SEC En Banc Case No. 07-22-502Rene Golangco vs. Capital Markets Integrity Corporation, Philippine Equity Pertners, Inc., Lorenzo Andres T. Roxas, Emeterio Gonzales III, and Ma. Lordes Arroyo - De Guzman

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance

RENE GOLANGCO, Complainant-Appellant,

LORENZO ANDRES T. ROXAS, EQUITY EMETERIO GONZALES III, and MA. LOURDES ARROYO - DE GUZMAN, CAPITAL MARKETS INTEGRITY CORPORATION, PARTNERS, - versus - PHILIPPINE INC. SEC En Banc Case No. 07-22-502 (CMIC-IED-IC-2022-001)

Respondents-Appellees.

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DECISION

23 March 2022 of the Capital Markets Integrity Corporation (CMIC), 2022 (the "Appeal") filed by Complainant-Appellant Rene Golangco (Mr Golangco) on 6 July 2022, praying for the reversal of the Resolution dated which was subsequently affirmed by the CMIC Board in its Resolution Before this Commission is the Memorandum of Appeal dated 5 July

Resolutions"), the dispositive portion of the latter reads, thus: dated 17 May 2022 (collectively referred to as the "Assailed

motion to expunge dated 12 April 2022 of Philippine Equity Partners, the request for reconsideration dated 11 April 2022 of Mr. Rene U. Inc. ("PEPI"), et al. in the case docketed as CMIC-IED-IC-2022-001. "RESOLVED, That the Board of Directors of the Capital Markets Integrity Corporation (the "Corporation") deny, as it hereby, denies, Golangco of the Corporation's resolution dated 23 March 2022 and the

Twenty Thousand Pesos (Php20,000.00) on PEPI for its first violation of Article VI, Section I(b)(vii)(c) and (d) of the CMIC Rules, as stated in "RESOLVED FURTHER, That the Board of Directors of the Corporation affirms, as it hereby affirms, the imposition of a fine in the amount of the Corporation's resolution dated 23 March 2022."

Resolutions, by directing the CMIC to (a) accept the ID, SSS number and The Appeal specifically prays for the reversal of the Assailed

business address indicated in the Customer Account Information Form (CAIF) of Mr. Golangco; (b) fully restore Mr. Golangco's trading rights; (c)

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impose additional fines on Philippine Equity Partners, Inc. corresponding to its alleged eleven (11) additional violations; and (d) pay Mr. Golangco Php10,000,000.00 by way of temperate damages.

PARTIES

client of Philippine Equity Partners, Inc. (PEPI). Complainant-Appellant Mr. Golangco is of legal age, Filipino, and a

Respondent-Appellee CMIC is a domestic corporation duly authorized and licensed to act as a Self-Regulatory Organization (SRO) with SEC Registration No. CS201104274. Its business address is at 10/F, PSE Tower, 5th Ave. Corner 28th St., Bonifacio Global City, Taguig City.

is at 10/F, PSE Tower, One Bonifacio High Street, Taguig City. and registered as a broker and dealer in securities. Its business address existing under Philippine laws, with SEC Registration No. A200111507, Respondent-Appellee PEPI is a corporation duly organized and

and have been impleaded in the instant case under such capacity. Emeterio Gonzales III (Mr. Gonzales), and Ma. Lourdes Arroyo - De Guzman (Ms. De Guzman) [collectively referred to as the "Individual Appellees"], officers and members of the Executive Committee of PEPI, Respondents-Appellees Lorenzo Andres T. Roxas (Mr. Roxas),

RELEVANT FACTS

Conditions (the "Agreement") which provided for, and embodied their On 8 April 2020, PEPI and Mr. Golangco executed the Terms and

agreed obligations covering securities transactions as broker/dealer and client, respectively. Relative to the opening of an account with PEPI, Mr. Golangco accomplished and submitted, among others, aCAIF.1

provided for a list of documents that the latter needs to submit, and the On 13 April 2020, PEPI sent an email to Mr. Golangco which

account regular. According to PEPI, the following information was lacking in the CAIF of Mr. Golangco: (a) Tax Identification Number; (b) residential and company address; (c) annual income and assets; (d) two (2) required information which he needs to provide in order to make his government issued identification cards; and (e) proof of income2 (the "Required Information and Documents").

