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Dee VS Harvest
Dee VS Harvest
DECISION
PERLAS-BERNABE, J.:
The Facts
Harvest All Investment Limited, Victory Fund Limited, Bondeast Private Limited, Albert
Hong Hin Kay, and Hedy S.C. Yap Chua (Harvest All, et al.) are, in their own capacities,
minority stockholders of Alliance Select Foods International, Inc. (Alliance), with Hedy
S.C. Yap Chua acting as a member of Alliance's Board of Directors.5 As per Alliance's
by-laws, its Annual Stockholders' Meeting (ASM) is held every June 15.6 However, in a
Special Board of Directors Meeting held at three (3) o'clock in the afternoon of May 29,
2015, the Board of Directors, over Hedy S.C. Yap Chua's objections, passed a Board
Resolution indefinitely postponing Alliance's 2015 ASM pending complete subscription
to its Stock Rights Offering (SRO) consisting of shares with total value of Pl Billion
which was earlier approved in a Board Resolution passed on February 17, 2015. As per
Alliance's Disclosure dated May 29, 2015 filed before the Philippine Stock Exchange,
such postponement was made "to give the stockholders of [Alliance] better
representation in the annual meeting, after taking into consideration their subscription
to the [SRO] of [Alliance]."7 This prompted Harvest All, et al. to file the instant
Complaint (with Application for the Issuance of a Writ of Preliminary Mandatory
Injunction and Temporary Restraining Order/Writ of Preliminary Injunction)8
involving an intra-corporate controversy against Alliance, and its other Board
members, namely, George E. Sycip, Jonathan Y. Dee, Raymund K.H. See, Mary Grace
T. Vera- Cruz, Antonio C. Pacis, Erwin M. Elechicon, and Barbara Anne C. Migallos
(Alliance Board). In said complaint, Harvest All, et al. principally claimed that the
subscription to the new shares through the SRO cannot be made a condition precedent
to the exercise by the current stockholders of their right to vote in the 2015 ASM;
otherwise, they will be deprived of their full voting rights proportionate to their
existing shareholdings.9 Thus, Harvest All, et al., prayed for, inter alia, the declaration
of nullity of the Board Resolution dated May 29, 2015 indefinitely postponing the
2015 ASM, as well as the Board Resolution dated February 17, 2015 approving the
SR0.10 The Clerk of Court of the RTC assessed Harvest All, et al. with filing fees
amounting to P8,860.00 which they paid accordingly.11 Later on, Harvest All, et al. filed
an Amended Complaint:12 (a) deleting its prayer to declare null and void the Board
Resolution dated February 17, 2015 approving the SRO; and (b) instead, prayed that
the Alliance Board be enjoined from implementing and carrying out the SRO prior to
and as a condition for the holding of the 2015 ASM.13
For its part, the Alliance Board raised the issue of lack of jurisdiction on the ground of
Harvest All, et al.' s failure to pay the correct filing fees. It argued that the latter should
have paid P20 Million, more or less, in filing fees based on the SRO which was valued at
P1 Billion. However, Harvest All, et al. did not mention such capital infusion in their
prayers and, as such, were only made to pay the measly sum of P8,860.00. On the
other hand, Harvest All, et al. maintained that they paid the correct filing fees,
considering that the subject of their complaint is the holding of the 2015 ASM and not a
claim on the aforesaid value of the SRO. Harvest All, et al. likewise pointed out that
they simply relied on the assessment of the Clerk of Court and had no intention to
defraud the government.14
In a Resolution15 dated August 24, 2015, the RTC dismissed the instant complaint
for lack of jurisdiction due to Harvest All, et al.'s failure to pay the correct filing
fees.16 Citing Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-
SC,17 and the Court's pronouncement in Lu v. Lu Ym, Sr. (Lu),18 the RTC found that
the basis for the computation of filing fees should have been the PI Billion value of the
SRO, it being the property in litigation. As such, Harvest All, et al. should have paid
filing fees in the amount of more or less P20 Million and not just P8,860.00. In this
regard, the RTC also found that Harvest All, et al.'s payment of incorrect filing
fees was done in bad faith and with clear intent to defraud the government,
considering that: (a) when the issue on correct filing fees was first raised during the
hearing on the application for TRO, Harvest All, et al. never manifested their willingness
to abide by the Rules by paying additional filing fees when so required; (b) despite
Harvest All, et al.'s admission in their complaint that the SRO was valued at P1 Billion,
they chose to keep mum on the meager assessment made by the Clerk of Court; and
(c) while Harvest All, et al. made mention of the SRO in the body of their complaint,
they failed to indicate the same in their prayer, thus, preventing the Clerk of
Court from making the correct assessment of filing fees.19
In a Decision21 dated February I5, 20I6, the CA reversed the RTC's order of dismissal
and, accordingly, reinstated the case and remanded the same to the court a quo for
further proceedings after payment of the proper legal fees.22 Also citing Rule 141 of the
Rules of Court, as amended by A.M. No. 04-2-04-SC, and Lu, the CA held that the
prevailing rule is that all intra-corporate controversies always involve a property in
litigation. Consequently, it agreed with the RTC's finding that the basis for the
computation of filing fees should have been the PI Billion value of the SRO and, thus,
Harvest All, et al. should have paid filing fees in the amount of more or less P20 Million
and not just P8,860.00.23 However, in the absence of contrary evidence, the CA held
that Harvest All, et al. were not in bad faith and had no intention of defrauding the
government, as they merely relied in the assessment of the Clerk of Court.
