Chapter 3 (Narrative Report) PDF

Republic of the Philippines Tarlac State University COLLEGE OF BUSINESS AND ACCOUNTANCY Tarlac City Laws, Regulations and Regulatory Agencies: Department of Trade and Industry and Securities and Exchange Comm...

Republic of the Philippines Tarlac State University COLLEGE OF BUSINESS AND ACCOUNTANCY Tarlac City Laws, Regulations and Regulatory Agencies: Department of Trade and Industry and Securities and Exchange Commission In Partial Fulfillment of the Requirements for Business Logic (GE ELEC 6) Submitted by: Cayabyab, William Y. Consorte, Ginnel V. Danzalan, Adlei Cedric A. Eria, Crystel Lorraine M. Escalambre, Kashmir G. BSAIS 3C Submitted to: Professor Tabelon, Kimberly R. GE ELEC 6 Instructor  September 2024 III. LAWS, REGULATIONS AND REGULATORY AGENCIES 1. DEPARTMENT OF TRADE AND INDUSTRY It is the executive department of the Philippine government responsible for promoting trade, industry, and investment in the country. History of DTI Department of Commerce (1898) On June 23,1898 DTI had its beginning when the first President of the Philippines, Emilio Aguinaldo formed the four government agencies namely, the Department of Navy, Commerce, Agriculture, and Manufacturing. Department of Industry and Police (1901) It was established to oversee the industrial activities of the country and law enforcement. Since industrial activities often led to labor unrest, it was connected with police responsibilities to ensure stability and better control. Department of Commerce and Industry (1947) After World War II, Manuel Roxas as the President of the Philippines during that time issued Executive Order 94 on October 4, 1947, creating the Department of Commerce and Industry. Department of Industry (1973) To have close supervision and ensure more effective delivery of services, President Ferdinand Marcos issued Presidential Decree 488, creating the Department of Industry. Department of Trade (1975) Under Presidential Decree 721, the Department of Trade was created to pursue the efforts of the government toward strengthening socio- economic development of the country, particularly in the area of commercial activities.  Ministry of Trade and Industry (1981) Marcos government’s national economic development goal required the need for new industrial promotion efforts with the expansion of Philippine trade overseas. This resulted in the creation of the Ministry of Trade and Industry on July 27, 1981. Department of Trade and Industry (1987) After the People Power Revolution, on February 27, 1987, President Corazon Aquino signed Executive Order 133 to reorganize the Ministry of Trade and Industry and renaming it the Department of Trade and Industry (DTI). a) Objectives Mission, Vision, and Values of DTI Mission Main economic catalyst in enabling innovative, competitive, job-generating, inclusive business, and empowering consumers. Vision A higher level of competitiveness for the Philippines and 2nd in ASEAN in FDI by 2028. Values o Passion o Integrity o Creativity o Competence o Synergy o Love for Country b) Roles, Structure and Authorities The Role of DTI The DTI is responsible for formulating and implementing policies that promote trade, investment, and industry growth. It supports businesses through various programs, regulations, and incentives to enhance economic development and competitiveness, and ensure consumer protection and fair-trade practices. The Organizational Structure of DTI DTI is headed by its secretary and has major Functional Groups which directly report to the Office of the Secretary, stakeholders, general public or in the provision of support to the said line agencies. Secretary: Maria Cristina Roque (August 2,2024) She is the acting secretary of DTI after the resignation of its former secretary, Alfredo Pascual. Functional Groups of DTI: Communication Group (CG) It is responsible for developing and executing comprehensive communication strategies to effectively disseminate the department’s objectives, policies, and initiatives to various stakeholders. Competitive and Innovation Group (CIG) Established to support the President’s agenda to increase competitiveness, innovation, and ease of doing business. Fair Trade Group (FTG) In charge of the enforcement of laws to protect consumers, consumer education, and formation of consumer groups. Industry Development and Investment Promotion Group (IPG) Responsible for trade and industry policy formulation and implementation of the Manufacturing Resurgence Program. International Trade Policy Group (ITG) Responsible for trade policy formulation, advocacy, negotiations, and representation at the multilateral, regional, and bilateral level. Management Service Group (MSG) Ensures the operational efficiency within the department by providing support services to all units to properly equip them in the performance of their respective functions. Regional Operations Group (ROG) Responsible for the field operations of the DTI in the regions and provinces. Authorities of DTI 1. Trade and Investment Promotion The DTI is responsible for crafting policies to boost trade and attract investments, both domestic and foreign. 2. Business Registration It oversees the registration and regulation of business entities. 3. Consumer Protection The department enforces laws to protect consumer rights and ensure fair trade practices. 4. SME Development It provides support and programs for the growth and development of small and medium enterprises. 