SEC v. GMA Network Inc.
2 Million
GR No. 164026
December 23, 2008
Doctrine: Executive Order No. 200, which repealed Art. 2
of the Civil Code provides, 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 otherwise provided.
Facts:
1. GMA Network filed an application for approval of
various amendments of its Articles of Incorporation and
By Laws with the SEC (Securities and Exchange
Commission).
2. GMA applied for amendments which included a change
in corporate name from Republic Broadcasting
System to GMA Network as well as for the
extension of its corporate term for another 50 years.
3. GMA was assessed by the SEC a separate filing for the
application for extension of corporate term.
4. The separate filing fee amounted to 1/10 of 1% of its
authorized capital stock plus 20%, which totalled
1,212,200 Pesos.
5. GMA formally protested the assessment of 1.
Pesos to extend its corporate term.
6. SEC eventually issued a ruling, with Commissioner
Gloria saying the assessment was in accordance with
law.
7. GMA filed a petition for review with the Court of
Appeals. GMA argued that SEC Memorandum Circular
No. 2 Series of 1994, which the SEC used as a basis for
assessing 1.2 Million Peso amount, was not valid.
8. CA ruled that Memorandum Circular No. 2 was invalid
for not having been published in accordance with the
law. CA stated that the circular is NOT an internal or
interpretive rule, but affects the public in general, so
publication is required for effectivity.
9. SEC argues that it is within its delegated legislative
power to fix fees and charges, and since the fees are not
a penalty, they require no publication.
10. GMA on the other hand, argues that an earlier SEC
Memorandum Circular No. 1 Series 1986, which refers
to filing fees for amended articles of incorporation,
extending the term of corporate existence should apply.
11. GMA argues Circular No. 2 refers only to filing fees for
articles of incorporation, having nothing to do with
 extending the term of corporate existence, so Memo
Circular 1 should apply.
12. Furthermore, GMA argues that Circular No 2 was not
effective because it was not filed with the University of
the Philippines Law center nor published either in the
Official Gazette or newspaper of general circulation as
required.
Issue: Whether or not Memorandum Circular No. 2 is valid
and effective?
Ruling: Memorandum Circular No. 2 is invalid.
1. The Circular was not published in the Official Gazette
or newspaper of general circulation.
2. Executive Order No. 200, which repealed Art. 2 of the
Civil Code provides, 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 otherwise
provided.
3. The court also cited the Case of Tanada v. Tuvera,
stating all statutes including those of local application
and private laws shall be published as a condition for
their effectivity, which shall begin 15 days after the
publication, unless a different effectivity date is fixed
by legislature.
4. Presidential decrees and EOs also need to be
published. Administrative rules as well, if the purpose
is to implement an existing law.
5. Only interpretive regulations, and those internal in
nature need not be published. Neither do letter of
instruction to subordinates.
6. Furthermore the Circular was never filed with the UP
Law Center as required by the Administrative Code of
1987.
7. One factor for not considering the Circular as merely
interpretative was the 1.2 Million Peso assessment,
which was unreasonable and amounts to an imposition.
A filing fee should be just, fair and proportionate for the
service rendered.