs). Contracts of the
Commission for review.
Request for opinions and special studies from the Chair, the Commissioners and other
Operating Departments.
Acts on formal request for opinions from the public involving the interpretation of the
laws which the Commission implements.
Liaises with the House of Representatives and the Senate, assists in the preparation
of the Commission’s legislative agenda, and prepares comments and position papers
on proposed legislation.
Liaises on legal matters with self -regulatory organizations, international organizations
and foreign government regulators and agencies.
Represents the Commission before the COA, DBM and other administrative agencies.
Oversees non-enforcement litigation, and appellate litigation in cooperation with the
Office of the Solicitor General.
Represents the Commission before the Office for Competition (DOJ) in conference s,
technical working groups, and other joint activities to study existing laws, rules and
regulations on trade and competition, and develop and propose appropriate legislative
or executive action in coordination with the other departments.
Entertains walk-in/phone legal queries involving complex issues from the public.
Performs such other functions as may be directed by the Chair and Commissioners.
OFFICE OF THE GENERAL ACCOUNTANT
Department’ Functions:
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Leads in the formulation, adoption, implementation of financial reporting and auditing
standards and practices based on global framework.
Prepares opinions, clarifications and reply to queries from the public that involve
financial reporting and audit issues.
Accredits auditing firms and/or external audito rs, appraisal companies or professional
service organizations, credit rating agencies and other independent professionals or
experts engaged by corporations regulated by the Commission.
Monitors compliance with rules by external auditors and auditing firms , appraisal
companies or professional service organizations, credit rating agencies and other
experts accredited by the Commission.
Evaluates financial statements of corporations that may be referred by the
Departments.
Renders advice to the operating Departments, upon request, on financial reporting and
related matters.
Formulates rules and guidelines on oversight review of work of accredited external
auditors, appraisers, experts or professionals to determine compliance.
Conducts oversight review over the operation, quality controls, and documentation of
accredited external auditors, appraisers, experts or professionals.
Maintains custody over documents it has acted on, or are directly filed with it, unless
otherwise directed by the En Banc.
Performs such other functions as may be directed by the Chair and Commissioners.
EXTENSION OFFICES
Office’ Functions:
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Registers corporations and records articles of partnership, and amendments thereof,
including issuance of Certificates of Authority to lending companies (main and branch)
and CA to branches of financing companies.
Issues licenses to do business in the Philippines to branch or representative offices of
foreign and multinational companies.
Monitors companies’ compliance with reportorial requirements.
Receives reportorial requirements from corporations.
Issues certifications, CTCs and photocopies of documents requested by the clients.
Performs enforcement and investigations functions motu propio and/or III coordination
with EIPD/CGFD.
Performs onsite/ocular inspection motu propio and/or 111 coordination with
EIPD/CGFD.
Provides advisory assistance to the public.
Acts as observer in the stock holders’ and members meetings upon request by
corporations/stockholders/members.
Undertakes information dissemination on corporate and capital market development
and regulation.
Serves notices/summons and other SEC issuances (i.e., CDOs, decisions) as
requested by OGC and/or other operating departments.
Executes decisions as requested by OGe and/or other operating departments.
Acts upon petitions for the correction of entries in the Articles of Incorporation and/or
By Laws.
Receives and maintains custody over documents acted upon by or directly filed with it.
Assesses, collects and deposits fees, tines an d penalties.
Prepares and submits reportorial requirements to different SEC departments and
offices.
Performs such other functions as may be directed by the Chair and Commissioners.
MANDATE
The Securities and Exchange Commission (SEC) or the Commission i s 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 b y Commonwealth Act (CA)
83 also known as The Securities Act, the Commission was tasked to regulate the sale and
registration of securities, exchanges, brokers, dealers and salesmen. Subsequent laws were
enacted to encourage investments and more active publ ic 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 corpor ate governance, protection of investors,
widest participation of ownership and democratization of wealth.
SEC is the registrar and overseer of the Philippine corporate sector; it supervises more than
600,000 active corporations and evaluates the financial statements (FS) filed by all
corporations registered with it. SEC also develops and regulates the capital market, a crucial
component of the Philippine financial system and economy. As it carries out its mandate,
SEC contributes significantly to governmen t revenues.
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 e ver 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 Commis sion’s mandates, powers, and functions
were:
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The SEC Reorganization Act or Presidential Decree (PD) 902 -A in 1976, as subsequently
amended by PDs 1653, 1758 and 1799 reorganized the Commission to give it ample
powers to protect the public and their investments. Under the Act, the Commission was
reorganized into a collegial body; and was given additional powers and functions,
including quasi-judicial powers over intra-corporate disputes as well as absolute
jurisdiction, supervision and control over al l corporations, partnerships or associations
that are the grantees of primary franchise and/or a license or permit issued by the
government to operate in the Philippines.
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The Corporation Code of the Philippines (CCP) or the Batas Pambansa (BP) 68 in 1980
gave SEC the mandate to register corporations, collect fees from registering corporations,
and prescribe reportorial requirements. Along with the granting of authority to register
corporations, it empowered SEC to reject articles of incorporation or disapp rove any
amendment thereto if the same is not in compliance with the requirements of BP 68. The
Code also required all registered corporations to submit to SEC an annual report of its
operations, together with a financial statement of assets and liabilitie s, certified by an
independent certified public accountant (CPA) in appropriate cases, and such other
requirements as SEC may require within the prescribed period. Likewise, it authorized
SEC to promulgate rules and regulations reasonably necessary to enab le it to perform its
duties particularly in the prevention of fraud and abuses on the part of the controlling
stockholders, members, directors, and trustees or officers of corporations.