5. Market Regulation The DTI monitors and regulates market conditions, including pricing and competition. c) Key Applicable Laws In the Philippines, the Department of Trade and Industry (DTI) is governed by several key laws and regulations. Here are some of the most relevant ones: 1. Consumer Act of the Philippines (Republic Act No. 7394) It is the policy of the State to protect the interests of the consumer, promote his general welfare and to establish standards of conduct for business and industry. Towards this end, the State shall implement measures to achieve the following objectives: i. protection against hazards to health and safety. ii. protection against deceptive, unfair and unconscionable sales acts and practices. iii. provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer. iv. provision of adequate rights and means of redress and v. involvement of consumer representatives in the formulation of social and economic policies.  Republic Act No. 7394 was enacted primarily to protect the consumers against hazards to health and safety, and against deceptive, unfair and unconscionable sales acts and practices. Unfortunately, blatant disregard to the law is still practiced by several manufacturers, distributors, retailers, and suppliers that puts the consumer in the losing end. The penalties provided in the Consumer Act are found to be less than what it is warranted to be. Throughout the world, people are increasingly coming to the understanding that substantial fines and appropriate prison terms are necessary deterrents. The law was enacted in 1992 when the penalties imposed have become too inconsequential relative to the standards of living today. The penalties are no longer effective deterrent against the commission of violations by persons who only wanted to increase profit. Consumer advocacy has yet to take roots in the country and it is incumbent upon Congress to continuously review the Consumer Act and its related laws towards promoting the best interests and general welfare of the consuming public. 2. Price Act (Republic Act No. 7581) An Act Providing Protection to Consumers by Stabilizing the Prices of Basic Necessities and Prime Commodities and by Prescribing Measures Against Undue Price Increases During Emergency Situations and Like Occasions It is the policy of the State to ensure the availability of basic necessities and prime commodities at reasonable prices at all times without denying legitimate business a fair return on investment. It is also a declared policy of the State to provide effective and sufficient protection to consumers against hoarding, profiteering and cartels with respect to the supply, distribution, marketing and pricing of said goods, especially during periods of calamity, emergency, widespread illegal price manipulation and other similar situations. To these ends, the State shall: i. Develop, adopt and promulgate measures to promote productivity in basic necessities and prime commodities. ii. Develop an improved and efficient transport and distribution system. iii. Develop, adopt and promulgate measures to stabilize prices at reasonable levels.  iv. Institute appropriate penalties for illegal price manipulation and other violations of this Act; and v. Establish a mechanism that will readily protect consumers from inadequate supply and unreasonable price increase on occasions of calamities, emergencies and like occurrences. 3. Business Name Law (Republic Act No. 3883) An Act to Regulate the Use in Business Transactions of Names Other Than True Names, Prescribing the Duties of the Director of the Bureau of Commerce and Industry in Its Enforcement, Providing Penalties for Violations Thereof, and for Other Purposes. It shall be unlawful for any person to use or sign, on any written or printed receipt, including receipt for tax on business, or on any written or printed contract not verified by a Notary Public, or on any written or printed evidence of any agreement or business transactions, any name used in connection with his business other than his true name, or keep conspicuously exhibited in plain view in or at the place where his business is concluded, if he is engaged in a business, any sign announcing a firm name or business name or style, without first registering such other name, or such firm name, or business name, or style, in the Bureau of Commerce (now Department of Trade and Industry) together with his true name and that of any other person having a joint or common interest with him in such contract, agreement, business transaction, or business. (As amended by Act No. 4147.) 4. Micro, Small, and Medium Enterprises (MSMEs) Development Act (Republic Act No. 9501) An Act to Promote Entrepreneurship by Strengthening Development and Assistance Programs to Micro, Small, and Medium Scale Enterprises, amending for the Purpose Republic Act No. 6977, as Amended, Otherwise Known as the "Magna Carta for Small Enterprises" and for Other Purposes. Recognizing that MSMEs have the potential for more employment generation and economic growth and therefore can help provide a self-sufficient industrial foundation for the country, it is hereby declared the policy of the State to promote, support,, strengthen and encourage the growth and development of MSMEs in all productive sectors of the economy particularly rural/agri-based enterprises. To this end, the State shall recognize the specific needs of the MSMEs and shall recognize the specific needs of the MSMEs and shall undertake to promote entrepreneurship, support entrepreneurs, encourage the establishments of MSMEs and ensure their continuing viability and growth and thereby attain countryside industrialization by: i. intensifying and expanding programs for training in entrepreneurship and for skills development for labor. ii. facilitating their access to sources of funds. iii. assuring to them access to a fair share of governments contracts and related incentives and preferences. iv. complementing and supplementing financing programs for MSMEs and doing away with stringent and burdensome collateral requirements that small entrepreneurs invariably find extreme difficulty complying with. v. instituting safeguards for the protection and stability of the credit delivery system. vi. raising government efficiency and effectiveness in providing assistance to MSMEs throughout the country, at the least cost. vii. promoting linkages between large and small enterprises, and by encouraging the establishments of common service facilities. viii. making the private sector a partner in the task of building up MSMEs through the promotion and participation of private voluntary organizations viable industry associations, and cooperatives; and ix. assuring a balance and sustainable development through the establishment of a feedback and evaluation mechanism that will monitor the economic contributions as well as bottlenecks and environmental effects of the development of MSMEs.  