Thus, in the interest of substantial justice, the CA ordered the reinstatement of
Harvest All, et al.'s complaint and the remand of the same to the RTC for further
proceedings, provided that they pay the correct filing fees.24
The primordial issues raised for the Court's resolution are: (a) whether or not
Harvest All, et al. paid insufficient filing fees for their complaint, as the same
should have been based on the P1 Billion value of the SRO; and (b) if Harvest
All, et al. indeed paid insufficient filing fees, whether or not such act was made in
good faith and without any intent to defraud the government.
The petition in G.R. No. 224834 is denied, while the petition in G.R. No. 224871 is
partly granted.
I.
At the outset, the Court notes that in ruling that the correct filing fees for Harvest
All, et al.'s complaint should be based on the P1 Billion value of the SRO - and, thus,
essentially holding that such complaint was capable of pecuniary estimation - both
the RTC and the CA heavily relied on the Court's pronouncement in Lu. In Lu,
the Court mentioned that in view of A.M. No. 04-2-04-SC dated July 20, 2004 which
introduced Section 21 (k)27 to Rule 141 of the Rules of Court, it seemed that
"an intra-corporate controversy always involves a property in litigation" and that
"there can be no case of intra-corporate controversy where the value of the subject
matter cannot be estimated."28
However, after a careful reading of Lu, it appears that Harvest All, et al. correctly
pointed out29 that the foregoing statements were in the nature of an obiter dictum.
To recount, in Lu, the Court ruled, inter alia, that the case involving an intra-corporate
controversy instituted therein, i.e., declaration of nullity of share issuance, is
incapable of pecuniary estimation and, thus, the correct docket fees were
paid.30 Despite such pronouncement, the Court still went on to say that had the
complaint therein been filed during the effectivity of A.M. No. 04-2-04-SC, then it would
have ruled otherwise because the amendments brought about by the same "seem to
imply that there can be no case of intra-corporate controversy where the value of
the subject matter cannot be estimated,"31viz.:
The new Section 21 (k) of Rule 141 of the Rules of Court, as amended by A.M.
No. 04-2-04-SC (July 20, 2004), expressly provides that "[f]or petitions for
insolvency or other cases involving intra-corporate controversies, the fees
prescribed under Section 7 (a) shall apply." Notatu dignum is that paragraph (b) 1 & 3
of Section 7 thereof was omitted from the reference. Said paragraph refers to
docket fees for filing "[a]ctions where the value of the subject matter cannot be
estimated" and "all other actions not involving property."
By referring the computation of such docket fees to paragraph (a) only, it denotes that
an intra-corporate controversy always involves a property in litigation, the value of
which is always the basis for computing the applicable filing fees. The latest
amendments seem to imply that there can be no case of intra-corporate controversy
where the value of the subject matter cannot be estimated. Even one for a mere
inspection of corporate books.
If the complaint were filed today, one could safely find refuge in the express
phraseology of Section 21 (k) of Rule 141 that paragraph (a) alone applies.