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The Revised Corporation Code (RCC) or RA 11232, signed into law by Pr esident Rodrigo
R. Duterte on 20 February 2019 and took effect on 23 February 2019, amended the
almost four-decade-old BP 68 and forms part of the present administration’s legislative
priorities. It aligns with the 10-point socio-economic agenda of the President, specifically
in increasing the Philippine economy’s competitiveness and improving the ease of doing
business in the country.
The RCC aims for a more competitive corporate sector, as it adopts international best
practices and standards tailored to address the needs and realities of the Philippine
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corporate setting, and introduces new concepts and mechanisms to help the Philippines
keep up with the changing times.
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Among the notable amendments to the Corporation Code is the grant of a perpetual
corporation term for existing and future corporations unless provided in their articles of
incorporation. The RCC also allows the formation of one -person corporation, a
corporation with a single stockholder and without a minimum authorized capital stock
required. Another salient feature of the RCC is the provision for an emergency board
when a vacancy in a corporation’s board of directors prevents the remaining directors
from constituting a quorum and consequently from making emergency actions required to
prevent grave, substantial and irreplaceable loss or damage.
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The RCC also allows corporations to adopt alternative dispute resolution mechanisms for
intra-corporate issues except those involving criminal offenses and interests of third
parties. As part of efforts to improve ease of doing business in the country, the RCC
mandated the Commission to develop and implement an electronic filing and monitoring
system. The SEC is mandated to promulgate rules to facilitate and expedite, among
others, corporate name reservation and registration, incorporation, submission of reports,
notices, documents required under the Code, and sharing of pertinent information with
other government agencies. To ensure optimal stockholder participation, meanwhile, the
RCC will allow the use of remote communication such as videoconferencing and
teleconferencing during stockholder meetings. Stockholders may also participate and vote
in absentia.
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The Revised Securities Act or BP 178 in 1982 repealed CA 83 in its entirety to give way to
a new statute that would enable the SEC to keep pace with new and more complex
securities instruments, trading vehicles and strategies. BP 178 provided, among others,
for a more sophisticated disclosure mechanism of securities to be offered to investors.
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The 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. The SRC also provided for the transfer of the Commission’s jurisdiction over
all cases enumerated under Section 5 of PD 902 -A to the Courts of general jurisdiction or
the appropriate Regional Trial Court. The SRC also defined in clear terms fraud and
criminal offenses related to securities transactions, and strengthened SEC regulatory
functions over all entities dealing in securities such as Self -Regulatory Organizations
(SROs) or the Philippine Stock Exchange (PSE), Philippine Dealing and Exchange
Corporation (PDEx) and Capital Market Integrity Corporation; as well as market
professionals such as brokers and dealers, among others.
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The SRC restated the requirements for the submission of an annual report by companies
of their operations, together with FS, c ertified by an independent CPA, and such other
requirements as SEC may deem necessary. It also included provisions on internal record
keeping and accounting controls to be complied with by companies. The SRC
Implementing Rules and Regulations (IRR), the la test amendment of which is known as
the 2015 SRC Rules, took effect on November 9, 2015.
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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 CCP relative to financial reporting. It also
includes rules and regulations governing registration statements and prospectuses for
various classes of securities and issuers, and defining accounting, tech nical and trade
terms used; the power to prescribe the form or details to be shown in the FS, and the
methods to be followed in the preparation of accounts, appraisal or valuation of assets
and liabilities, and other financial statement items, among others .
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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, additi onal
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 ass urance
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.
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Credit Information System Act (CISA) or RA 9510 in 2008 mandated the SEC to be the
lead government agency to implement and enforce the said Act. It designated the
Chairman of the SEC to be the Chairman of the Board of Directors of the Credit
Information Corporation (CIC), whose primary purpose is to receive and consolidate basic
credit data; to act as a central registry or central repository of credit information; and, to
provide access to reliable, standardized information on credit history and financial
condition of borrowers.
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Microfinance Nongovernment Organizations (NGOs) Act or RA 10693 in 2015 mandated
SEC to establish an accrediting body to be known as the Microfina nce NGO Regulatory
Council which shall, among others, institute and operationalize a system of accreditation
for Microfinance NGOs; issue certificate of accreditation as a Microfinance NGO upon
determination that the criteria set for this purpose have been fully satisfied; and, monitor
the performance of Microfinance NGOs to ensure continuing compliance with the
provisions of the Act and its IRR. The Chairman of SEC or designated representative shall
serve as the Chairperson of the Council; and the Council shall be assisted by a
secretariat to be lodged in the SEC, which shall coordinate the activities involved in the
accreditation process.
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Today, SEC is tasked with “serious responsibility of enforcing all laws affecting
corporations and other forms of associations not otherwise vested in some other
government offices.” In addition to the aforementioned laws, the Commission also
implements and acts either as lead or support agency in administering and enforcing
special laws, the more significant of which are:
•
Anti-Money Laundering Act of 2001 (RA 10365), as amended
•
Lending Company Regulation Act (LCRA) of 2007 (RA 9474)
•
Financing Company Act (FCA) (RA 8556), as amended
•
Investment Company Act (RA 2629), as amended, and its IRR
•
Investment Houses Law (PD 129)
•
Retail Trade Liberalization Act of 2000 (RA 8762)
•
Foreign Investments Act of 1991 (RA 7402), as amended
•
Omnibus Investments Code of 1987 (E.O. 226, Book III)
•
Anti-Dummy Law (Commonwealth Act 108), as amended
•
Civil Code of the Philippines (RA 386, Title IX – Partnership)
•
Securitization Act of 2004 (RA 9267)
•
Real Estate Investment Trust Act of 2009 (RA 9856)
•
Personal Equity and Retirement Account Act of 2008 (RA 9505)
•
Ease of Doing Business and Efficient Government Service Delivery Act of 2018
(RA 11032)