Dee vs. Harvest All Investment Limited

The nature of the principal action or remedy sought determines whether an intra-corporate controversy is capable of pecuniary estimation for purposes of computing filing fees under Rule 141 of the Rules of Court; where the primary relief sought is the nullity of a corporate resolution postponing a stockholders' meeting and the mandatory holding of such meeting, the action is incapable of pecuniary estimation and subject to the fixed fee under Section 7(b)(3), notwithstanding the mere mention of a stock rights offering valued at ₱1 Billion in the complaint, which serves only a descriptive or narrative purpose to illustrate the potential dilution of voting rights.

Harvest All Investment Limited, Victory Fund Limited, Bondeast Private Limited, Albert Hong Hin Kay, and Hedy S.C. Yap Chua held minority shareholdings in Alliance Select Foods International, Inc., a corporation with by-laws fixing its Annual Stockholders' Meeting every June 15. On May 29, 2015, the Board of Directors, over the objection of director Hedy S.C. Yap Chua, passed a resolution indefinitely postponing the 2015 ASM pending complete subscription to a Stock Rights Offering approved earlier on February 17, 2015 with a total value of ₱1 Billion. The disclosure filed with the Philippine Stock Exchange indicated the postponement aimed to give stockholders better representation after considering their subscription to the SRO.

• Nature of the Action: Harvest All, et al. filed a complaint for intra-corporate controversy with application for writ of preliminary mandatory injunction and temporary restraining order against Alliance and its Board members, alleging that the subscription to new shares through the SRO could not be made a condition precedent to the exercise of voting rights in the 2015 ASM.
• Relief Sought: The complaint principally sought the declaration of nullity of the May 29, 2015 Board Resolution postponing the 2015 ASM, and initially prayed for nullity of the February 17, 2015 Board Resolution approving the SRO. The Amended Complaint deleted the prayer regarding the SRO approval and instead sought to enjoin the Board from implementing the SRO prior to and as a condition for holding the 2015 ASM.
• Payment of Fees: The Clerk of Court assessed filing fees of ₱8,860.00, which Harvest All, et al. paid.
• Jurisdictional Challenge: The Alliance Board moved to dismiss, arguing lack of jurisdiction due to failure to pay correct filing fees. They contended that the fees should be based on the ₱1 Billion value of the SRO, requiring approximately ₱20 Million in fees, and that Harvest All, et al. deliberately omitted the SRO value from the prayer to prevent correct assessment.
• RTC Findings: The RTC dismissed the complaint, ruling that the SRO was the property in litigation and the basis for fee computation under Section 7(a) of Rule 141. The court found that Harvest All, et al. acted in bad faith and with intent to defraud the government by failing to manifest willingness to pay additional fees when required, keeping silent on the meager assessment despite admitting the SRO value in the complaint, and omitting the SRO from the prayer.
• CA Findings: The CA reversed, agreeing that the ₱1 Billion SRO value should be the basis for fees under Section 21(k) of Rule 141 as interpreted in Lu v. Lu Ym, Sr., but finding no bad faith as Harvest All, et al. merely relied on the Clerk of Court's assessment. The CA ordered reinstatement upon payment of correct fees.

• Bad Faith and Jurisdiction (Dee - G.R. No. 224834): Petitioner Jonathan Y. Dee maintained that the Court of Appeals erred in failing to find that Harvest All, et al. acted in bad faith and with intent to defraud the government in paying insufficient filing fees. He argued that reliance on the Clerk of Court's assessment does not negate fraudulent intent where the petitioners knew the SRO value and deliberately omitted it from the prayer to evade the proper fee.
• Nature of Action and Filing Fees (Harvest All - G.R. No. 224871): Petitioners Harvest All, et al. argued that the RTC and CA erred in computing filing fees based on the ₱1 Billion SRO value. They maintained that the subject of their complaint was the holding of the 2015 ASM and the nullity of the postponement resolution, not a claim on the SRO value, making the action incapable of pecuniary estimation subject to the fixed fee under Section 7(b)(3) of Rule 141.
• Obiter Dictum in Lu: Petitioners contended that the statements in Lu v. Lu Ym, Sr. regarding intra-corporate controversies always involving property capable of pecuniary estimation were obiter dictum and non-binding, as they addressed a hypothetical scenario not present in that case.
• Good Faith: They argued that they paid the correct fees based on the Clerk of Court's assessment without intent to defraud, as they merely relied on the official assessment.

