3 Securities and Exchange Commission, vs. GMA Network, Inc.

8/4/2015
SUPREMECOURTREPORTSANNOTATEDVOLUME575
has been no compliance if the penalty is iniquitous or

unconscionable in accordance with Article 1229 of the Civil
Code. (Florentino vs. Supervalue, Inc., 533 SCRA 156
[2007])
o0o
G.R. No. 164026.December 23, 2008.*
SECURITIES
AND
EXCHANGE
COMMISSION,
petitioner, vs. GMA NETWORK, INC., respondent.
Administrative Law Securities and Exchange Commission
(SEC) Filing Fees The Securities and Exchange Commission
(SEC) is entitled to collect and receive the same fees it assesses and
collects both for the filing of articles of incorporation and the filing
of an amended articles of incorporation for purposes of extending
the term of corporate existence. Republic Act No. 3531 (R.A. No.
3531) provides that where the amendment consists in extending
the term of corporate existence, the SEC shall be entitled to
collect and receive for the filing of the amended articles of
incorporation the same fees collectible under existing law as the
filing of articles of incorporation. As is clearly the import of this
law, the SEC shall be entitled to collect and receive the same fees
it assesses and collects both for the filing of articles of
incorporation and the filing of an amended articles of
incorporation for purposes of extending the term of corporate
existence.
Same Same Same Republic Act (R.A.) No. 3531 provides an
unmistakable standard which should guide the Securities and
Exchange Commission (SEC) in fixing and imposing its rates and
fees.What this proposition fails to consider, however, is the clear
directive of R.A. No. 3531 to impose the same fees for the filing of
articles of incorporation and the filing of amended articles of
incorporation to reflect an extension of corporate term. R.A. No.
3531 provides an unmistakable standard which should guide the
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SEC in fixing and imposing its rates and fees. If such mandate
were the only
_______________
*SECOND DIVISION.
114
114
SUPREME COURT REPORTS ANNOTATED
Securities and Exchange Commission , vs. GMA Network, Inc.
consideration, the Court would have been inclined to rule that the
SEC was correct in imposing the filing fees as outlined in the
questioned
memorandum
circular,
GMAs
argument
notwithstanding.
Same Same Publication Requirement The questioned
memorandum circular of the Securities and Exchange Commission
(SEC) is invalid as it does not appear from the records that it has
been published in the Official Gazette or in a newspaper of general
circulation.We agree with the Court of Appeals that the
questioned memorandum circular is invalid as it does not appear
from the records that it has been published in the Official Gazette
or in a newspaper of general circulation. Executive Order No. 200,
which repealed Art. 2 of the Civil Code, provides that laws shall
take effect after fifteen days following the completion of their
publication either in the Official Gazette or in a newspaper of
general circulation in the Philippines, unless it is otherwise
provided.
Same Same Office of the National Administrative Register
(ONAR) The questioned Securities and Exchange Commission
(SEC) memorandum circular is likewise ineffective for not having
been filed with the Office of the National Administrative Register
of the University of the Philippines Law Center as required in the
Administrative Code of 1987.The questioned memorandum
circular, furthermore, has not been filed with the Office of the
National Administrative Register of the University of the
Philippines Law Center as required in the Administrative Code of
1987. In Philsa International Placement and Services Corp. v.
Secretary of Labor and Employment, 356 SCRA 174 (2001),
Memorandum Circular No. 2, Series of 1983 of the Philippine
Overseas Employment Administration, which provided for the
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schedule of placement and documentation fees for private

employment agencies or authority holders, was struck down as it
was not published or filed with the National Administrative
Register.
Same Same Same The questioned Securities and Exchange
Commission (SEC) memorandum circular cannot be construed as
simply interpretative of Republic Act (R.A.) No. 3531 since it is an
implementation of the mandate of Republic Act (R.A.) No. 3531
and indubitably regulates and affects the public at large.The
questioned memorandum circular, it should be emphasized,
cannot be construed as simply interpretative of R.A. No. 3531.
This administrative issuance is an implementation of the
mandate of R.A. No. 3531 and indubitably regulates and affects
the public at large. It
115
VOL. 575, DECEMBER 23, 2008
115
cannot, therefore, be considered a mere internal rule or