5. Innovative Startup Act (Republic Act No. 11337) An Act Providing Benefits and Programs to Strengthen, Promote and Develop the Philippine Startup Ecosystem. It is hereby declared the policy of the State to foster inclusive growth through an innovative economy by streamlining government and nongovernment initiatives, in both local and international spheres, to create new jobs and opportunities, improve production, and advance innovation and trade in the country. To this end, the State shall provide incentives and remove constraints aimed at encouraging the establishment and operation of innovative new businesses, businesses crucial to their growth and expansion, and to strengthen, promote, and develop an ecosystem of businesses and government and nongovernment institutions that foster an innovative entrepreneurial culture in the Philippines. d) Key Regulatory Requirements and Penalties for Non-compliance Key Regulatory Requirements Essential rules and standards set by government bodies or regulatory agencies that businesses and organizations must follow. Compliance with these requirements is crucial to ensure legal operation and to avoid penalties or legal issues. In the Philippines, the Department of Trade and Industry (DTI) imposes several key regulatory requirements for businesses and enterprises. These requirements ensure compliance with legal standards and promote fair trade practices. Entrepreneurs who wish to open a business through a sole proprietorship business entity must register with the Department of Trade and Industry (DTI). When starting a business in the Philippines, complying with appropriate government agencies is important in order to lawfully operate. Importance of Registering With DTI Under Republic Act (RA) 3883, it is illegal to use a business name without registering first with DTI. Ensuring to register your business name will guarantee you the legal right to use it for five years and must be renewed to continue its legal validity. Failing to do so will result in an additional 50% of the registration fee as a penalty.  Additionally, it is important to note that securing a business name is not a license to operate but is just one of the documentary requirements when you register a business in the Philippines. Business Registration Eligibility Anyone can apply for business registration as long as they meet the following criteria set by DTI: 1. Individuals of at least 18 years of age. Non-Filipino citizens under 18 years old must submit proof coming from their home country where the legal age is lower than 18 2. Filipino Citizen 3. Non-citizens with a certificate of sole proprietorship or Certificate of authority to engage in business in the Philippines 4. Stateless person An authorized representative can also register your business on your behalf as long as they provide the required documents such as the BN application form, valid ID, and an authorization letter signed by the business proprietor. DTI Registration Requirements DTI requires applicants to provide the following documents upon registering their business in the Philippines. You must provide the following: General Requirements: Accomplished BN Registration – Sole Proprietorship Application Form Present any of the following government-issued valid ID: o Passport o Driver’s license o UMID o PRC ID o NBI Clearance  o Police Clearance (in ID form) o Postal ID o Voter’s ID o OWWA ID o Seaman’s Book o IBP ID o Senior citizen ID o PWD ID o Government office ID Requirements for Foreign Nationals: Certified copy of Alien Certificate of Registration Certificate of Registration for Sole Proprietorship/Certificate of Authority to engage in business in the Philippines. Requirements for Recognized Stateless Person: Clear certified copy of the Certificate of Recognition issued by the DOJ-RSPPU or presentation of the original Certificate of Recognition and submission of a duplicate copy. Penalties for Non-compliance SECTION 15. PENALTY PROVISION. – The following violations related to primary registration shall be penalized as follows: 1. Failure to register (those who are found unregistered during TCVD – Subject to the penalties under prevailing revenue issuances. 2. Late Registration (those who are voluntary registering, but beyond the prescribed period as indicated in these Regulations) – Compromise penalty of P1,000.00, in addition to the unpaid ARF and penalties due thereon for every  year that the business is in operation. This provision shall not apply to application of TIN for employees. 3. Late payment of ARF – Subject to 25% surcharge and 20% interest per annum and P200.00 penalty. e) Latest Updates and News i. DTI warns consumers of vape brands subject to trading suspension Brand Manufacturer Importer Shenzhen Adwell Technology Co. LTD SHFT Electronic SHFT & DR Gadgets Trading OPC FREEZE Aerogin Consumer Electronics Trading AEROGIN & Genome Flavor Corporation DON BARS Technology Shenzhen Weimei Electronic Technology Co., LTD. SHFT Electronic CHILLAX Gadgets Trading OPC Shenzhen x Black Vape BLACK Technology Co. LTD. Jey 888 Trading ELITE Corporation LOST MARY ZCREW Dongguan Airv International, Inc. Technology Formal charges have been filed against these brands for violating Section 4(d) of Republic Act No. 