Securities and Exchange Commission vs. GMA Network, Inc.

Administrative rules and regulations that enforce or implement existing law and affect the public must be published in the Official Gazette or a newspaper of general circulation and filed with the University of the Philippines Law Center to be effective, and cannot be enforced if these requirements are unmet, even if the administrative agency possesses delegated legislative authority to fix fees.

GMA Network, Inc. filed an application with the Securities and Exchange Commission (SEC) for the amendment of its articles of incorporation, including an extension of its corporate term. The SEC assessed a filing fee of P1,212,200.00 based on SEC Memorandum Circular No. 2, Series of 1994, which imposed a fee of 1/10 of 1% of the authorized capital stock plus 20% thereof, deleting the maximum fee cap present in the earlier SEC Memorandum Circular No. 1, Series of 1986. GMA protested the assessment, arguing the 1994 Circular was invalid for lack of publication and that the 1986 Circular, which specifically addressed corporate term extensions and imposed a maximum cap, should apply.

• Nature of the Application: On August 19, 1995, GMA Network, Inc. filed an application with the SEC for collective approval of various amendments to its Articles of Incorporation and By-Laws, including a change of corporate name from "Republic Broadcasting System, Inc." and an extension of its corporate term for another 50 years.
• The Assessment: The SEC Corporate and Legal Department assessed a separate filing fee for the extension of corporate term equivalent to 1/10 of 1% of the authorized capital stock plus 20% thereof, amounting to P1,212,200.00, pursuant to SEC Memorandum Circular No. 2, Series of 1994.
• Protest and SEC Ruling: GMA protested the assessment, arguing it was not in accordance with law. On April 18, 1996, the SEC Associate Commissioner upheld the validity of the assessment, requiring GMA to comply with the filing fee. The SEC En Banc subsequently dismissed GMA's appeal on September 26, 2001.
• The Conflicting Circulars: SEC Memorandum Circular No. 1, Series of 1986 imposed a filing fee of 1/10 of 1% of the authorized capital stock with a maximum cap of P100,000.00 for stock corporations extending their corporate term. SEC Memorandum Circular No. 2, Series of 1994 imposed a fee of 1/10 of 1% of the authorized capital stock plus 20% thereof, with a minimum of P500.00 but no maximum cap, for the filing of articles of incorporation.

• Delegated Legislative Power: SEC maintained that it issued the questioned memorandum circular in the exercise of its delegated legislative power to fix fees and charges.
• Nature of the Circular: SEC argued that the filing fees are uniformly imposed on the transacting public, essential to its supervisory and regulatory functions, and do not constitute a penalty or sanction; thus, publication is not required.

• Applicability of MC No. 1, s. 1986: GMA argued that an extension of corporate term is an amendment, not a filing of new articles, and that MC No. 1, s. 1986 specifically governs applications for extension of corporate term and should apply as it is more favorable.
• Invalidity of MC No. 2, s. 1994: GMA contended that MC No. 2, s. 1994 did not take effect because it was neither filed with the University of the Philippines Law Center nor published in the Official Gazette or a newspaper of general circulation, as required by existing laws.

• Applicable Filing Fee Circular: Whether SEC Memorandum Circular No. 1, Series of 1986 or SEC Memorandum Circular No. 2, Series of 1994 should govern the computation of filing fees for the extension of corporate term.
• Validity of MC No. 2, s. 1994: Whether SEC Memorandum Circular No. 2, Series of 1994 is valid and effective despite its lack of publication and filing with the UP Law Center.

• Applicable Filing Fee Circular: Republic Act No. 3531 mandates that the SEC shall collect the same fees for filing amended articles to extend corporate term as it collects for filing new articles of incorporation. The SEC was thus correct in principle that the rates for new articles apply to term extensions, notwithstanding GMA's argument that the extension is a mere amendment. However, the specific circular imposing those rates must be validly enacted.
• Validity of MC No. 2, s. 1994: SEC Memorandum Circular No. 2, Series of 1994 was declared invalid and ineffective for lack of publication and filing with the UP Law Center. Administrative rules that enforce or implement existing law and affect the public at large require publication; they are not merely internal or interpretative. Furthermore, the assessed fee of P1,212,200.00 was found exceedingly unreasonable and amounted to an imposition, violating the due process requirement that filing fees must be just, fair, and proportionate to the service rendered.

• Publication Requirement for Administrative Rules — Administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. Interpretative regulations and those merely internal in nature need not be published. Applied to invalidate SEC MC No. 2, s. 1994, which implements R.A. No. 3531 and affects the transacting public, not merely internal agency personnel.
• Filing with the UP Law Center — Every agency must file with the University of the Philippines Law Center three certified copies of every rule adopted; rules in force not filed within three months from the effectivity of the Administrative Code cannot thereafter be the basis of any sanction against any party. Applied to invalidate the 1994 Circular, which was not filed as required.
• Reasonableness of Filing Fees — A filing fee, charged by a public official to accept a document for processing, must be just, fair, and proportionate to the service for which it is collected. Courts may strike down rate-fixing regulations that arbitrarily infringe on a person's right to property. Applied to find the P1,212,200.00 assessment exceedingly unreasonable.

• "Administrative rules and regulations must also be published if their purpose is to 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."
• "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."

• Tañada v. Tuvera, 230 Phil. 528 (1986) — Followed. Established the doctrine that administrative rules implementing existing law must be published to be effective, while interpretative and internal rules need not be published.
• Philsa International Placement and Services Corp. v. Secretary of Labor and Employment, 408 Phil. 270 (2001) — Followed. Struck down a POEA memorandum circular for lack of publication and filing with the National Administrative Register, supporting the invalidation of the SEC circular.

• Republic Act No. 3531 — Provides that where the amendment consists in extending the term of corporate existence, the SEC shall collect the same fees collectible under existing law for the filing of articles of incorporation. Applied to establish the standard that filing fees for term extensions should be equal to those for new articles of incorporation.
• Executive Order No. 200 — Provides that laws shall take effect after fifteen days following publication in the Official Gazette or a newspaper of general circulation. Applied to mandate the publication of SEC MC No. 2, s. 1994.
• Administrative Code of 1987 (E.O. 292), Book VII, Chapter 2, Section 3 — Requires agencies to file three certified copies of every rule adopted with the UP Law Center; rules not filed cannot be the basis of any sanction. Applied to invalidate the 1994 Circular for lack of filing.

Leonardo A. Quisumbing, Conchita Carpio Morales, Minita V. Chico-Nazario, Presbitero J. Velasco, Jr.