regulation, nor an interpretation of the law, but a rule which
must be declared ineffective as it was neither published nor filed
with the Office of the National Administrative Register.
Same Same Due Process Securities and Exchange
Commissions (SECs) assessment amounting to P1,212,200.00 for
the filing of an application for amendment of its articles of
incorporation extending its corporate term is exceedingly
unreasonable and amounts to an impositiona filing fee, by legal
definition, is that charged by a public official to accept a document
for processing, and must be just, fair, and proportionate to the
service for which the fee is being collected The due process clause,
however, permits the courts to determine whether the regulation
issued by the Securities and Exchange Commission (SEC) is
reasonable and within the bounds of its ratefixing authority and
to strike it down when it arbitrarily infringes on a persons right to
property.A related factor which precludes consideration of the
questioned issuance as interpretative in nature merely is the fact
the SECs assessment amounting to P1,212,200.00 is exceedingly
unreasonable and amounts to an imposition. A filing fee, by legal
definition, is that charged by a public official to accept a document
for processing. The fee should be just, fair, and proportionate to
the service for which the fee is being collected, in this case, the
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examination and verification of the documents submitted by GMA

to warrant an extension of its corporate term. Ratefixing is a
legislative function which concededly has been delegated to the
SEC by R.A. No. 3531 and other pertinent laws. The due process
clause, however, permits the courts to determine whether the
regulation issued by the SEC is reasonable and within the bounds
of its ratefixing authority and to strike it down when it
arbitrarily infringes on a persons right to property.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
The Solicitor General for petitioner.
Belo, Gozon, Elma, Parel, Asuncion & Lucila Law
Offices for respondent.
116
116
Securities and Exchange Commission , vs. GMA Network,

Inc.
TINGA,J.:
Petitioner Securities and Exchange Commission (SEC)
assails the Decision1 dated February 20, 2004 of the Court
of Appeals in CAG.R. SP No. 68163, which directed that
SEC Memorandum Circular No. 1, Series of 1986 should be
the basis for computing the filing fee relative to GMA
Network, Inc.s (GMAs) application for the amendment of
its articles of incorporation for purposes of extending its
corporate term.
The undisputed facts as narrated by the appellate court
are as follows:
On August 19, 1995, the petitioner, GMA NETWORK, INC.,
(GMA, for brevity), a domestic corporation, filed an application for
collective approval of various amendments to its Articles of
Incorporation and ByLaws with the respondent Securities and
Exchange Commission, (SEC, for brevity). The amendments
applied for include, among others, the change in the corporate
name of petitioner from Republic Broadcasting System, Inc. to
GMA Network, Inc. as well as the extension of the corporate
term for another fifty (50) years from and after June 16, 2000.
Upon such filing, the petitioner had been assessed by the SECs
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Corporate and Legal Department a separate filing fee for the

application for extension of corporate term equivalent to 1/10 of
1% of its authorized capital stock plus 20% thereof or an amount
of P1,212,200.00.
On September 26, 1995, the petitioner informed the SEC of its
intention to contest the legality and propriety of the said
assessment. However, the petitioner requested the SEC to
approve the other amendments being requested by the petitioner
without being deemed to have withdrawn its application for
extension of corporate term.
On October 20, 1995, the petitioner formally protested the
assessment amounting to P1,212,200.00 for its application for
extension of corporate term.
_______________
1 Rollo, pp. 1019. Penned by Associate Justice Amelita G. Tolentino and
concurred in by Associate Justices Eloy R. Bello, Jr. and Arturo D. Brion (now an
Associate Justice of this Court).
117
117
On February 20, 1996, the SEC approved the other

amendments to the petitioners Articles of Incorporation,
specifically Article 1 thereof referring to the corporate name of the
petitioner as well as Article 2 thereof referring to the principal
purpose for which the petitioner was formed.
On March 19, 1996, the petitioner requested for an official
opinion/ruling from the SEC on the validity and propriety of the
assessment for application for extension of its corporate term.
Consequently, the respondent SEC, through Associate
Commissioner Fe Eloisa C. Gloria, on April 18, 1996, issued its
ruling upholding the validity of the questioned assessment, the
dispositive portion of which states:
In light of the foregoing, we believe that the questioned
assessment is in accordance with law. Accordingly, you are
hereby required to comply with the required filing fee.
An appeal from the aforequoted ruling of the respondent SEC
was subsequently taken by the petitioner on the ground that the
assessment of filing fees for the petitioners application for
extension of corporate term equivalent to 1/10 of 1% of the
authorized capital stock plus 20% thereof is not in accordance
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with law.
On September 26, 2001, following three (3) motions for early
resolution filed by the petitioner, the respondent SEC En Banc
issued the assailed order dismissing the petitioners appeal, the
dispositive portion of which provides as follows:
WHEREFORE, for lack of merit, the instant Appeal is
hereby dismissed.
SO ORDERED.2
In its petition for review3 with the Court of Appeals,