2 Ibid. Pars. 3.3 and 4. Comment Ad Cautelam with Motion to Dismiss Outright. Par. 3 (page 4)

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Notwithstanding the non-submission of the Required Information and Documents by Mr. Golangco, PEPI facilitated and carried out two (2) trade transactions on 13 and 15 April 2020, where the latter purchased Manila Water Company (MWC) shares.3

In a letter dated 16 April 2020, PEPI reiterated to Mr. Golangco that he needs to submit the Required Information and Documents, which was also required under the Anti-Money Laundering Act (AMLA), to regularize his trading account.4

transaction with PEPI. However, considering that the Required On 7 May 2020, Mr. Golangco placed another trade (purchase)

Information and Documents have not yet been submitted, PEPI sent another letter dated 8 May 2020 to Mr. Golangco where it again reiterated the need for latter to comply with the requirements, otherwise, it "cannot accept further instructions to buy/sell stocks" for him.5

Sometime in October and November 2021, Mr. Golangco informed

on the alleged ground that his account was suspended for shares PEPI of his intent to purchase shares which was turned down by the latter purchase as there was a pending investigation being made by the PSE on his complaint. The failure of Mr. Golangco to submit the Required Information and Documents also prompted PEPI not to act on any further request for purchase of shares from Mr. Golangco.6

seeking the issuance by the latter of a resolution mandating PEPI and the On 7 January 2022, Mr. Golangco filed a Complaint with the CMIC,

Individual Appellees to cease and desist from (a) harassing him in the normal courseof hisstocktradingactivities,and (b removing/excluding/restrictinghis stockbuyingactivities. The

appropriate sanctions for alleged violation of the Article VII, Sections 1 Complaint likewise prayed for the imposition upon PEPI of the

act of capriciously denying him of his stock trading rights based on a non (a), (b), and (d) of the CMIC Rules. Mr. Golangco claimed that the CMIC's

of the appropriate fines, and an award of temperate damages. ID which is not required under the CMIC Rules, warrants the imposition existent deficiency in his CAIF, as well as his alleged refusal to submit an

5 Ibid. Par. 12 3 Ibid. Pars. 7 and 8 4 Ibid. Pars. 8 and 9 6 Ibid. Pars. 32 and 33

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be held liable for violating the following provisions of the CMIC Rules: PEPI to submit its answer to the Complaint, and explain why it should not On 10 January 2022, the CMIC issued a Show Cause Letter directing

a.) Article XII, Section 3 (a)(iii), in relation to Article XI-B,

Section 1 (d), and Sections 26.1 and 26.3 of the Securities

b.) Article V, Section 1, in relation to Article V, Section 2; d.) Article VI, Section 1 (b)(vii)(c) and (d); and e.) Article VI, Section 2. c.) Article VI, Section 1 (a), (b)(i)(ii) and (iii); Regulation Code (SRC);

comply with the requirement to submit the Required Information and Documents. violated the CMIC Rules, and refuted the allegations in the Complaint. PEPI maintained that Mr. Golangco's inability to continue trading was caused by his refusal to comply with the requirements under the contract, the law, and rules and regulations. PEPI averred that it continuously communicated with Mr. Golangco, and repeatedly reminded the latter to On 26 January 2022, PEPI filed its Answer? where it denied having

reiterated PEPI's alleged gross violations of the agreement, the laws and CMIC Rules; and its lack of remorse and arrogant attitude in denying service to a customer. Mr. Golangco then prayed for the imposition of the maximum fines and sanctions against PEPI. On 3 February 2022, Mr. Golangco filed his Reply where he

integral part of the Agreement, justified the suspension of his trading transactions that are not compliant with the laws, rules and regulations, Documents which was needed to fully accomplish his CAIF, which is an reiterated its earlier allegations and arguments in support of its defense. PEPI also emphasized that under the Agreement, it can reject sound market practice and/or would work undue hardship on PEPI. The failure of Mr. Golangco to submit the Required Information and account. On 14 February 2022, PEPI filed a Rejoinder where it essentially

by the CMIC Board which denied Mr. Golangco's Motion for Reconsideration was served upon Mr. Golangco on 27 May 2022.8 subject of the instant Appeal. The Resolution dated 17 May 2022 issued The CMIC then issued the Assailed Resolutions which are the

