G.R. No. 164026; December 23, 2008
SECURITIES AND EXCHANGE COMMISSION, petitioner, vs. GMA NETWORK, INC., respondent.

FACTS

On August 19, 1995, respondent GMA Network, Inc. (GMA) filed an application with the petitioner Securities and Exchange Commission (SEC) for various amendments to its Articles of Incorporation, including an extension of its corporate term for another fifty years. The SEC’s Corporate and Legal Department assessed a filing fee for the extension application equivalent to 1/10 of 1% of GMA’s authorized capital stock plus 20% thereof, amounting to P1,212,200.00, based on SEC Memorandum Circular No. 2, Series of 1994. GMA formally protested this assessment, arguing it was not in accordance with law. The SEC, through an Associate Commissioner, upheld the assessment on April 18, 1996, and the SEC En Banc dismissed GMA’s appeal on September 26, 2001. GMA filed a petition for review with the Court of Appeals, contending that its application for extension was akin to an amendment, not a filing of new articles, and that Memorandum Circular No. 2, Series of 1994 was invalid. The Court of Appeals, in its Decision dated February 20, 2004, agreed with the SEC that an extension of corporate term is analogous to filing new articles of incorporation. However, it ruled that Memorandum Circular No. 2, Series of 1994 was legally invalid and ineffective for not having been published in accordance with law, as it affected the public in general and was not merely an internal or interpretative rule. The appellate court directed that SEC Memorandum Circular No. 1, Series of 1986 should be the basis for computing the filing fee. The SEC’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in declaring SEC Memorandum Circular No. 2, Series of 1994 invalid and in directing the use of SEC Memorandum Circular No. 1, Series of 1986 as the basis for computing the filing fee for GMA’s application for extension of its corporate term.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Court held that while Republic Act No. 3531 clearly directs that the filing fee for an amended articles of incorporation extending corporate term shall be the same as that for filing original articles of incorporation, SEC Memorandum Circular No. 2, Series of 1994, which imposed the new fee schedule, was invalid due to lack of publication. The Court reiterated the doctrine in Tañada v. Tuvera that administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. The questioned memorandum circular was not merely interpretative but affected the transacting public; hence, publication was required for its effectivity under Executive Order No. 200. Furthermore, the circular had not been filed with the Office of the National Administrative Register of the University of the Philippines Law Center as required by the Administrative Code of 1987. Consequently, the circular could not serve as a valid basis for imposing the filing fee. The Court of Appeals correctly directed the application of SEC Memorandum Circular No. 1, Series of 1986, which specifically pertained to filing fees for amended articles of incorporation where the amendment consists of extending the term of corporate existence.