GMA argued that its application for the extension of its
corporate term is akin to an amendment and not to a filing
of new articles of incorporation. It further averred that
SEC Memorandum Circular No. 2, Series of 1994, which
the SEC used as basis for assessing P1,212,200.00 as filing
fee for the extension of GMAs corporate term, is not valid.
_______________
2Id., at pp. 1112.
3Id., at pp. 91115.
118
118

Inc.
The appellate court agreed with the SECs submission

that an extension of the corporate term is a grant of a fresh
license for a corporation to act as a juridical being endowed
with the powers expressly bestowed by the State. As such,
it is not an ordinary amendment but is analogous to the
filing of new articles of incorporation.
However, the Court of Appeals ruled that Memorandum
Circular No. 2, Series of 1994 is legally invalid and
ineffective for not having been published in accordance
with law. The challenged memorandum circular, according
to the appellate court, is not merely an internal or
interpretative rule, but affects the public in general. Hence,
its publication is required for its effectivity.
The appellate court denied reconsideration in a
Resolution4 dated June 9, 2004.
In its Memorandum5 dated September 6, 2005, the SEC
argues that it issued the questioned memorandum circular
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in the exercise of its delegated legislative power to fix fees

and charges. The filing fees required by it are allegedly
uniformly imposed on the transacting public and are
essential to its supervisory and regulatory functions. The
fees are not a form of penalty or sanction and, therefore,
require no publication.
For its part, GMA points out in its Memorandum,6 dated
September 23, 2005, that SEC Memorandum Circular No.
1, Series of 1986 refers to the filing fees for amended
articles of incorporation where the amendment consists of
extending the term of corporate existence. The questioned
circular, on the other hand, refers only to filing fees for
articles of incorporation. Thus, GMA argues that the
former circular, being the one that specifically treats of
applications for the extension of corporate term, should
apply to its case.
_______________
4Id., at p. 57.
5Id., at pp. 196221.
6Id., at pp. 231249.
119
119

Inc.
Assuming that Memorandum Circular No. 2, Series of

1994 is applicable, GMA avers that the latter did not take
effect and cannot be the basis for the imposition of the fees
stated therein for the reasons that it was neither filed with
the University of the Philippines Law Center nor published
either in the Official Gazette or in a newspaper of general
circulation as required under existing laws.
It should be mentioned at the outset that the authority
of the SEC to collect and receive fees as authorized by law
is not in question.7 Its power to collect fees for examining
and filing articles of incorporation and bylaws and
amendments thereto, certificates of increase or decrease of
the capital stock, among others, is recognized. Likewise
established is its power under Sec. 7 of P.D. No. 902A to
recommend to the President the revision, alteration,
amendment or adjustment of the charges which it is
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authorized to collect.
The subject of the present inquiry is not the authority of
the SEC to collect and receive fees and charges, but rather
the validity of its imposition on the basis of a memorandum
circular which, the Court of Appeals held, is ineffective.
Republic Act No. 3531 (R.A. No. 3531) provides that
where the amendment consists in extending the term of
corporate existence, the SEC shall be entitled to collect
and receive for the filing of the amended articles of
incorporation the same fees collectible under existing law
as the filing of articles of incorporation.8 As is clearly the
import of this law, the SEC
_______________
7Sec. 139 of B.P. Blg. 68 authorizes the SEC to collect and receive fees
as authorized by law or by rules and regulations promulgated by it.
8An Act to Further Amend Section Eighteen of the Corporation Law.
xxx
The Securities and Exchange Commissioner shall be entitled to collect
and receive the sum of ten pesos for filing said copy of the amended
articles of incorporation: Provided, however, That where the amendment
consists in extending the term of corporate existence
120
120