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act. In accordance with Section 11 of Executive Order No. 913 (1983), trading of these brands is effectively suspended pending resolution of the formal charges. The PS Licenses of SHFT, DR FREEZE, AEROGIN, DON BARS, and CHILLAX have also been suspended. The penalties for selling or trading these products are PHP2 million for the first offense, PHP4 million for the second offense, PHP5 million and cancellation of licenses for the third offense.  The DTI Office for the Special Mandate on Vaporized Nicotine and Non-Nicotine Products, their Devices, and Novel Tobacco Products (OSMV) has also recently released a policy advisory on the Elements of Offenses Provided Under Republic Act No. 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act, recognizing the need to define the elements of the offenses to ensure orderly enforcement of the law and establish uniform and predictable resolutions to formal charges. Date of release: 06 September 2024 ii. SBCorp open loan facility for typhoon-hit enterprises Small Business Corporation (SBCorp), the financing arm of the Department of Trade and Industry, has launched the Enterprise Rehabilitation Financing (ERF) program on August 27. Serves as a special loan facility, the program provides crucial financing assistance to micro, small, and medium enterprises (MSMEs) devastated by Typhoon Carina, enabling their recovery and rebuilding efforts. New and existing borrowers of SBCorp may borrow a maximum of PHP 300 thousand, payable monthly up to three years. A three-month grace period may also be secured, in case loan borrowers need for a reprieve from payments. Loans are interest free for the first year, and 1% per month interest rate based on diminishing balance shall be levied for the second and third year. MSMEs in the following areas are qualified to apply for the program: National Capital Region, Ilocos Norte, La Union, Bataan, Pampanga, Bulacan, Tarlac (Camiling), Cavite, Rizal, Laguna (Mabitac), Oriental Mindoro (Pinamalayan and Baco), Romblon (San Andres), Zamboanga (Tambulig), Davao Occidental (Jose Abad Santos and Trinidad) and Cotabato (Kabakan and Pikit). “Our existing borrowers who are current in their loan repayments and have yet to fully reach the PHP 300,000 loan cap can quickly access this facility without needing to submit any documentary requirements,” said SBCorp President/CEO Bastillo. New borrowers only need to submit their Mayor’s Permit or Barangay MicrBusiness Enterprise (BMBE) Certificate for loans over PHP100,000, or Barangay Certification for loans up to PHP100,000. In addition, all new borrowers must provide government-issued ID, proof of bank or e-money account, and corporate documents, if applicable. Date of release: 29 August 2024  iii. DTI lauds House committee approval of proposed Clark National Food Hub Act The Department of Trade and Industry (DTI) welcomed the House Committee on Trade and Industry’s approval of the House Bill No. 10678, also known as the Clark National Food Hub (CNFH) Act. This bill aims to establish a major food hub in Clark, Pampanga to improve food security, enhance supply chain efficiency, and promote economic growth. Undersecretary Pacheco emphasized that the establishment of the food hub align with the DTI’s Three-Year Food Logistics Action Agenda. The agenda seeks to revolutionize the Philippines’ food distribution system, reduce transport and logistics costs, increase investments in logistics infrastructure on transportation and storage, and address other supply chain gaps. Meanwhile, Representative Rufus B. Rodriguez acknowledged the DTI’s unwavering commitment to ensuring accessible, affordable, and available food for every Filipino. The House Committee on Trade and Industry, chaired by Rep. Ferjenel G. Biron, approved the bill after a deliberation held on August 20. The bill’s principal authors are Representatives Rufus Rodriguez (2nd District, Cagayan de Oro), Maria Angela Garcia (3rd District, Bataan), and Anna Victoria Veloso-Tuazon (3rd District, Leyte). The DTI is set to participate in the CNFH Technical Working Group, focusing on key areas such as policy development, business integration, and inter-agency cooperation. The approved bill builds upon the memorandum of understanding signed on February 19 between the DTI, the Department of Agriculture and the Clark International Airport Corporation, aimed at realizing the farm-to-fork strategy of the DTI. It encompasses provisions for creating a nationwide a hub-and-spoke trading network, establishing food safety and quality standards, and promoting agro-processing and value-adding activities within Clark Freeport Zone. Date of release: 30 August 2024 2. SECURITIES AND EXCHANGE COMMISSION The national government regulatory agency charged with supervision over the corporate sector, and the securities and investment instruments market, and the protection of the investing public maintain the fair and orderly functioning of the securities markets and facilitate capital formation. It is also responsible for enforcing the law against market manipulation. Regulate the sale and registration of securities, exchanges, brokers, dealers and salespeople. It encourages investments and more active public participation in the affairs of private corporations and enterprises Color The SEC’s official color is green, which signifies life, growth and harmony. It also denotes money and finances. Principal Elements of the Logo i. Hexagon – The shape depicts the SEC’s core values. It also suggests balance, cohesion and communication. ii. Three Rising Buildings – The bars represent the corporations, the SEC, and the investors. The image of these buildings connotes the SEC’s contribution. iii. Diamond – Each side of the diamond corresponds to the people who make up the agency working together towards the achievement of its mission and its vision, viz: the leadership, the management, the technical specialists, and the support staff. Subliminal Elements of the Logo Shield – The logo is reminiscent of a shield symbolizing the protection that the SEC provides to investors. 