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8. UNION BANK V. SEC

FactsUnion Bank sought the opinion of the SEC as to the applicability and coverageof the Full Material Disclosure Rule on banks.

Union Bank claimed that the rules amend Section 5(a)(3) of the RevisedSecurities Act which exempts securities issued or guaranteed by bankinginstitutions from the registration requirement provided by Section 4 of the sameAct.

Chairman Yasay replied and informed Union Bank that the requirements ofregistration do not apply to securities of banks which are exempt under Section5(a)(3) of the Revised Securities Act. However, banks with a class of securitieslisted for trading on the Philippine Stock Exchange, Inc. are covered by certainRevised Securities Act Rules governing the filing of various reports with theSecurites and Exchange Commission.

Sec 5. Exempt Securities . (a) Except as expressly provided, the requirement ofregistration under subsection (a) of Section four of this Act shall not apply toany of the following classes of securities:x x x x x x x x x(3) Any security issued or guaranteed by any banking institution authorized todo business in the Philippines, the business of which is substantially confined tobanking, or a financial institution licensed to engage in quasi-banking, and issupervised by the Central Bank.

IssueWhether or not Union Bank is required to comply with the full disclosure rules

HeldYes, it must comply with the full disclosure rules.

RatioThe provision exempts from registration the securities issued by banking orfinancial institutions mentioned in the law. It does not state nor imply that as alisted corporation it is exempt from complying with the reports required by theassailed RSA Implementing Rules.

The mere fact that Union Bank, in regard to its banking functions, is alreadysubject to the supervision of the Bangko Sentral ng Pilipinas does not exemptthe former from reasonable disclosure regulations issued by the Securities andExchange Commission (SEC). These regulations -- imposed on petitioner as abanking institution listed in the stock market -- are meant to assure full, fairand accurate information for the protection of investors. Imposing suchregulations is a function within the jurisdiction of the SEC.

That Union Bank is under the supervision of the Bangko Sentral ng Pilipinas(BSP) and the Philippine Stock Exchange (PSE) does not exempt it fromcomplying with the continuing disclosure requirements embodied in theRules. As a bank, it is primarily subject to the control of the BSP. As acorporation trading its securities in the stock market, it is under the supervisionof the SEC. The stringent requirements imposed are understandable,

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considering the paramount importance given to the interests of the investingpublic.