In the present case, however, the original Complaint was filed on August 14,
2000 during which time Section 7, without qualification, was the applicable
provision. Even the Amended Complaint was filed on March 31, 2003 during which
time the applicable rule expressed that paragraphs (a) and (b) 1 & 3 shall be the basis
for computing the filing fees in intra-corporate cases, recognizing that there could
be an intra-corporate controversy where the value of the subject matter cannot be
estimated, such as an action for inspection of corporate books. The immediate
illustration shows that no mistake can even be attributed to the RTC clerk of
court in the assessment of the docket fees. 32 (Emphases and underscoring
supplied)
Accordingly, the passages in Lu that "an intra-corporate controversy always involves a
property in litigation" and that "there can be no case of intra-corporate controversy
where the value of the subject matter cannot be estimated" are clearly non-
determinative of the antecedents involved in that case and, hence, cannot be
controlling jurisprudence to bind our courts when it adjudicates similar cases upon
the principle of stare decisis. As it is evident, these passages in Lu only
constitute an opinion delivered by the Court as a "by the way" in relation to
a hypothetical scenario (i.e., if the complaint was filed during the effectivity of A.M.
No. 04-2-04-SC, which it was not) different from the actual case before it.
In Land Bank of the Philippines v. Santos, 33 the Court had the opportunity to
define an obiter dictum and discuss its legal effects as follows:
[An obiter dictum] "x x x is a remark made, or opinion expressed, by a judge, in
his decision upon a cause by the way, that is, incidentally or collaterally, and
not directly upon the question before him, or upon a point not necessarily
involved in the determination of the cause, or introduced by way of
illustration, or analogy or argument. It does not embody the resolution or
determination of the court, and is made without argument, or full
consideration of the point. It lacks the force of an adjudication, being a mere
expression of an opinion with no binding force for purposes of res
judicata."34 (Emphasis and underscoring supplied)
For these reasons, therefore, the courts a quo erred in applying the case of Lu.
II.
In any event, the Court finds that the obiter dictum stated in Lu was actually incorrect.
This is because depending on the nature of the principal action or remedy sought,
an intra-corporate controversy may involve a subject matter which is either capable
or incapable of pecuniary estimation.
In Cabrera v. Francisco,35 the Court laid down the parameters in determining whether
an action is considered capable of pecuniary estimation or not:
In determining whether an action is one the subject matter of which is not
capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal courts or in the
[C]ourts of [F]irst [I]nstance would depend on the amount of the claim.
However, where the basic issue is something other than the right to recover
a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such
actions as cases where the subject of the litigation may not be estimated
in terms of money, and are cognizable exclusively by [C]ourts of [F]irst [I]nstance
(now Regional Trial Courts). 36 (Emphases and underscoring supplied)
This case is a precise illustration as to how an intra-corporate controversy may be
classified as an action whose subject matter is incapable of pecuniary estimation.
A cursory perusal of Harvest All, et al.'s Complaint and Amended Complaint
reveals that its main purpose is to have Alliance hold its 2015 ASM on the
date set in the corporation's by laws, or at the time when Alliance's SRO has yet
to fully materialize, so that their voting interest with the corporation would
somehow be preserved. Thus, Harvest All, et al. sought for the nullity of the
Alliance Board Resolution passed on May 29, 2015 which indefinitely postponed the
corporation's 2015 ASM pending completion of subscription to the SR0.37 Certainly,
Harvest All, et al.'s prayer for nullity, as well as the concomitant relief of holding the
2015 ASM as scheduled in the by-laws, do not involve the recovery of sum of money.
The mere mention of Alliance's impending SRO valued at P1 Billion cannot transform
the nature of Harvest All, et al.'s action to one capable of pecuniary estimation,
considering that: (a) Harvest All, et al. do not claim ownership of, or much less
entitlement to, the shares subject of the SRO; and (b) such mention was merely
narrative or descriptive in order to emphasize the severe dilution that their voting
interest as minority shareholders would suffer if the 2015 ASM were to be held after the
SRO was completed. If, in the end, a sum of money or anything capable of pecuniary
estimation would be recovered by virtue of Harvest All, et al.'s complaint, then it would
simply be the consequence of their principal action. Clearly therefore, Harvest All, et
al.'s action was one incapable of pecuniary estimation.