[re: Me Answer dated 26 January 2022; mment Ad Cautelam with Motion to Dismiss Outright. Annex "8-A" im of Appea Idated 05 July 2022 "1" of Respondents-Appell s( I Cautelam with Motion to Dismiss Outright

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On 29 July 2022, the CMIC filed its Comment (on Appellant's Memorandum of Appeal), praying for the denial of the Appeal on the of his trading rights under the Agreement was justified by his failure to submit the Required Information and Documents which is required by law;9 and (b) the penalties imposed upon PEPI were consistent with ground that the same lacks factual and legal bases. In support thereof, the CMIC maintained that (a) the suspension of the exercise by Mr. Golangco Article VI, Sec. 1(b) in relation to Article I, Sec. 2 of the CMIC Rules.10

Comment Ad Cautelam with Motion to Dismiss Outright [Re: Memorandum of Appeal date 05 July 2022], praying for the dismissal of the Appeal on finding that PEPI did not violate any law when it restricted Mr. Golangco information; and there is no basis to impose additional penalties against the ground that the same was filed out of time. PEPI and the Individual from continuing to trade as he continually refused to submit the required Appellees also maintained therein that the CMIC Board was correct in Appellees. On the same date, PEPI and the Individual Appellees filed their

ISSUES

A. Whether the Appeal of Mr. Golangco was timely filed.

B. Whether PEPI violated the CMIC Rules when it suspended the provision of its services to Mr. Golangco, which resulted in the inability of Mr. Golancgo to trade shares in the Exchange.

RULING

evidence on record support the dismissal of the Appeal. The factual circumstances attendant in the instant case, and the

attained finality. The Appeal was not filed within the reglementary period. The Resolution dated 17 May 2022 of the CMIC has

Securities and Exchange Commission (the "2016 Rules") provides: Section 3-2, Rule III Part IV of the 2016 Rules of Procedure of the

10 (bid. Pars. 44 and 45 9 Comment (on Appe lant's Memorandum of Appeal). Pars. 22, 32, 34 and 39

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"An appeal to the Commission En Banc may be taken within fifteen (15) davs from receipt by the party to an action of the adverse decision.fina

Special Hearing Panel. order or resolution of a Director of an Operating Department or the

decision, final order or resolution of a Self-Regulatory Organization." (Emphasis and underscoring supplied) An appeal to the Commission En Banc may be taken within thirty (30) days from receipt by the party to an action of the adverse

equally requires appellants to perfect the same in the following manner: the 30-day reglementary period, Sec. 3-3 Rule 3 Part V of the 2016 Rules In addition to the requirement that the appeal must be filed within

within the period prescribed in the preceding section: (i) an appeal of the appeal memorandum on the appellee and/or the Director of the Operating Department, the Special Hearing Panel or the Self- Regulatory Organization concerned, as the case may be; and (iii) payment of the appeal fee and other applicable fees." (Emphasis and underscoring supplied) the Commission En Banc, through the Office of the General Counsel memorandum in six (6) legible copies; (ii) proof of service of a copy "The appellant shall perfect an appeal by filing the following with

a statutory privilege of appealing a decision or resolution of a court or an administrative agency performing quasi-judicial functions, must comply with the requirements prescribed by law. Non-compliance with the appeal. In the case of Boardwalk Business Venture, Inc. v. Villareal11, the Supreme Court emphasized this rule in this wise: invoked only if the same is granted by statute, since it is not a natural right or a component of due process. Any person who wishes to exercise statutory requirement results in the forfeiture of the privilege to file an It is established in jurisprudence that the right to appeal can be

component] of due process[. I]t is a mere statutory privilege, and may be exercised only in the manner and in accordance with the Deviations from the Rules cannot be tolerated. The rationale for this facilitate the orderly disposition of appealed cases. In an age where by appellants with greater fidelity. Their observance cannot be left to the whims and caprices of appellants. provisions of law." This being so, x x x an appealing party must strictly comply with the requisites laid down in the Rules of Court. strict attitude is not difficult to appreciate as the Rules are designed to courts are bedeviled by clogged dockets, the Rules need to be followed "[T]he right to appeal is neither a natural right nor [is it a

