SECOND DIVISION

[G.R. No. 164026. December 23, 2008.]

SECURITIES AND EXCHANGE COMMISSION, petitioner, vs.

GMA NETWORK, INC., respondent.

DECISION

TINGA, J : p
*

Petitioner Securities and Exchange Commission (SEC) assails the

Decision 1 dated February 20, 2004 of the Court of Appeals in CA-G.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 (GMA's) application for the amendment of its articles of incorporation
for purposes of extending its corporate term. ETDaIC

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
By-Laws 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 SEC's
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. DIESaC

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deemed to have withdrawn its application for extension of corporate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.
On February 20, 1996, the SEC approved the other
amendments to the petitioner's 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. aICHEc

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 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 petitioner's application for extension
of corporate term equivalent to 1/10 of 1% of the authorized capital
stock plus 20% thereof is not in accordance with law. HCITAS

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 petitioner's 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 review 3 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
GMA's corporate term, is not valid. TIHCcA

The appellate court agreed with the SEC's 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 Resolution 4 dated June
9, 2004.
In its Memorandum 5 dated September 6, 2005, the SEC argues that it
issued the questioned memorandum circular 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
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 supervisory and regulatory functions. The fees are not a form of penalty or
sanction and, therefore, require no publication. ATHCDa

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.
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. aEHASI

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 by-laws 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. 902-A to recommend to the President the revision,
alteration, amendment or adjustment of the charges which it is 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 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.
EACIcH

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.
Several years after, the SEC issued Memorandum Circular No. 2, Series
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 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. TCDHIc

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 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, GMA's argument
notwithstanding. TCADEc

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 Tañada 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
enforce or implement existing law pursuant also to a valid delegation.
CTEacH

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 so-called 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

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 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. 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 authority holders, was struck down as it was not published or
filed with the National Administrative Register. CEaDAc

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.
A related factor which precludes consideration of the questioned
issuance as interpretative in nature merely is the fact the SEC's 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. ASaTCE

Rate-fixing 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
person's right to property.
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 68163, dated February 20, 2004, and its
Resolution, dated June 9, 2004, are AFFIRMED. No pronouncement as to
costs.
SO ORDERED.
Quisumbing, Carpio-Morales, Chico-Nazario and Velasco, Jr., JJ., concur.

Footnotes
* Additional member in lieu of Associate Justice Arturo D. Brion per Special Order.

1. Rollo, pp. 10-19; 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). aIEDAC

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 2. Id. at 11-12.

3. Id. at 91-115.
4. Id. at 57.
5. Id. at 196-221.

6. Id. at 231-249.
7. Sec. 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.

8. AN ACT TO FURTHER AMEND SECTION EIGHTEEN OF THE CORPORATION LAW.

xxx xxx 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 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 xxx xxx

R.A. No. 3531 took effect on June 20, 1963.
9. Presidential Decree 902-A, R.A. No. 1143, and the Revised Securities Act.
10. 230 Phil. 528 (1986). DEacIT

11. Id. at 535.

12. Executive 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.
13. 408 Phil. 270 (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.

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