Opinion No. 24-03Re: Exempt Securities under Subsection 9.1(b) of the Securities Regulation Code

Commission Securities and Exchange tF

BAGONG PILIPINAS

OFFICE OFTHE GENERALCOUNSEL

SEC OGC Opinion No.24O3 Re: Exempt Securities under Subsection 9.1(b) of the Securities Regulation Code 2 March 2024 Hongkong and Shanghai Banking Corporation Philippines HSBC Centre,3058 5th Avenue West maroy.garcia@hsbc.com.ph Bonifacio Global City, Taguig City 1634

Attention AVP Regulatory Affairs maroy.garcia@hsbc.com.ph Mr. Maroy Garcia

Dear Sir:

("HSBC") Philippines, for an opinion on exempt securities under Subsection 9.1(b) of Republic Act No. 8799 otherwise known as the "Securities Regulation Code ("SRC")." This refers to your letter requesting, on behalf of Hongkong and Shanghai Banking Corporation

foreign bonds to be accessed even by non-qualified buyers without prior registration, i.e. diplomatic relations and on the basis of reciprocity. You stated that there are two (2) requirements under Subsection 9.1(b) of the SRC in order for

traded in the main exchange/s of another country already meets the reciprocity principle under the SRC. Your query is, whether a determination that Philippine government-issued or guaranteed bonds are

As a general rule, Subsection 8.1 of the SRC mandates the registration of securities, thus:

distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. prescribe, shall be made available to each prospective purchaser. Prior to such sale, information on the securities, in such form and with such substance as the Commission may Section 8. Requirement of Registration of Securities.- 8.1. Securities shall not be sold or offered for sale or

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the abovementioned requirement of registration,viz Nevertheless, Subsection 9.1 of the SRC enumerates the classes of securities that are exempt from

rule apply to any of the following classes of securities: Section 9. Exempt Securities. - 9.1. The requirement of registration under Subsection 8.1 shall not as a general

Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof,orby any person controlled or supervised by,and acting as an instrumentality of said Government. (b)Any security issued or guaranteed by the government of any country with which the Philippines basis of reciprocity: Provided, That the Commission may require compliance with the form and content for disclosures the Commission may prescribe. maintains diplomatic relations, or by any state, province or political subdivision thereof on the

(c)Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory

www.sec.gov.ph | imessagemo@sec.gov.ph The SEC Headquarters,7907 Makati Avenue 1 Received by this Office on 29 January 2024. +63253227696 2 Italics supplied. Salcedo Village,Belair,Makati iy INVESTORS IN PEOPLE We invest in people M RTIFIED w B OREC

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body. (d) Any security or its derivatives the sale or transfer of which, by law, is under the supervision and regulation of the Office of the Insurance Commission, Housing and Land Use Rule Regulatory Board, or the Bureau of Internal Revenue. (e) Any security issued by a bank except its own shares of stock.

are considered as exempt securities under Subsection 9.1(b) of SRC, to wit: Prescinding from the foregoing, there are two (2) types of foreign government security issuances that

(1 (2 Securities issued or guaranteed by the government of any country which has diplomatic relations with the exempt on the basis of reciprocity. Philippines; or Securities issued or guaranteed by any state,province or political subdivision of the foreign country which are

Thus, we answer your query in the negative.

another country, that party should also provide competent evidence, such as laws, statutes, rules and there are Philippine government-issued or guaranteed bonds traded in the main exchange/s of regulations, that the Philippine government-issued or guaranteed securities are exempt from registration with the foreign country. If a party seeks to avail of the exemption on the basis of reciprocity, in addition to the proof that

thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Evidence ("RRE") which read as follows: To provide such competent evidence of said exemption, the party invoking it must present a copy