11 G.R. No. 181182, April 10, 2013

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appeal in the manner and within the period set by law is not only To stress, the right to appeal is statutory and one who seeks to avail of it must comply with the statute or rules. The requirements for perfecting an appeal within the reglementary period specified in the law must be strictly followed as they are considered indispensable interdictions against needless delays. Moreover, the perfection of an mandatory but jurisdictional as well, hence failure to perfect the same renders the judgment final and executory. And, just as a losing party has the prevailing party have the correlative right to enjoy the finality of a decision in his favor." (Emphasis supplied) the privilege to file an appeal within the prescribed period,so also does

decision/resolution of an SRO, such as the CMIC, and who intends to have Under the 2016 Rules, any party who is aggrieved by a

the same reviewed, revised or reversed by the Commission, is required

that service thereof, if made electronically, is deemed complete upon to perfect an appeal and file the same with the latter within thirty (30) days from receipt thereof. As regards the date of receipt of a transmission to the party(ies), thus: decision/resolution, Sec. 4-2(e), Rule IV Part I of the 2016 Rules provides

whichever is earlier; or (v) in the case of electronic service, upon transmission, but is not effective if the person serving it learns that it did not reach the person to be served." (Emphasis and underscoring supplied) "Service shall be deemed complete when (i) it is personally received by him or his authorized agent; (ii) it is received by the clerk or some of business; (ii) it is received by some person of suitable age and discretion then residing at his dwelling house or residence; (iv) it is at his office or residence address or after five (5) days from the date he other person in charge thereof at his principal office or regular place received by him in a sealed envelope by registered mail or by courier received the first notice of the postmaster or the private courier

reiterated and emphasized in Chipongian v. Benitez-Lirio12, to wit: reglementary period, results in the decision or resolution of the court or administrative agency becoming final and executory. This rule was The failure of a party to perfect and file an appeal within a

accordance with Section 3 of Rule 41, he did not perfect his appeal of "Considering that the petitioner did not submit a record on appeal in The right to appeal, being statutory in nature, required strict became final and immutable. He now has no one to blame but himself. the judgment dismissing his intervention. As a result, the dismissal

12 G.R. No. 162692, August 26, 2015.

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compliance with the rules regulating the exercise of the right. As beyond review on appeal. Indeed, we have fittingly pronounced such, his perfection of his appeal within the prescribed period was mandatory and jurisdictional, and his failure to perfect the appeal within the prescribed time rendered the judgment final and in Lebin vs Mirasol:

In like manner, the perfection of an appeal within the period laid to perfect the appeal within the time prescribed by the Rules of down by law is mandatory and jurisdictional, because the failure Court causes the judgment or final order to become final as to

their counsel to file the record on appeal on time rendered the orders of the RTC final and unappealable. Thereby, the appellate court lost supplied) preclude the appellate court from acquiring the jurisdiction to the jurisdiction to review the challenged orders, and the petitioners were precluded from assailing the orders." (Emphasis review the judgment or final order.The failure of the petitioners and

In the instant case, the records show that Mr. Golangco consented to, and requested that all communications relating to his complaint be electronically served the Resolution dated 17 May 2022 upon Mr coursed through his electronic mail. (e-mail).13 Thus, when the CMIC Golangco on 27 May 2020, service of the same was deemed completed

received the same on the said date. and the latter was, for all legal intents and purposes, deemed to have

The Commission takes cognizance of the fact that Mr. Golangco

Resolution dated 17 May 2022 which the CMIC made on 27 May 2022 resolutions/decisions, is the date of its transmission and not the date This admission affirms not'only the completeness of the service of the that would have placed CMIC on notice that the same did not reach Mr. Golangco. It bears emphasis that under the 2016 Rules, what is determinative in reckoning the completion of an electronic service of when the party opened and/or read the email. admitted having received on 6 June 2022, the electronic service of the Resolution dated 17 May 2022, but also the absence of any circumstance

