Case Summary (G.R. No. 206673)
Context and Background
This case revolves around a legal dispute concerning the substantial filing fee imposed by the Securities and Exchange Commission (SEC) for the extension of First Philippine's corporate term. The SEC charged First Philippine P24,000,000.00, based on SEC Memorandum Circular No. 9, Series of 2004, which dictates that the application for extended corporate existence entails a fee equivalent to 1/5 of 1% of the corporation's authorized capital stock.
Relevant Dates
- Registration of First Philippine: June 30, 1961
- Termination of Corporate Existence Under Current Terms: June 30, 2011
- Fee Imposition Date: June 21, 2007
- CA Resolutions: September 28, 2012, and March 25, 2013
Applicable Law
The case is evaluated under the 1987 Philippine Constitution, particularly focusing on the due process clause, along with relevant provisions under the Corporation Code and Securities Regulations Code.
Prior Proceedings and SEC Ruling
First Philippine filed its amended Articles of Incorporation to extend its corporate term from the original 50 years. Upon application, it paid the filing fee but subsequently expressed concern about the fee's reasonableness, especially in light of historical fee structures that placed a much lower cap on similar assessments. After an exchange of submissions, the SEC upheld the fee as a valid exercise of its authority, stating that it reflects the SEC's duties in regulating public companies.
Court of Appeals Ruling
The Court of Appeals affirmed the SEC's authority to set filing fees, reiterating that the fee structure was reasonably necessary to enable regulatory oversight and protect investors. First Philippine's subsequent motion for reconsideration was denied.
Supreme Court Analysis and Findings
Initially, the Supreme Court recognized the SEC's authority to prescribe filing fees under the Corporation Code but ultimately found the amount of P24,000,000.00 to be excessive and unreasonable. The Court underscored that while the SEC must cover its own operational costs through fees, such fees must remain reasonable and proportionate to the service provided.
Rationale on Unreasonableness
The Court emphasized that the imposed fee far exceeded any rational relation to the actual regulatory activities involved in processing the amendment of corporate articles. Considering historical precedents, the a
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Background and Procedural History
- This case involves a petition for review on certiorari under Rule 45 of the Rules of Court, challenging the September 28, 2012, and March 25, 2013 Resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 121883.
- The Court of Appeals dismissed the petition of First Philippine Holdings Corporation (petitioner) and upheld the Securities and Exchange Commission's (SEC) authority to impose a registration fee of P24,000,000.00 for extending the corporate term of the petitioner.
- The petitioner subsequently filed a motion for reconsideration, which was denied by the CA.
Facts of the Case
- The dispute centers around the reasonableness of the P24,000,000.00 filing fee imposed by the SEC's Company Registration and Monitoring Department (CRMD) for the amendment of the petitioner’s articles of incorporation to extend its corporate existence.
- The petitioner, registered with the SEC on June 30, 1961, had its corporate term set to expire on June 30, 2011.
- An amendment to its articles was approved on March 1, 2007, and ratified by stockholders on May 21, 2007, extending the corporate term for an additional 50 years.
- The fee was assessed based on SEC Memorandum Circular No. 9, Series of 2004, which stipulates that the filing fee for extending a corporate term is 1/5 of 1% of the authorized capital stock, with a minimum fee of P2,000.00. The petitioner’s authorized capital stock was P12,100,000,000.00, leading to the assessment of P24,200,000.00, which was paid under protest.
Rulings of the SEC and CA
- Th