19,+ when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his or her deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. Section 24. Proof of official record. - The record of public documents referred to in paragraph (a) of Section

convention to which the Philippines is also a party, or considered a public document under such treaty or convention treaty or convention subject to reciprocity granted to public documents originating from the Philippines. pursuant to paragraph (c) of Section 19 hereof.5 the certificate or its equivalent shall be in the form prescribed by such If the office in which the record is kept is in a foreign country, which is a contracting party to a treaty or

referred to in the next preceding sentence, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice-consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his [or her] office. For documents originating from a foreign country which is not a contracting party to a treaty or convention

further proof, the certificate or its equivalent being prima facie evidence of the due execution and genuineness of the document involved. The certificate shall not be required when a treaty or convention between a foreign country and the Philippines has abolished the requirement, or has exempted the document itself from this formality. (24a) A document that is accompanied by a certificate or its equivalent may be presented in evidence without

the purpose of evidence, the attestation must state, in substance, that the copy is a correct copy of the original, or a be any, or if he or she be the clerk of a court having a seal, under the seal of such court. (25a) specific part thereof, as the case may be. The attestation must be under the official seal of the attesting officer, if there Section 25. What attestation of copy must state. - Whenever a copy of a document or record is attested for

S5 Section 19. Classes of Documents. -- For the purpose of their presentation in evidence, documents are either public or private. Section 19. Classes of Documents. -For the purpose of their presentation in evidence,documents are either public or private 3 Emphasis and italics supplied. Public documents are: aThe written official acts,or records of the official acts of the sovereign authorityofficial bodies and tribunals,and public Public documents are: (c Documents that are considered public documents under treaties and conventions which are in force between the Philippines and the country sources; and officers, whether of the Philippines, or of a foreign country; X X X XXX XXX X X X XXX XXX X X X XXX XXX

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laws. As such, it must be proven as facts under our rules on evidence. The Supreme Court's ruling in EDI- Staffbuilders International Inc. v. National Labor Relations Commission illuminates: The rationale behind the foregoing is that Philippine courts do not take judicial notice of foreign

judge or labor arbiter cannot take judicial notice of a foreign law. He is presumed to know only domestic or forum proving the foreign law.The foreign law is treated as a question of fact to be properly pleaded and proved as the law. In international law, the party who wants to have a foreign law applied to a dispute or case has the burden of

admitting foreigners into the practice of medicine. Respondent therein submitted a duly notarized English translation of the Medical Practitioners Law of Japan duly authenticated by the Consul General of the Philippine Embassy to Japan, Jesus I. Yabes; thus, he was allowed to take the Medical Board Examinations in August 1992, which he subsequently passed. satisfactorily complied and established the existence of reciprocity between Japan and Philippines in In Board of Medicine et. al. v. Yasuyuki Ota,3 the Supreme Court found that the respondent therein

for establishing reciprocity: Applying the foregoing and for ease of reference, please see below the abridged outline of the process

1 Official Publication or Certified True Copy. The record of public documents under paragraph or her deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. a) of Section 19, Rule 132 of the RRE may be evidenced by either:(a) an official publication thereof; or (b) by a copy attested by the officer having the legal custody of the record, or by his

2. Apostille Convention. The Hague Convention Abolishing the Requirement of Legalisation for applicable: Foreign Public Documents, otherwise known as the "Apostille Convention," was concluded on 05 October 1961 and entered into force on 21 January 1965. On 14 May 2019, the Philippines became a party to the Apostille Convention. Accordingly, please refer to the following process, as

a Apostille: If both the country where the public document1o was issued and the

designated Competent Authority in the country of origin in order to be recognized and country where the public document is to be used are Parties to the Apostille Convention, a foreign public document will only need to be Apostillizedi1 by the used in the Philippines and vice-versa, save for some exceptions as will be discussed hereunder. Legalisation12 by the Philippine Embassy or Consulate (as the receiving country) located in that country is no longer needed.