Inc.
shall be entitled to collect and receive the same fees it

assesses and collects both for the filing of articles of
incorporation and the filing of an amended articles of
incorporation for purposes of extending the term of
corporate existence.
The SEC, effectuating its mandate under the
aforequoted law and other pertinent laws,9 issued SEC
Memorandum Circular No. 1, Series of 1986, imposing the
filing fee of 1/10 of 1% of the authorized capital stock but
not less than P300.00 nor more than P100,000.00 for stock
corporations, and 1/10 of 1% of the authorized capital stock
but not less than P200.00 nor more than P100,000.00 for
stock corporations without par value, for the filing of
amended articles of incorporation where the amendment
consists of extending the term of corporate existence.
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Several years after, the SEC issued Memorandum

Circular No. 2, Series of 1994, imposing new fees and
charges and deleting the maximum filing fee set forth in
SEC Circular No. 1, Series of 1986, such that the fee for the
filing of articles of incorporation became 1/10 of 1% of the
authorized capital stock plus 20% thereof but not less than
P500.00.
A reading of the two circulars readily reveals that they
indeed pertain to different matters, as GMA points out.
SEC Memorandum Circular No. 1, Series of 1986 refers to
the filing fee for the amendment of articles of incorporation
to extend corporate life, while Memorandum Circular No.
2, Series of 1994 pertains to the filing fee for articles of
incorporation. Thus, as GMA argues, the former circular,
being
_______________
the Securities and Exchange Commissioner shall be entitled to collect and
receive for the filing of the amended articles of incorporation the same fees
collectible under existing law for the filing of articles of incorporation.
xxx
R.A. No. 3531 took effect on June 20, 1963.
9Presidential Decree 902A, R.A. No. 1143, and the Revised Securities
Act.
121
121

Inc.
squarely applicable and, more importantly, being more

favorable to it, should be followed.
What this proposition fails to consider, however, is the
clear directive of R.A. No. 3531 to impose the same fees for
the filing of articles of incorporation and the filing of
amended articles of incorporation to reflect an extension of
corporate term. R.A. No. 3531 provides an unmistakable
standard which should guide the SEC in fixing and
imposing its rates and fees. If such mandate were the only
consideration, the Court would have been inclined to rule
that the SEC was correct in imposing the filing fees as
outlined in the questioned memorandum circular, GMAs
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argument notwithstanding.
However, we agree with the Court of Appeals that the
questioned memorandum circular is invalid as it does not
appear from the records that it has been published in the
Official Gazette or in a newspaper of general circulation.
Executive Order No. 200, which repealed Art. 2 of the Civil
Code, provides that laws shall take effect after fifteen days
following the completion of their publication either in the
Official Gazette or in a newspaper of general circulation in
the Philippines, unless it is otherwise provided.
In Taada v. Tuvera,10 the Court, expounding on the
publication requirement, held:
We hold therefore that all statutes, including those of local
application and private laws, shall be published as a condition for
their effectivity, which shall begin fifteen days after publication
unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive
orders promulgated by the President in the exercise of legislative
powers whenever the same are validly delegated by the
legislature, or, at present, directly conferred by the Constitution.
Administrative rules and regulations must also be published if
their purpose is to
_______________
10230 Phil. 528 146 SCRA 446 (1986).
122
122
enforce or implement existing law pursuant also to a valid

delegation.
Interpretative regulations and those merely internal in nature,
that is, regulating only the personnel of the administrative agency
and not the public, need not be published. Neither is publication
required of the socalled letters of instructions issued by
administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their
duties.11
The questioned memorandum circular, furthermore, has

not been filed with the Office of the National
Administrative Register of the University of the
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Philippines Law Center as required in the Administrative