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 condition 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. Emilio Benito Aquino is the first CPA-Lawyer appointed as Chairperson and CEO of the Securities and Exchange Commission (SEC). Vision By 2028, the SEC with its driven, competent, agile and equipped with digital technology and adaptive registration and data management systems. considered among the best in the Southeast Asian (SEA) Region. Mission We provide a competitive, secure, and sustainable environment for fast and easy company registration, efficient capital formation, and strong investor protection. 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, 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 efficient manner. Independence We act without fear or favor and render sound judgment in the performance of our duties and responsibilities. a) Objectives 1. 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. 2. Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies on all aspects of the securities market.  3. Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications. 4. Regulate, investigate or supervise the activities of persons to ensure compliance. 5. Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies. 6. Impose sanctions for the violation of laws and the rules, regulations and orders issued pursuant thereto. 7. Issue cease and desist orders to prevent fraud or injury to the investing public. b) Roles, Structure and Authorities Roles The Securities and Exchange Commission (SEC), under Commonwealth Act (CA) 83, also known as The Securities Act, is a pivotal national government regulatory body. Since its inception, the Commission has been entrusted with the responsibility of overseeing the corporate sector, regulating capital market participants, and safeguarding the securities and investment instruments market. SEC's primary goal is to protect the investing public and ensure the integrity of the financial markets. Initially tasked with regulating the sale and registration of securities, exchanges, brokers, dealers, and salesmen, SEC's mandate has expanded over the years through subsequent laws. These legislative measures have been aimed at promoting investments, increasing public participation in corporate affairs, and enhancing SEC's role in fostering good corporate governance. The broader mandate also underscores the Commission's responsibility to democratize wealth and encourage widespread ownership of corporations. As the primary registrar and overseer of the Philippine corporate sector, the SEC supervises over 600,000 active corporations, playing a vital role in the economy. Among its critical duties is the evaluation and assessment of financial statements (FS) submitted by all registered corporations. These functions contribute to the overall integrity of the corporate sector and enhance public trust in the financial statements of registered entities. Additionally, the SEC's regulatory role extends to the capital market, a critical pillar of the Philippine financial system. In this capacity, the Commission helps ensure that the capital market operates efficiently and transparently.  The SEC's operations contribute significantly to government revenues. By ensuring that corporations comply with financial regulations and standards, the Commission aids in fostering a stable and efficient market environment that promotes investor confidence and encourages both local and foreign investments. In recent years, the Commission's role has grown increasingly complex. The expansion of corporations and other forms of associations, combined with the rapid evolution of transactions, particularly those involving fraudulent activities, has placed greater demands on the SEC. The corporate vehicle, often used to defraud the investing public, has become a focal point of SEC's oversight activities. Furthermore, the capital market's dynamic nature requires continuous adaptation and vigilance from the Commission. In response to these challenges, the SEC has strengthened its role as a prudent registrar, supervisor, and independent guardian of the corporate and capital markets. This involves not only monitoring compliance but also developing strategies to prevent fraudulent activities and protect investors. SEC's commitment to fostering good corporate governance and protecting investors remains at the forefront of its mandate. Conclusion The Securities and Exchange Commission's role in the Philippines extends far beyond regulatory oversight. It is a key driver of economic growth and a protector of public interest in the corporate and capital markets. As the corporate landscape continues to evolve and the capital market becomes more sophisticated, the SEC's responsibilities will likely expand further, solidifying its position as a cornerstone of the country's financial stability and integrity. Structure and Authorities As of February 21, 2024, the SEC’s organizational structure is designed to support its wide-ranging responsibilities, which include registration, regulation, enforcement, and corporate governance. SEC Leadership At the top of the organizational structure are the Chairpersonand the Commissioners. The Chairperson is the head of the SEC and oversees the overall operations of the organization, while the Commissioners assist in policy-making and regulatory oversight. Together, they ensure that the SEC fulfills its mission of investor protection and market development. Key Offices Under the Leadership The SEC’s organizational structure includes several key offices that report directly to the Chairperson and Commissioners. These offices have specialized roles that support the governance and regulatory functions of the SEC. 1. Office of the General Accountant This office is responsible for accreditation, setting accounting and audit policies, and conducting oversight assurance reviews. These activities ensure that the financial reports and audits conducted by public companies adhere to national standards and regulatory requirements. 