Resolution dated 17 May 2022 on 27 May 2022, he had thirty (30) days or until 27 June 202214 within which to perfect and file the Appeal. The records however show, and no less than Mr. Golangco himself admitted, that the Appeal was filed only on 6 July 2022, which is nine (9) days after the reglementary period has lapsed. Considering that Mr. Golangco is deemed to have received the CMIC

13 Complaint dated 7 January 2022. 14 26 June 2022 being a Sunday, filing of the Appeal ca siness day

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On account thereof, this Commission finds and so holds that the Appeal was filed out of time. Verily, the CMIC Resolution dated 17 May 2022 has lapsed into finality ipso jurei5, which legally prevents this Commission from reviewing the same for want of jurisdiction. This principle which is established in jurisprudence was explained in the case of Torres v. Aruego16, thus:

lapses and no appeal is perfected within such period. As a "A judgment becomes 'final and executory' by operation of law. Finality becomes a fact when the reglementary period to appeal consequence, no court (not even this Court) can exercise appellate jurisdiction to review a case or modify a decision that has become final.

When a final judgment is executory, it becomes immutable and court which rendered it or even by this Court. The doctrine is founded on considerations of public policy and sound practice that, at the risk of occasional errors, judgments must become final at some definite point in time." (Emphasis and underscoring supplied) unalterable. It may no longer be modified in any respect either by the

With the CMIC Resolution dated 17 May 2022 having become final and executory, this Commission is constrained to dismiss the Appeal for want of jurisdiction; mindful of the rule that without such jurisdiction, the only power of this Commission is to dismiss the case, and any decision rendered without jurisdiction is a total nullity and may be struck down at any time.17

PEPI did not violate the CMIC Rules when it suspended the provision of its services to Mr. Golangco, which

15 Part IV, Rule II, Section 2-4 of the 2016 Rules provides that:

"(a) If no appeal or motion for reconsideration is filed within the period fixed in these Rules or the Rules of Court, the decision, final order or resolution of the Commission En Banc, Special Hearing Panel or the Director of the Operating Department,as the case may be,shall become final and executory.(emphasis and underscoring supplied)

16 G.R. No. 201271, September 20, 2017 body to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject matter. It is axiomatic that jurisdiction over the subject matter is conferred by law and not by the co or by erroneous belief of the court that it exists. Thus, when a court or tribunal has no jurisdiction over the subject matter, the only power it has is to dismiss the action. Here, we find it necessary to discuss first the HLURB's jurisdiction. See Cirineo Bowling Plaza, Inc. vs. Gerry Sensing, et al., 448 SCRA 175 (2005). 17 "Jurisdiction is defined as the power and authority to hear, try, and decide a case. In order for the court or an adjudicative nt or acqui ence of any or all of the parties

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appear in the case before us. On the contrary, the issue was raised as early as in the motion to dismiss filed in the trial court by on appeal before this Court. The only exception is where the party raising the issue is barred by estoppel, which does not It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even the petitioner, which continued to plead it in its answer and, later, on appeal to the respondent court. We have no choice therefore, notwithstanding the delay this decision will entail, to nullify the proceedings in the trial court for lack of jurisdiction." (Velasquez vs Lisondra Land Incorporated. G.R. No. 231290, August 27, 2020)

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resulted in the inability of Mr. Golangco to trade shares in the Exchange.

The dismissal of the instant Appeal on jurisdictional ground notwithstanding, this Commission nonetheless finds that in relation to the substantive issues, the Appeal is equally dismissible for lack of merit. Thus, while the final and executory status of the CMIC Resolution dated 17 May 2022 can no longer be disturbed, the Commission deems it necessary to expound, for the instruction of the parties herein, why the Appeal will not prosper even on the substantive aspect.

restricting/suspending the exercise of his trading right due to his failure In his Appeal, Mr. Golangco maintained that PEPI's act in

to submit the Required Information and Documents was contrary to the intent and purpose of the securities laws18, and was made in violation of the Agreement.19 This, according to Mr. Golangco rendered PEPI liable administratively, and for damages.

this Commission. finding that PEPI had sufficient grounds to suspend his trading right were contrary to the purposes of Securities Law20, and should be reversed by Thus, Mr. Golangco equally maintained that CMIC's affirmation and

We find the position and argument of Mr. Golangco to be bereft of merit and basis.

