Pacifico A. Agabin

June 15, 1983 Pacifico A. Agabin Assistant General Manager National Development Company NDC Bldg.,377 Buendia Ave. Ext. Makati, Metro Manila Sir : This refers to your letter dated May 4, 1983, requesting for a reconsideration of the ruling of the Commission, dated April 5, 1983, denying the request for rebate of the filing fee remitted by the proposed National Shipping Corporation in connection with the filing of its articles of incorporation with the Securities and Exchange Commission, in view of the following contentions: prcd 1. That the SEC erred in defining what constitutes a "filing" as it failed to state therein the preceding paragraphs of the citation, to wit: "In order to constitute a filing, it is necessary not only that the papers should be left with the officer at his office, but also that they be received and retained by the officer as papers on file. There is no filing where a person goes to the officer to file papers, but on refusal to pay the filing fees he leaves the office, taking the papers with him with the consent of the officer. The fact that the indorsement of filing of the articles is not signed is immaterial where they actually delivered to and received by the proper officer." (Vol. I, Fletcher Cyclopedia 530); That the articles of incorporation and other relevant documents of the proposed National Shipping Corporation were received by the SEC but were not retained since they were endorsed to the Maritime Industry Authority (MARINA) in accordance with Section 17 of the Corporation Code which requires special corporations governed by special laws to have favorable recommendation of the appropriate government agency; That because of the unfavorable recommendations of the MARINA, the proposed company decided to withdraw said application and because of such withdrawal, the documents submitted should not be retained by the Officer as papers on "file" as contemplated in the above-stated definition; That you are in doubt that an examination or investigation on the part of the SEC has been conducted; That the foregoing arguments find support from the SEC's opinion dated September 15, 1980 defining the word "filing" as follows: "The word filing is construed as approval of the Securities & Exchange Commission, in as much as the same is still subject to examination to determine whether such increase is in accordance with the provision of Section 17 of the Corporation Law." llcd 2. The prevailing principles behind the collection of fees or other charges by government agencies as distinguished from taxes is that fees are intended as reward or compensation allowed by law to an officer for specific services performed by him in the discharge of his official duties and should only be in such amount sufficient to pay for the cost and maintenance of the specific function. It has been repeatedly held that where the fees collected are in such amount as not to bear any relation to reasonable compensation for services rendered or reimbursement for the expenses of maintaining the particular services such amount collected in effect constitute taxes rather than fees. (Smith vs. Carbon County, 90 UTAH 560; 108 ALR 513). As regards your first contention, please be advised that it is a settled rule that a mere filing of documents is considered service rendered as "to file means to deposit papers in official custody or receive them officially, for orderly, systematic safe keeping " ( Letter of the Executive Secretary to the President of the Philippines to Atty. Feliciano A. Arceo of Cabanatuan, Nueva Ecija, dated March 15, 1950 ,citing words and Phrases 531, State v. Lewis 22 S0327, a copy of which is hereto attached for your ready reference) "No other act or service on the part of the Commission is required before its claim to the accounts collected shall become absolute, since the act of filing is complete once the papers have been actually delivered to and received by the proper officer." (Ibid, citing 1 Fletcher Cyclopedia of Corporations, 530 citing Owensboro Wagon Co. v. Bliss 132 Ala. 253, 31 SO 81). In the instant case, services were already rendered inasmuch as the articles of incorporation and its supporting documents have already been examined and analyzed by the Examiners and Appraisers Department of this Commission, particularly on its capital structure. The indorsement to MARINA of the duplicate copy of the articles of incorporation is a part of our processing procedure, thus the state is still considered under the custody of the Commission even pending receipt of MARINA's recommendation on the matter. In connection with the SEC's interpretation of the word "filing" in Section 17 of the old Corporation Law referring to the "approval of the SEC", please be advised that such interpretation was made for purposes of determining the date of effectivity of the increase of capital stock which should not be confused with the instant case. Regarding your second contention, be advised that pursuant to Presidential Decree No. 902-A as amended, the Commission is authorized to collect filing and examination fee of 1/10 of 1% of the authorized capital stock which in the instant case is P40,000.00 plus miscellaneous fees. "Fees paid without duress cannot be recovered back although collected under an erroneous construction of the law under which they were claimed." (1 Fletcher Cyclopedia Corporations, citing Alton Light & Traction Co. v. Rose 117 Ill. App. 83).Hence, with more reason that fees collected under authority of law cannot be recovered. Furthermore, the Commission on Audit, thru its Auditor assigned at the SEC, in its 1st Indorsement dated June 1, 1983 affirmed its previous ruling denying such request of similar nature, a copy of said indorsement is hereto attached for your reference and guidance. cdlex In view of the foregoing, your request for reconsideration is hereby denied. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner