G.R. No. 152685. December 4, 2007.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, vs. NATIONAL TELECOMMUNICATIONS COMMISSION, JOSEPH A. SANTIAGO, in his capacity as NTC Commissioner, and EDGARDO CABARRIOS, in his capacity as Chief, CCAD, respondents.

FACTS

The National Telecommunications Commission (NTC) assessed Supervision and Regulation Fees (SRF) against Philippine Long Distance Telephone Company (PLDT) under Section 40(e) of the Public Service Act. The core dispute involved the proper valuation base for the SRF. In a prior case, G.R. No. 127937, the Supreme Court ruled that the SRF should be based on the value of “capital stock subscribed or paid,” defined as the amount received by the corporation, inclusive of premiums, for the original issuance of shares. For stock dividends, the Court held the base is the amount transferred from surplus profits to the capital account.
Following this final ruling, the NTC issued new assessments to PLDT for the years 1998-1999, which included the value of stock dividends. PLDT protested, arguing that the Court’s decision in G.R. No. 127937 excluded stock dividends from the SRF base because no new payment is received by the corporation for such issuances. The NTC denied the protest. PLDT filed a motion for clarification with the Supreme Court, which was merely noted as the decision was final. PLDT then filed a special civil action for certiorari and prohibition with the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in upholding the NTC’s assessments, which included the value of stock dividends in computing the SRF, as being consistent with the Supreme Court’s decision in G.R. No. 127937.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic is anchored on the precise interpretation of “capital stock subscribed or paid” as definitively settled in G.R. No. 127937. The Court clarified that its prior ruling did not exclude stock dividends. While it is true that a corporation receives no fresh cash infusion for a stock dividend, the law focuses on the value of the capital stock, not the mode of issuance. A stock dividend represents a capitalization of retained earnings; it increases the corporation’s outstanding capital stock. The amount capitalized—the value transferred from surplus to capital account—constitutes the “paid” value for the newly issued shares. This interpretation aligns with the statutory purpose of the SRF as a reimbursement for regulatory supervision, which extends to all capital deployed in the public service, regardless of whether it originated from cash subscriptions or capitalized earnings. Therefore, the NTC correctly included the value of stock dividends in its reassessment, as it was based on the schedule of capital stock submitted by PLDT itself, reflecting the actual capital stock, inclusive of stock dividends, as mandated by the final ruling in G.R. No. 127937.