Saturday, February 04, 2012

Philippine Long Distance Telephone Company (PLDT) vs. National Telecommunications Commission (NTC), G.R. 152685, December 4, 2007

Facts: This case pertains to Section 40 (e) of the Public Service Act (PSA), as amended on March 15, 1984, pursuant to Batas Pambansa Blg. 325, which authorized the NTC to collect from public telecommunications companies Supervision and Regulation Fees (SRF) of PhP 0.50 for every PhP 100 or a fraction of the capital and stock subscribed or paid for of a stock corporation, partnership or single proprietorship of the capital invested, or of the property and equipment, whichever is higher.

PLDT wanted the July 28, 1999 Decision in G.R. No. 127937 clarified. It posited that the SRF should be based on the par value in consonance with our holding in Philippine Long Distance Telephone Company v. Public Service Commission, and that the premiums on issued shares should not be included in the valuation of the outstanding capital stock. Through the November 15, 1999 Resolution in G.R. No. 127937, we elucidated that the July 28, 1999 decision was not in conflict with the ruling in Philippine Long Distance Telephone Company since it never enunciated in the said case that the phrase “capital stock subscribed or paid” must be determined at par value. It is reiterated that the term “capital stock subscribed or paid” is the amount that the corporation receives, inclusive of the premiums, if any, in consideration of the original issuance of the shares.

PLDT now contends that the disposition in G.R. No. 127937 excluded stock dividends from the SRF coverage, while the NTC asserts the contrary. Also, PLDT questions the assessments for violating the disposition in G.R. No. 127937 since these assessments were identical to the previous assessments from 1988 which were questioned by PLDT in G.R. No. 127937 for being based on the market value of its outstanding capital stock.

Issue: Whether or not the appellate court erred in holding that the assessments of the NTC were contrary to our Decision in G.R. No. 127937 entitled NTC v. Honorable Court of Appeals

Held:  No. The term “capital” and other terms used to describe the capital structure of a corporation are of universal acceptance and their usages have long been established in jurisprudence. The capital subscribed is the total amount of the capital that subscribers or shareholders have agreed to take and pay for, which need not necessarily by, and can be more than, the par value of the shares. In fine, it is the amount that the corporation receives, inclusive of the premiums if any, in consideration of the original issuance of the shares. In the case of stock dividends, it is the amount that the corporation transfers from its surplus profit account to its capital account. It is the same amount that can be loosely termed as the “trust fund” of the corporation. The “Trust Fund” doctrine considers this subscribed capital as a trust fund for the payment of the debts of the corporation, to which the creditors may look for satisfaction. Until the liquidation of the corporation, no part of the subscribed capital may be returned or released to the stockholder without violating this principle. Thus, dividends must never impair the subscribed capital; subscription commitments cannot be condoned or remitted; nor can the corporation buy its own shares using the subscribed capital as the considerations therefore.

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