Case Digest (G.R. No. 86738)
Facts:
Nestle Philippines, Inc. v. Court of Appeals and Securities and Exchange Commission, G.R. No. 86738, November 13, 1991, the Supreme Court First Division, Feliciano, J., writing for the Court.
In February 1983, petitioner Nestle Philippines, Inc. increased its authorized capital stock from P300 million (3 million shares at P100 par) to P600 million (6 million shares at P100 par). Nestle obtained the required board and stockholders approvals, filed the necessary papers with the Securities and Exchange Commission (SEC), and paid P50,000 as a filing fee under the applicable schedule of fees (filed pursuant to the Corporation Code requirements).
Nestle’s capitalization structure included two principal shareholders: San Miguel Corporation and Nestle S.A. The remaining shareholders were natural persons holding single shares for qualifying purposes. On December 16, 1983, Nestle’s board and stockholders approved the issuance of 344,500 shares out of the previously authorized but unissued capital stock, exclusively to San Miguel (which subscribed and paid for 168,800 shares) and Nestle S.A. (which subscribed and paid for 175,700 shares).
On March 28, 1985 Nestle, through its corporate secretary, wrote to the SEC seeking confirmation that (1) it need not file for exemption under Section 6(b) of the Revised Securities Act because Section 6(a)(4) already exempted the issuance, and (2) it was not liable for the fee under Section 6(c) because it had already paid a filing fee in 1983. Nestle’s interpretation of Section 6(a)(4) was that the statute’s phrase “issuance of additional capital stock” encompassed both (a) issuance incident to an increase of authorized capital stock and (b) issuance of previously authorized but unissued shares.
By letter dated June 26, 1986, SEC Chairman Julio A. Sulit, Jr. denied Nestle’s requested blanket exemption, holding that Section 6(a)(4) applied only to issuances that occur as part of an increase in authorized capital stock; the proposed issuance of previously authorized but unissued shares was not automatically exempt. The SEC advised Nestle to apply for exemption under Section 6(b) and to pay the fee imposed by Section 6(c). Nestle moved for reconsideration, which was denied.
Nestle sought judicial review on July 3, 1987; the petition was referred to the Court of Appeals. In a Decision dated January 13, 1989, the Court of ...(Pro-only)
Issues:
- Does the exemption in Section 6(a)(4) of the Revised Securities Act cover the issuance of previously authorized but unissued shares to existing shareholders, or is it limited to issuances made in the course of increasing a corporation’s authorized capital stock?
- Is petitioner Nestle exempt from paying the fee prescribed in Section 6(c) of the Revised Securities Act by reason of the filing fee it paid in connection with its earlie...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)