At this juncture, it should be mentioned that the Court passed A.M. No. 04-02-04-SC38
dated October 5, 2016, which introduced amendments to the schedule of legal fees
to be collected in various commercial cases, including those involving intra-
corporate controversies. Pertinent portions of A.M. No. 04-02-04-SC read:
RESOLUTION
xxx
Whereas, Rule 141 of the Revised Rules of Court, as amended by A.M. No. 04-2-04-
SC effective 16 August 2004, incorporated the equitable schedule of legal fees
prescribed for petitions for rehabilitation under Section 21 (i) thereof and, furthermore,
provided under Section 21(k) thereof that the fees prescribed under Section 7(a) of the
said rule shall apply to petitions for insolvency or other cases involving intra--
corporate controversies;
xxx
NOW, THEREFORE, the Court resolves to ADOPT a new schedule of filing fees as
follows:
xxx
xxx
This Resolution shall take effect fifteen (15) days following its publication in the Official
Gazette or in two (2) newspapers of national circulation. The Office of the Court
Administrator (OCA) is directed to circularize the same upon its effectivity. (Emphases
and underscoring supplied)
While the Court is not unaware that the amendments brought by A.M. No. 04-02-04-
SC dated October 5, 2016 only came after the filing of the complaint subject of
this case, such amendments may nevertheless be given retroactive effect so as to
make them applicable to the resolution of the instant consolidated petitions as
they merely pertained to a procedural rule, i.e., Rule 141, and not substantive
law. In Tan, Jr. v. CA,39 the Court thoroughly explained the retroactive effectivity of
procedural rules, viz.:
The general rule that statutes are prospective and not retroactive does not
ordinarily apply to procedural laws. It has been held that "a retroactive law, in a
legal sense, is one which takes away or impairs vested rights acquired under laws, or
creates a new obligation and imposes a new duty, or attaches a new disability, in
respect of transactions or considerations already past. Hence, remedial statutes
or statutes relating to remedies or modes of procedure, which do not create
new or take away vested rights, but only operate in furtherance of the
remedy or confirmation of rights already existing, do not come within the
legal conception of a retroactive law, or the general rule against the
retroactive operation of statutes." The general rule against giving statutes
retroactive operation whose effect is to impair the obligations of contract or to disturb
vested rights does not prevent the application of statutes to proceedings pending
at the time of their enactment where they neither create new nor take away
vested rights. A new statute which deals with procedure only is
presumptively applicable to all actions - those which have accrued or are
pending.
Statutes regulating the procedure of the courts will be construed as applicable to
actions pending and undetermined at the time of their passage. Procedural laws
are retroactive in that sense and to that extent. The fact that procedural statutes may
somehow affect the litigants' rights may not preclude their retroactive application to
pending actions. The retroactive application of procedural laws is not violative
of any right of a person who may feel that he is adversely affected. Nor is
the retroactive application of procedural statutes constitutionally
objectionable. The reason is that as a general rule no vested right may
attach to, nor arise from, procedural laws. It has been held that "a person has
no vested right in any particular remedy, and a litigant cannot insist on the application
to the trial of his case, whether civil or criminal, of any other than the existing
rules of procedure." 40 (Emphases and underscoring supplied)
In view of the foregoing, and having classified Harvest All, et al.'s action as one
incapable of pecuniary estimation, the Court finds that Harvest All, et al. should be
made to pay the appropriate docket fees in accordance with the applicable fees
provided under Section 7 (b) (3) of Rule 141 [fees for all other actions not involving
property] of the Revised Rules of Court, in conformity with A.M. No. 04-02-04-SC
dated October 5, 2016. The matter is therefore remanded to the RTC in order: chanRoblesvirtualLawlibrary
(a) to first determine if Harvest, et al.'s payment of filing fees in the amount of
P8,860.00, as initially assessed by the Clerk of Court, constitutes sufficient compliance
with A.M. No. 04-02-04- SC;
(c) if Harvest All, et al.'s payment of P8,860.00 is already sufficient, proceed with
the regular proceedings of the case with dispatch.
WHEREFORE, the petition in G.R. No. 224834 is DENIED, while the petition in
G.R. No. 224871 is PARTLY GRANTED. The Decision dated February 15, 2016 and
the Resolution dated May 25, 2016 of the Court of Appeals in CA-G.R. SP No. 142213
are hereby AFFIRMED with MODIFICATION in that COMM'L. CASE NO. 15-234 is
hereby REMANDED to the Regional Trial Court of Pasig City, Branch 159 for further
proceedings as stated in the final paragraph of this Decision.
SO ORDERED.