2. Office of the General Counsel The General Counsel's office provides legal support to the SEC, formulating policies and opinions, handling adjudication of cases, and liaising with legislative bodies. This office is vital in maintaining the legal integrity of the SEC’s operations and decisions. 3. Office of the Commission Secretary This office handles the SEC’s corporate communication and maintains the secretariat for the Commission. It ensures smooth communication within the organization and with external stakeholders, enhancing transparency and organizational efficiency. Core Departments of the SEC The SEC is organized into several core departments, each responsible for a specific area of regulation, compliance, or enforcement. These departments ensure that the SEC’s mandate is executed across all sectors of the capital market. 1. Markets and Securities Regulation Department This department is tasked with registering securities, regulating market intermediaries, overseeing investment products and services, and conducting audits and compliance examinations. It also promotes strategic investments in small and medium enterprises (SMEs). 2. Corporate Governance and Finance Department This department handles licensing, monitoring, compliance, and auditing of corporations. It also ensures that corporate governance practices adhere to the SEC’s standards, promoting transparency and accountability in the corporate sector. 3. Company Registration and Monitoring Department This department is responsible for the registration of corporations and partnerships, monitoring compliance, conducting financial analysis and audits, and adjudicating corporate disputes. It ensures that companies operate within the legal framework set by the SEC. 4. Enforcement and Investor Protection Department The enforcement arm of the SEC, this department conducts market surveillance, investigates violations, prosecutes offenders, and enforces anti-money laundering regulations. It also handles international affairs and cyber forensics, protecting both the integrity of the market and the interests of investors. 5. Information and Communications Technology Department This department manages the SEC’s information systems, ensuring that technology is used to enhance regulatory efficiency. It handles systems development, electronic records management, cybersecurity, and shared services, supporting the digital transformation of the SEC. 6. Economic Research and Training Department This department provides strategic management and planning, conducts market research, and educates market professionals and investors. By analyzing market data and trends, it helps the SEC make informed policy decisions. 7. Human Resources Department This department manages the recruitment, training, and development of SEC employees, ensuring that the organization is staffed with skilled and competent professionals. It also drives organizational development initiatives to improve overall performance.  8. Management Services Department This department is responsible for supply chain management, general services, and operational logistics. It ensures that the SEC’s resources are managed efficiently to support its regulatory activities. 9. Financial Management Department This department handles the SEC’s financial operations, including budgeting, fiscal management, accounting, and treasury functions. It ensures that the organization operates within its financial means while effectively managing public funds. Special Offices In addition to the core departments, the SEC also has specialized offices that address specific regulatory challenges: PhilFintech Innovation Office (PhilFINNO): This office focuses on the regulation and promotion of financial technology (Fintech) innovations. Internal Audit: Ensures that the SEC’s internal operations are transparent, accountable, and comply with internal policies and procedures. Financing and Lending Companies: Oversees the operations and regulation of financing and lending companies, ensuring they operate within legal boundaries and protect consumers. Regional Extension Offices To extend its reach across the Philippines, the SEC has established regional extension offices in key cities such as Baguio, Tarlac, Legazpi, Iloilo, Bacolod, Cebu, Tacloban, Zamboanga, Cagayan de Oro, and Davao. These offices ensure that SEC services are accessible to stakeholders outside Metro Manila, promoting financial inclusion and regional market development. c) Key Applicable Laws The evolution of the regulatory landscape governing the Securities and Exchange Commission (SEC) of the Philippines demonstrates a progressive strengthening of its powers, mandates, and functions aimed at safeguarding the public and their investments. The changes have been prompted by the need to adapt to the growing complexity of corporate structures, securities markets, and the changing demands of the Philippine economy. 1. The SEC Reorganization Act (PD 902-A) In 1976, the SEC underwent a significant transformation with the enactment of the SEC Reorganization Act, also known as Presidential Decree (PD) 902-A. This law, subsequently amended by various Presidential Decrees, empowered the SEC by expanding its role as a protector of public investments. The decree reorganized the Commission into a collegial body and conferred quasi-judicial powers over intra-corporate disputes. It granted the SEC absolute jurisdiction, supervision, and control over all corporations, partnerships, and associations that were recipients of primary franchises or licenses issued by the government. 