Code of 1987.12
In Philsa International Placement and Services Corp. v.
Secretary of Labor and Employment,13 Memorandum
Circular No. 2, Series of 1983 of the Philippine Overseas
Employment Administration, which provided for the
schedule of placement and documentation fees for private
employment agencies or
_______________
11Id., at p. 535.
12Executive Order No. 292, Book VII, Chapter 2, Sec. 3 thereof states:
Sec.3.Filing.(1) Every agency shall file with the University of the
Philippines Law Center three (3) certified copies of every rule adopted by
it. Rules in force on the date of effectivity of this Code which are not filed
within three (3) months from that date shall not thereafter be the basis of
any sanction against any party or persons.
(2)The records officer of the agency, or his equivalent functionary,
shall carry out the requirements of this section under pain of disciplinary
action.
(3)A permanent register of all rules shall be kept by the issuing
agency and shall be open to public inspection.
13408 Phil. 270 356 SCRA 174 (2001) cited in National Association of
Electricity Consumers for Reforms (NASECORE) v. Energy Regulatory
Commission, G.R. No. 163935, February 2, 2006, 481 SCRA 480, 520.
123
123

Inc.
authority holders, was struck down as it was not published

or filed with the National Administrative Register.
The questioned memorandum circular, it should be
emphasized, cannot be construed as simply interpretative
of R.A. No. 3531. This administrative issuance is an
implementation of the mandate of R.A. No. 3531 and
indubitably regulates and affects the public at large. It
cannot, therefore, be considered a mere internal rule or
regulation, nor an interpretation of the law, but a rule
which must be declared ineffective as it was neither
published nor filed with the Office of the National
Administrative Register.
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A related factor which precludes consideration of the

questioned issuance as interpretative in nature merely is
the fact the SECs assessment amounting to P1,212,200.00
is exceedingly unreasonable and amounts to an imposition.
A filing fee, by legal definition, is that charged by a public
official to accept a document for processing. The fee should
be just, fair, and proportionate to the service for which the
fee is being collected, in this case, the examination and
verification of the documents submitted by GMA to
warrant an extension of its corporate term.
Ratefixing is a legislative function which concededly
has been delegated to the SEC by R.A. No. 3531 and other
pertinent laws. The due process clause, however, permits
the courts to determine whether the regulation issued by
the SEC is reasonable and within the bounds of its rate
fixing authority and to strike it down when it arbitrarily
infringes on a persons right to property.
WHEREFORE, the petition is DENIED. The Decision of
the Court of Appeals in CAG.R. SP No. 68163, dated
February 20, 2004, and its Resolution, dated June 9, 2004,
are AFFIRMED. No pronouncement as to costs.
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8/4/2015

has been no compliance if the penalty is iniquitous or

G.R. No. 164026.December 23, 2008.*

SUPREME COURT REPORTS ANNOTATED

Securities and Exchange Commission , vs. GMA Network, Inc.

schedule of placement and documentation fees for private

VOL. 575, DECEMBER 23, 2008

Securities and Exchange Commission , vs. GMA Network, Inc.

cannot, therefore, be considered a mere internal rule or

examination and verification of the documents submitted by GMA

PETITION for review on certiorari of the decision and

SUPREME COURT REPORTS ANNOTATED

Securities and Exchange Commission , vs. GMA Network,

Corporate and Legal Department a separate filing fee for the

VOL. 575, DECEMBER 23, 2008

Securities and Exchange Commission , vs. GMA Network, Inc.

On February 20, 1996, the SEC approved the other

In its petition for review3 with the Court of Appeals,

SUPREME COURT REPORTS ANNOTATED

Securities and Exchange Commission , vs. GMA Network,

The appellate court agreed with the SECs submission

in the exercise of its delegated legislative power to fix fees

VOL. 575, DECEMBER 23, 2008

Securities and Exchange Commission , vs. GMA Network,

Assuming that Memorandum Circular No. 2, Series of

SUPREME COURT REPORTS ANNOTATED

Securities and Exchange Commission , vs. GMA Network,

shall be entitled to collect and receive the same fees it

Several years after, the SEC issued Memorandum

VOL. 575, DECEMBER 23, 2008

Securities and Exchange Commission , vs. GMA Network,

squarely applicable and, more importantly, being more

SUPREME COURT REPORTS ANNOTATED

Securities and Exchange Commission , vs. GMA Network, Inc.

enforce or implement existing law pursuant also to a valid

The questioned memorandum circular, furthermore, has

Philippines Law Center as required in the Administrative

VOL. 575, DECEMBER 23, 2008

Securities and Exchange Commission , vs. GMA Network,

authority holders, was struck down as it was not published

A related factor which precludes consideration of the

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