1o For the purposes of the present Convention, the following are deemed to be public documents: G.R. No. 166097, July 14, 2008. 9 See https://dfa-oca.ph/quick-facts-on-apostille/ - last accessed on 11 March 2024 at 8:39 a.m. 6G.R.No.145587,October 26,2007. 7 Emphasis and italics supplied. C) b documents emanating from an authority or an official connected with the courts or tribunals of the State, including those official certificates which are placed on documents signed by persons in their private capacity, such as official certificates emanating from a public prosecutor, a clerk of a court or a process-server ("huissier de justice"); administrative documents; recording the registration of a document or the fact that it was in existence on a certain date and official and notarial authentications of signatures. notarial acts;

However,the present Convention shall not apply: a b to documents executed by diplomatic or consular agents to administrative documents dealing directly with commercial or customs operations. (Article 1, Apostille Convention)

produced certify the authenticity of the signature, the capacity in which the person signing the document has acted and, where The term "public document" extends to all documents other than those issued by persons in their private capacity. Therefore, any document executed by an authority or person in an official capacity (i.e., acting in the capacity of an officer authorised to execute the document) is a public document. (See Apostille Handbook No.103) appropriate, the identity of the seal or stamp which it bears. (Article 2, Apostille Convention) 11 An Apostlle is the Certificate issued under Article 3(1) of the Convention to certify the authenticity of the origin of a public document. 12 Legalisation means only the formality by which the diplomatic or consular agents of the country in which the document has to be

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b. Authentication and Legalisation13 If the public document originates from a foreign country which is not a contracting party to the Apostille Convention, the public document executed or issued overseas needs to be: (1) authenticated by the designated Competent Authority in the country of origin; and (b) legalized before the Philippine Embassy or Consular Office located in the document's country of origin, before the same can be recognized and used in the Philippines.

Further, kindly note that, even if the receiving country is a party to the Apostille an objection to the accession of the State of Origin of the public document and vice versa under Article 12 of the Apostille Convention.14 In case of the Philippines, the countries that objected to its accession are: (a) Austria; (b) Finland; (c) Germany; and (d) Greece. Consequently, the public documents to and from such countries shall undergo authentication and legalization as discussed above. Convention,the Apostille may not be recognized by the said receiving country if it raised

3. Translation into English or Filipino. Documents written in an unofficial language shall likewise

be accompanied with a translation into English or Filipino15 by a registered/official translator

be verified with the appropriate authority or office. relevant rules and regulations that the Commission may hereafter prescribe apropos to compliance with the reciprocity requirement as well as the form and content for disclosures for offerings subject of Subsection 9.1(b) of the SRC. Finally, the relevant and detailed processes related to notarization, apostille, authentication, and/or legalization, as well as the submission of the documents related thereto, should still Please take note that the foregoing shall constitute as general guidelines and shall be subject to

circumstances and documents disclosed/submitted, and relevant solely to the particular issue raised therein. It shall not be used in the nature of a standing rule binding upon the Commission in other cases or it will be disclosed that the facts relied upon are different, this opinion shall be rendered void. upon the courts whether of similar or dissimilar circumstances.16 If, upon further inquiry or investigation, It shall be understood that the foregoing opinion is rendered on the basis solely of the facts,

ery truly yoi

Ro muald C Phdilla afmrtkimn General Counsel

which have not raised an objection to its accession in the six months after the receipt of the notification referred to in sub-paragraph d) of Article 15. Any such objection shall be notified to the Ministry of Foreign Affairs of the Netherlands. The Convention shall enter 15 See Rule 132, Section 33 of the Revised Rules of Evidence. 14 Article 12. Any State not referred to in Article 10 may accede to the present Convention after it has entered into force in accordance Netherlands. Such accession shall have effect only as regards the relations between the acceding State and those Contracting States expiry of the period of six months mentioned in the preceding paragraph. 13 Supra at 9. with the first paragraph of Article 11. The instrument of accession shall be deposited with the Ministry of Foreign Affairs of the into force as between the acceding State and the States which have raised no objection to its accession on the sixtieth day after the 16 Paragraph 7, SEC Memorandum Circular No. 15, Series of 2003.