2. The Corporation Code of the Philippines (BP 68) The Corporation Code of the Philippines, or Batas Pambansa (BP) 68, enacted in 1980, further enhanced the SEC's authority by mandating it to register corporations, collect fees, and prescribe reportorial requirements. This law allowed the SEC to reject articles of incorporation or amendments that did not comply with the requirements of BP 68. It also required registered corporations to submit annual reports, including financial statements certified by independent certified public accountants (CPA). Moreover, BP 68 authorized the SEC to promulgate rules and regulations aimed at preventing fraud and abuses by controlling stockholders, members, directors, and trustees. 3. The Revised Corporation Code (RA 11232) In 2019, the Philippines enacted the Revised Corporation Code (RCC), or RA 11232, which represented a comprehensive overhaul of the decades-old BP 68. This landmark legislation aimed to enhance the competitiveness of the Philippine corporate sector by adopting international best practices while addressing the unique needs of the Philippine economy. One of the most notable provisions of the RCC was the introduction of a perpetual corporation term unless otherwise stated in the corporation's articles of incorporation. The RCC also allowed for the formation of one-person corporations without the need for a minimum authorized capital stock. It facilitated the creation of emergency boards in cases where board vacancies impeded decision-making during emergencies. Additionally, the RCC promoted the use of alternative dispute resolution mechanisms and mandated the development of an electronic filing and monitoring system to improve the ease of doing business.  4. The Revised Securities Act (BP 178) and Securities Regulation Code (RA 8799) In response to the increasing complexity of securities instruments and trading strategies, the Revised Securities Act (BP 178) was enacted in 1982, repealing the earlier Commonwealth Act 83. This law introduced a more sophisticated disclosure mechanism for securities offered to investors. The subsequent Securities Regulation Code (SRC), or RA 8799, enacted in 2000, further redefined the SEC's role by focusing on capital market development, corporate governance, and investor protection. The SRC also transferred jurisdiction over certain cases to the Regional Trial Courts and clarified fraud and criminal offenses related to securities transactions. Moreover, the SRC strengthened the SEC’s regulatory functions over entities dealing in securities, including self-regulatory organizations such as the Philippine Stock Exchange (PSE). 5. Special Accounting Rules (Rule 68) Rule 68, issued as part of the SRC Implementing Rules and Regulations (IRR) in 2001, reinforced the SEC’s authority over financial reporting. This rule provided guidelines for financial statement preparation, the responsibilities of auditors, and the accreditation of independent auditors. Over the years, Rule 68 has undergone amendments to ensure the reliability of financial statements and protect investors. 6. The Credit Information System Act (RA 9510) In 2008, the Credit Information System Act (CISA), or RA 9510, designated the SEC as the lead agency to implement and enforce the Act. The law also established the Credit Information Corporation (CIC), with the SEC Chairman serving as its chairman. The CIC's primary role is to consolidate credit data and serve as a central repository of credit information. 7. The Microfinance NGOs Act (RA 10693) In 2015, the Microfinance NGOs Act, or RA 10693, mandated the SEC to establish an accrediting body known as the Microfinance NGO Regulatory Council. This Council, chaired by the SEC, was tasked with instituting and operationalizing a system of accreditation for Microfinance NGOs. The Council monitors the performance of these organizations to ensure their compliance with the Act's provisions. d) Key Regulatory Requirements and Penalties for Non-compliance Regulatory, non-compliance occurs when an organisation fails to comply with the policies, standards, regulations, or laws relevant to its operations.  Examples of non-compliance include: a. Failure to wear personal protective equipment (PPE) b. Insufficient administration of operations c. Failure to obtain proper certifications/illegal operations d. Failure to follow operation procedures e. Failure to report to relevant authorities The consequences of regulatory non-compliance can be costly. Even though compliance improves efficiency and protects businesses from heavy penalties, most companies continue to wrongly view it as an operation cost rather than an investment. In the context of regulatory compliance, the cost and risk of non-compliance can very easily outweigh the cost of investing in compliance efforts. What we see, over and over, is that businesses that ignore the importance of proactive compliance still end up paying for compliance only it is through penalties, reputational issues, and product delays. e) Latest Updates and News News is important for a number of reasons within a society. Mainly to inform the public about events that are around them and may affect them. News from a local area is often important to advise people in a locality about activities that may have an impact on a community. This can allow a community to engage in decision making processes in a community. News from one country to another is important in today’s global economy. Knowing what is happening in other countries gives people a perspective of each others' ways of life and cultural differences. Certain kinds of news from countries that rely on each other for energy or other resources can often have a profound influence in overall global economics. i. SEC Champions Gender Diversity and Leadership Inclusion at Census of Women in Leadership Teams Launch The Securities and Exchange Commission (SEC) continues to advocate for the further representation of women in leadership roles and