widest participation of ownership in enterprises, promoting the market, and protecting investors, among others. These are the core development of the capital market, minimizing if not totally eliminating principles of our securities regulation laws, which the Commission is mandated and duty-bound to implement.21 fraudulent or manipulative practices which create distortions in the free Section 2 of the SRC provides for the policy of the State encouraging

21 "It has been observed that the afore-quoted provision lays down seven core principles of our securities regulation 20 Ibid. Par. 21 18 Appeal. Pars. 16, 21 and 23 19 Ibid. Pars. 17 practices that create distortions in the free market, with the unifying principle being the protection of investors. These core laws: self-regulation, encouragement of the widest participation of ownership in enterprises, enhancement of the principles animate the whole of the SRC; and as such, any doubt or conflict in the interpretation of the SRC and its implementing rules must be resolved in a manner that will carry out the foregoing principles. We therefore resolve the issues before Us with these principles in mind, giving particular attention to the principles of full disclosure, investor protection, and the elimination of fraudulent or manipulative devices and practices." (Palanca IV v. RCBC Securities, Inc., G.R. No. 241905, [March 11, 2020]) democratization of wealth, promotion of capital market development, protection of investors, ensuring full and fair disclosu about rities.and min Zation, if not total elimination, of insider tradir d other fraudulent or ma anipulative devices and

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The trading of listed securities in the Exchange through a broker- dealer is one of the transactions that is covered and regulated under the SRC, the same being imbued with public interest. PSE v. Secretary of Finance22 was emphatic in holding that its effect on the national economy makes regulation thereof imperative, thus:

economy. The rise and fall of stock market indices reflect to a tend to herald changes in business conditions. Consequently, securities public regulation." "Stock market transactions affect the general public and the national considerable degree the state of the economy. Trends in stock prices transactions are impressed with public interest, and are thus subject to

Being a regulated activity, securities trading, which necessarily includes investing in securities, is merely a privilege granted by the State, and is not an inherent right. Neither is the same a statutory right which is

the Commission to regulate, investigate or supervise the activities of legally demandable from the State. Thus, persons who engage in securities trading are under the obligation to abide by, and comply with all securities laws, rules and regulations. The SRC expressly authorizes

persons to ensure compliance, and to impose the appropriate sanctions on the basis of a finding of violation of any of its provisions.23

services of PEPI, where they executed the Agreement required under Sec. 30.2.3.1 of the 2015 SRC-IRR, which embodied their respective In the instant case, the records show that Mr. Golangco engaged the

Mr. Golangco to ensure that all provisions in the Agreement which relate to, or cover transactions that are regulated under the SRC are compliant with, and/or does not violate its provisions, including that of its IRR, as obligations relating to the purchase/sale of securities, among others, for and on behalf of Mr. Golangco. It was therefore incumbent upon PEPI and well as the CMIC Rules, otherwise, the same can be struck down as a void for being contrary to law.24

"71.1. Any condition, stipulation, provision binding any person to waive compliance with any provision of this Code or of any 23 Sec. 5d) and f)of the SRC. engaged in the performance of any such contract, and 22 G.R No. 213860, July 5, 2022. 24 Sec. 71 of the SRC provides: rule or regulation thereunder, or of any rule of an Exchange required thereby, as well as the waiver itself, shall be void. including any contract for listing a security or an Exchange heretofore or hereafter made, the performance of which involves the thereunder, shall be void thereunder with actual knowledge of the facts by reason of which the making or performance of such contract was in violation of any such provision, rule or regulation. 71.2. Every contract made in violation of any provision of this Code or of any rule or regulation thereunder, and every contract, violation of,or the c (b) As regards the rights of any person who, not being a party to such contract, shall have acquired any right (a) As regards the rights of any person who, in violation of any such provision, rule or regulation, shall have made or uance of any relationship or practice in violation of, any provision of this Code, or any rule or regulation

