Case Digest (G.R. No. 86738)
Facts:
In Nestle Philippines, Inc. v. Court of Appeals and Securities and Exchange Commission (G.R. No. 86738, November 13, 1991), the petitioner, Nestle Philippines, Inc. (“Nestle”), sought guidance from the SEC concerning its proposal to issue 344,500 shares of its capital stock from already authorized but unissued shares exclusively to its two principal shareholders, San Miguel Corporation and Nestle S.A. In February 1983, Nestle increased its authorized capital stock from ₱300 million to ₱600 million, securing board and stockholders’ approval and paying a ₱50,000 filing fee to the SEC under the Corporation Code. On December 16, 1983, its board and stockholders approved the exclusive issuance of 344,500 unissued shares—168,800 to San Miguel and 175,700 to Nestle S.A.—all of which were fully subscribed and paid. On March 28, 1985, Nestle’s corporate secretary requested SEC confirmation that (1) the proposed issuance was exempt from registration under Section 4 by virtue of Section 6(Case Digest (G.R. No. 86738)
Facts:
- Increase of Authorized Capital Stock
- February 1983: Nestle Philippines, Inc. increased authorized capital stock from ₱300 million (3 million shares at ₱100 par) to ₱600 million (6 million shares at ₱100 par).
- Obtained Board and stockholders’ approvals; filed with SEC and paid ₱50,000 filing fee under the Corporation Code (Sec. 139).
- Issuance of Unissued Shares
- December 16, 1983: Board and stockholders approved issuance of 344,500 unissued shares exclusively to principal shareholders (San Miguel Corp. and Nestlé S.A.).
- Subscriptions: San Miguel Corp. – 168,800 shares (fully paid); Nestlé S.A. – 175,700 shares (fully paid).
- Request for Exemption and Fee Relief
- March 28, 1985: Nestle sought SEC confirmation that (a) no registration under Sec. 4 of the Revised Securities Act was needed for issuance of the 344,500 shares, and (b) no fee under Sec. 6(c) of the same Act was payable.
- Nestle’s argument: Sec. 6(a)(4) exempts “issuance of additional capital stock … sold or distributed by it among its own stockholders exclusively” and thus covers both increase in authorized capital and issuance of already authorized but unissued stock, provided no commission is paid.
- SEC and Court of Appeals Rulings
- SEC Ruling (June 26, 1986): Held Sec. 6(a)(4) applies only to issuance in the course of increasing authorized capital; advised Nestle to apply for exemption under Sec. 6(b) and pay the Sec. 6(c) fee.
- Denial of reconsideration by SEC; Nestle petitioned the Supreme Court, which referred the case to the Court of Appeals.
- Court of Appeals Decision (Jan. 13, 1989): Affirmed SEC’s interpretation and requirement of exemption application plus fee payment.
- Petition for Review
- Nestle elevated the same issues to the Supreme Court via Petition for Review on Certiorari.
- The Supreme Court granted the petition but ultimately denied relief, affirming the Court of Appeals decision.
Issues:
- Whether Section 6(a)(4) of the Revised Securities Act exempts the issuance of previously authorized but unissued shares to existing stockholders from registration under Section 4.
- Whether Nestle is exempt from paying the fee under Section 6(c) of the Revised Securities Act, given its prior payment of ₱50,000 to SEC for the increase of authorized capital stock.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)