promote gender diversity and inclusivity at the launch of the Census of Women in Leadership Teams within Philippine Publicly Listed Companies (PLCs), held on August 20 at The SEC Headquarters in Makati City. Organized by the Philippine Business Coalition for Women Empowerment (PBCWE) and the Philippine Women’s Economic Network (PhilWEN), the event aimed to illuminate the current state of women’s representation in executive leadership teams of Philippine PLCs, while also addressing the challenges and opportunities women encounter in their corporate careers. The SEC’s involvement in the event underscores its ongoing commitment to promoting gender diversity in corporate leadership, strengthening inclusivity across the business sector, and driving meaningful progress toward a more equitable and sustainable corporate environment. ii. SEC Revokes Lucky South 99 Registration for Illegal POGO Activities The Securities and Exchange Commission (SEC) has revoked the corporate registration of Lucky South 99 Corp. for operating a Philippine Offshore Gaming Operator (POGO) facility in Pampanga without the necessary license. In an order dated July 30, 2024, the SEC’s Enforcement and Investor Protection Department (EIPD) revoked the certificate of incorporation of Lucky South 99 for violating Section 44 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines (RCC) in relation to Section 179 of the RCC. Section 44 of the RCC provides that no corporation shall possess or exercise corporate powers other than those conferred by the law or its articles of incorporation (AoI), and those necessary or incidental to the exercise of such powers. Incorporated in 2019 originally under the name, Lucky South 99 Outsourcing Inc., the company was organized for the primary purpose of engaging in business process outsourcing activities, with a secondary purpose of engaging in the real estate business. However, an investigation by the EIPD revealed that Lucky South 99 Corp. has been included in the list of Offshore Gaming Licensees issued by the Philippine Amusement and Gaming Corporation as early as August 8, 2023. Prior to this, the Department of the Interior and Local Government (DILG) also announced in an advisory dated September 19, 2022, that it conducted a raid operation in Lucky South’s office for  operating without license and allegedly being involved in the trafficking of Chinese nationals. iii. SEC Grants Incentive for Corporations to Comply with Reportorial Requirements The Securities and Exchange Commission (SEC) has rolled out an incentive program that allows corporations, which have failed to submit their annual reports on time, to restore their good standing. Following the success of the amnesty program it implemented last year, the Commission on August 30 issued SEC Memorandum Circular (MC) No. 13, Series of 2024, providing for the Enhanced Compliance Incentive Plan (ECIP). After the SEC Amnesty Program, the Commission has strictly imposed higher revised fines and penalties to encourage strict and habitual compliance with reportorial obligations and good corporate housekeeping. With the launch of ECIP, we are affording corporations under our supervision another opportunity to remedy their violations, at lower fees, and restore their good standing. References: Department of Trade and Industry. (2024, July 22). Department of Trade and Industry Philippines. Department of Trade and Industry Philippines. https://www.dti.gov.ph/ Department of Trade and Industry. (2022, May 13). Republic Acts | Department of Trade and Industry Philippines. Department of Trade and Industry Philippines. https://www.dti.gov.ph/resources/laws- andpolicies/republicacts/?fbclid=IwZXh0bgNhZW0CM TEAAR1KL4mK03BSyx9Lm6L8KxnVy_aNV2T5PNpZBFX1GMEG7WmLAFkksrz36A_ aem _B7I740ep-EZR0M8TJoWx9Q Department of Trade and Industry. (2021, April 20). Latest News | Department of Trade and Industry Philippines. Department of Trade and Industry Philippines. https://www.dti.gov.ph/news/?fbclid=IwZXh0bgNhZW0CMTEAAR1Do2C9nyIfeDQ8diCp W3 Tmu7N4IZAWys9sicG2eCDBxSyQQiRfnMB_1F4_aem_ps0PQ-88Nlb7KtK-Wh2ICQ Importance of news | ClearlyExplained.com. (n.d.). http://clearlyexplained.com/news/importanceofnews.html#:~:text=Importance%20o f%20intern ational%20news&text=Knowing%20what%20is%20happening%20in,influence%20in%2 0overal l%20global%20economics Kim. (2024b, September 5). SEC REVOKES LUCKY SOUTH 99 REGISTRATION FOR ILLEGAL POGO ACTIVITIES. Securities and Exchange Commission. https://www.sec.gov.ph/pr-2024/sec-revokes-lucky-south-99-registration-for- illegalpogoactiviti es/#gsc.tab=0 Kim. (2024b, September 4). SEC GRANTS INCENTIVE FOR CORPORATIONS TO COMPLY WITH REPORTORIAL REQUIREMENTS. Securities and Exchange Commission. https://www.sec.gov.ph/pr-2024/sec-grants-incentive-for- corporationstocomply-with-reportoria l-requirements/  Kim. (2024, September 4). SEC CHAMPIONS GENDER DIVERSITY AND LEADERSHIP INCLUSION AT CENSUS OF WOMEN IN LEADERSHIP TEAMS LAUNCH. Securities and Exchange Commission. https://www.sec.gov.ph/pr2024/secchampions-gender-diversity-and-leadership-inclusion-at- cen sus-of-women-inleadershipteams-launch/#gsc.tab=0 Republic Act No. 11337. (n.d.). https://lawphil.net/statutes/repacts/ra2019/ra_11337_2019.html R.A. 9501. (n.d.). https://lawphil.net/statutes/repacts/ra2008/ra_9501_2008.html Securities and Exchange Commission. (2024, August 15). Home - SEC - Securities and Exchange Commission. https://www.sec.gov.ph/#gsc.tab=0 Securities and Exchange Commission. (2024a, February 22). Organizational setup - Securities and Exchange Commission. https://www.sec.gov.ph/about- us/organizationalsetup/#gsc.tab=0 https://legacy.senate.gov.ph/lisdata/25531926!.pdf https://www.officialgazette.gov.ph/1992/04/13/republic-act-no-7394-s-1992/ https://dilg.gov.ph/PDF_File/issuances/republic_acts/RA_7581.PDF https://laws.chanrobles.com/acts/7_acts.php?id=320 https://laws.chanrobles.com/acts/7_acts.php?id=320