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Section 30.2.1.2.4 of the 2015 SRC-IRR requires registered persons, among others, to establish the true and full identity of each of their clients, their financial situation, investment experience and objectives. We find this provision adopted in the CMIC Rules25, Section 1(a), Article VII of which, specifically requires all trading participants (including PEPI) to maintain customer accounts containing the information prescribed therein. Among the information required under the said provision is the residence address and TIN of the customer. These provisions are in place to promote the integrity of the capital market, and ensure protection of

our securities law.27 Thus, Article VI, Section 1 (iv) (g) categorically customers/investors and the public26, which is the unifying principle in prohibits registered persons from effecting any transaction unless they

therein.28 have first complied with the same, and other requirements prescribed

In our jurisdiction, it is a settled doctrine that a law, rule or regulation enjoys a presumption of validity and proscribes a collateral attack on the same. Thus, until a law, rule or regulation is nullified by a

applies to the CMIC Rules which, having been approved by this court in a direct proceeding, the same is considered valid.29 This doctrine Commission on 12 January 201230, should continue to bind the CMIC and the Trading Participants (which include PEPI) in the absence of any declaration by a court nullifying the same. Both the CMIC and PEPI were duty-bound to comply with the above-cited provisions of the 2015 SRC IRR and the CMIC Rules. Such duty constituted a valid justification for the CMIC to sustain the restriction/suspension by PEPI of Mr. Golangco's access to trade stocks in the Exchange because of his failure/refusal to submit the Required Information and Documents. A contrary position will sanction the exercise of a discretionary authority on the part of the

2s See Article VI, Section 1 (iv)a) and (e). business with them. Advisers must be careful that they are not taken along for the ride; taking time to challenge appropriately 26 "KYC is the bedrock of financial advice. It is a form of due diligence to ascertain relevant client information before doing is a must if the customer is to get value for money and your firm is to build a successful relationship with that customer. For too "There are many reasons why financial institutions do customer due diligence and commit time and effort to "know their long there have been large blank spaces in fact finds or simple notes that state "does not wish to disclose" or "not applicable". It customers: 27 See Palanca IV v. RCBC Securities, Inc., G.R. No. 241905, March 11, 2020 28 "A registered person shall not do anything to effect a transaction unless he has first complied with the requirements of this rule, as required in SRC Rule 30.2, paragraph 4. 29 Kilusang Mayo Uno v. Hon. Benigno Simeon C. Aquino,II., G.R. No. 210500. April , 2019 is an adviser's duty to get to know the customer in front of them." (https://www.huntswood.com/insights/reducing investments-mis-selling-at-home-2) 30 https://documents.pse.com.ph/CircularOPSPDF/PSE-ANCMNT2110000455.pdf To ensure the organisation remains compliant with the regulations and laws of the regions or markets they are To guard against fraudulent activity such as identity fraud or impersonatio To help make sure the customer is really who they say they are So that the financial institution can assist law enforcement" (https://www.swift.com/your-needs/financial-crime: operating in cyber-security/know-your-customer-kyc/customer-due-diligence-cdd)

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CMIC to modify the requirements prescribed under the 2015 SRC-IRR and the CMIC Rules, one which the CMIC does not have.

This Commission therefore finds that no reversible error was committed by the CMIC in sustaining the restriction/suspension by PEPI of Mr. Golangco's access to trade stocks in the Exchange insofar as the same was grounded on the latter's failure/refusal to submit the Required Information and Documents, which is required under the 2015 SRC-IRR and the CMIC Rules. Aside from the fact the such act was based on contract, we hold that an act or decision which aims to comply with a law,

of a Constitutional or statutory provision expressly penalizing the same. rule or regulation cannot give rise to a violation or liability in the absence

who was trading stocks in the Exchange is not exempt from complying with the relevant provisions of the SRC, the 2015 SRC-IRR and the CMIC It is worth stressing, and this Commission holds, that Mr. Golangco

Rules which cover or relate to (individual and corporate) investors, including and especially the requirements to submit/provide the Required Information and Documents. Investors who trade listed securities in the Exchange through a broker-dealer are required to fully and continuously comply with all securities laws, rules and regulations, and the State can, at any time, prohibit (and even penalize) such investors if found to have violated any law, rule or regulation. We have in fact a number of cases where the Supreme Court sanctioned the imposition of appropriate penalties upon investors who traded based on insider

transactions, all of which are acts violative of the securities law. This shows that the realization and achievement of the purposes and objectives of the securities laws, rules and regulations can only be information, committed market manipulation or carried out fraudulent possible by strict implementation of its provisions by this Commission and faithful/dutiful compliance with the same by market participants and investors.

