SEC vs GMA Network, Inc. 575 SCRA 113

SECURITIES AND EXCHANGE COMMISSION, petitioner, vs. GMA NETWORK, INC., respondent.

Facts: Petitioner GMA filed an application for various amendments to its Articles of Incorporation and By-Laws with the respondent SEC. The amendments include, among others, the change in the corporate name of from "Republic Broadcasting System, Inc." to "GMA Network, Inc." as well as the extension of the corporate term for another 50 years.

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 (P1,212,200.00) The petitioner formally protested the assessment. SEC approved the other amendments. (corporate name and the principal purpose)

The petitioner requested for an official opinion/ruling from the SEC on the validity and propriety of the assessment. SEC, through Assoc. Commissioner Fe Eloisa C. Gloria, issued its ruling upholding the validity of the questioned assessment.

An appeal was taken by the petitioner on the ground that the assessment is not in accordance with law. SEC En Banc issued the assailed order dismissing the petitioner’s appeal for lack of merit.

It filed an appeal with CA. 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 the basis for the assessment is not valid. (SEC Memorandum Circular No. 2, Series of 1994)

CA agreed with the SEC’s submission that an extension of the corporate term is a grant of a fresh license for a corporation. As such, it is not an ordinary amendment. However, the CA ruled that the Memorandum Circular is invalid and ineffective for not having been published in accordance with law.

Issue: Whether or not the Memorandum Circular (MC) is valid.

Held: GMA points out that the MC 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, the former circular should apply to its case. Assuming that MC No. 2, Series of 1994 is applicable, GMA avers that the latter did not take effect for it was neither filed with the UP Law Center nor published either in the Official Gazette or in a newspaper of general circulation.

R.A. No. 3531 provides 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.

R.A. No. 3531 provides a 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 MC.

However, we agree with the CA that the questioned MC is invalid as it was not published in the Official Gazette or in a newspaper of general circulation. Furthermore it 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.

The MC cannot be construed as simply interpretative of R.A. No. 3531. This is an implementation of the mandate of R.A. No. 3531 and indubitably regulates and affects the public at large. It cannot be considered a mere internal rule or regulation, nor an interpretation of the law.

The petition is denied.