in his refusal to comply with the statutory requirement to the 2015 SRC-IRR or the CMIC Rules which required him submit/provide and so hold that the suspension of his privilege to trade stocks in the Exchange by PEPI (which was sustained by the CMIC) did not violate the 2015 SRC-IRR or the CMIC Rules. If at all, such suspension put a stop to a submit/provide the Required Information and Documents. We thus find continuing non-compliance by Mr. Golangco of the relevant provisions of the Required Information and Documents. In the instant case, the records show that Mr. Golangco stood firm

Rene Golangco. vs. Capital Markets Integrity Corporation, et al. SEC En Banc Case No. 07-22-502 Page 14 of 15

Mr. Golangco also maintained that PEPI's act in restricting/suspending his access to buy/sell stocks in the Exchange violated the Agreement which renders it liable for payment of damages Resolutions not attained finality, this Commission cannot take cognizance of this matter for want of jurisdiction. the regular courts and not with this Commission. Thus, had the Assailed The competence in determining and passing upon this matter rests with

and may only exercise powers, take cognizance of, and pass upon matters that are specifically granted/provided by the statute. Matters relating to] the validity of contracts, the breach of its provisions or the award of within the jurisdiction of the proper Regional Trial Courts. We find this rule emphasized in the case of Imperial .s Cruz31, where the Supreme Court also explained the rationale thereof, thus: damages are governed by the provisions of the Civil Code which are The Commission is an administrative agency of limited jurisdiction

the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable solution of the problems submitted to them. This would also relieve the regular already clogged dockets. But as expedient as this policy may be, it should not deprive the courts of justice of their power to decide the creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution. "It is true that the trend is towards vesting administrative bodies like ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. Otherwise. courts of a substantial number of cases that would otherwise swell their

have jurisdiction to order the cancellation of the sale between Napal and Cruz. It also has no jurisdiction to cancel Cruz's TCT and order its Applying these principles to this case, we rule that the SEC does not transfer to NIDSLAND

To assail the validity of the sale, Imperial and NIDSLAND sought to prove that the sale to Cruz was simulated. This involves the application Alexander T. Ty, the issue of whether a sale is simulated falls within adjudication of the rights of Imperial, NIDSLAND and Napal under the of the law on sales. As we have already held in Intestate Estate of the jurisdiction of ordinary civil courts. It does not concern an Corporation Code and the internal rules of the corporation." (Emphasis supplied)

31 G.R. No. 178842, January 30, 2017.

Rene Golangco. vs. Capital Markets Integrity Corporation, et al. SEC En Banc Case No. 07-22-502 Page 15 of 15

v

Finally, We hold that no reversible error was committed by the CMIC in finding that PEPI violated the CMIC Rules when it facilitated and effected stock purchases made by Mr. Golangco despite being fully aware that the latter has not complied with the statutory requirement to submit/provide the Required Information and Documents. We reiterate

submit/provide the Required Information and Documents. PEPI clearly disregarded and violated Article VI, Section 1 (iv) (g) which categorically that there is nothing in the 2015 SRC-IRR and the CMIC Rules which grant PEPI the discretion to exempt its clients from the requirement to prohibits registered persons from effecting any transaction unless they have first complied with the same, and other requirements prescribed therein.32 This warrants the imposition of the appropriate penalties provided in the CMIC Rules, which the CMIC correctly did.

of time. Consequently, this Commission AFFIRMS the Assailed filed by Mr. Rene Golangco is hereby DISMISSED for having been filed out Resolutions of the CMIC, which have become final and executory. WHEREFORE, premises considered, the Memorandum of Appeal

SO ORDERED.

Makati City, December 2024.

EMILIOT AQUINO

Chainp erson

JAVEY'PAUL D.FRANCISCO Commissioner KARLO|s: BELLO Commissioner

MCJILL BRYANT T. FERNANDEZ Commissioner R6G#LIO V.QUEVEDO Commissioner

32 "A registered person shall not do anything to effect a transaction unless he has first complied with the requirements of this rule, as required in SRC Rule 30.2, paragraph 4."