• Valuation and Good Faith (Harvest All in G.R. No. 224834): Respondents countered that the CA correctly found no bad faith, as reliance on the Clerk of Court's assessment precluded fraudulent intent, and that the filing fees were indeed insufficient.
• Jurisdiction and Bad Faith (Alliance Board in G.R. No. 224871): Respondents argued that the SRO value of ₱1 Billion constituted the property in litigation, making the action capable of pecuniary estimation and requiring fees based on Section 7(a) of Rule 141 pursuant to Section 21(k). They maintained that the omission of the SRO value from the prayer evidenced intent to defraud the government.

• Pecuniary Estimation of Intra-Corporate Controversies: Whether the filing fees for an intra-corporate controversy challenging the postponement of a stockholders' meeting should be computed based on the value of a Stock Rights Offering mentioned in the complaint or on the nature of the principal relief sought.
• Good Faith in Payment: Whether the payment of filing fees assessed by the Clerk of Court, later determined to be insufficient, was made in good faith without intent to defraud the government.

• Pecuniary Estimation: The action was incapable of pecuniary estimation. The principal relief sought was the nullity of the Board Resolution postponing the ASM and the holding of the meeting as scheduled, not the recovery of a sum of money. The mention of the ₱1 Billion SRO served merely to illustrate the potential dilution of voting rights and did not transform the nature of the action, as Harvest All, et al. claimed no ownership or entitlement to the shares subject of the SRO.
• Obiter Dictum: The statements in Lu v. Lu Ym, Sr. 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" constituted obiter dictum, being incidental remarks on a hypothetical scenario not determinative of the actual case. Such remarks lack the force of adjudication and are not binding under stare decisis.
• Retroactive Application of Procedural Rules: A.M. No. 04-02-04-SC dated October 5, 2016, which deleted Section 21(k) of Rule 141 and restored the applicability of Section 7(b)(1) and (3) for intra-corporate controversies incapable of pecuniary estimation, applies retroactively to pending cases as procedural rules do not create vested rights.
• Good Faith: The payment of ₱8,860.00 was made in reliance on the Clerk of Court's assessment and without intent to defraud.

• Obiter Dictum — A remark or opinion expressed by a judge incidentally or collaterally, not directly upon the question before the court or upon a point necessarily involved in the determination of the cause. It lacks the force of adjudication and has no binding force for purposes of res judicata.
• Test for Pecuniary Estimation — The nature of the principal action or remedy sought determines capability of pecuniary estimation. If primarily for recovery of a sum of money, the claim is capable of pecuniary estimation. If 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, the action is incapable of pecuniary estimation.
• Retroactivity of Procedural Laws — Statutes regulating court procedure are presumptively applicable to all actions, including those pending at the time of enactment, as they neither create new nor take away vested rights. No vested right attaches to procedural laws.

• "The nature of the principal action or remedy sought determines capability of pecuniary estimation..."
• "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..."
• "[An obiter dictum] 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... It lacks the force of an adjudication..."
• "Procedural laws are retroactive in that sense and to that extent... as a general rule no vested right may attach to, nor arise from, procedural laws."

• Lu v. Lu Ym, Sr., 658 Phil. 156 (2011) — Distinguished; the statements therein regarding intra-corporate controversies always involving property capable of pecuniary estimation were declared obiter dictum and incorrect.
• Cabrera v. Francisco, 716 Phil. 574 (2013) — Followed; established the test for determining whether an action is capable of pecuniary estimation based on the nature of the principal relief sought.
• Land Bank of the Philippines v. Santos, G.R. Nos. 213863 and 214021, January 27, 2016 — Cited; defined obiter dictum and its legal effects.
• Tan, Jr. v. CA, 424 Phil. 556 (2002) — Followed; explained the retroactive effectivity of procedural rules.

• Section 21(k), Rule 141, Rules of Court (as amended by A.M. No. 04-2-04-SC, July 20, 2004) — Deleted by A.M. No. 04-02-04-SC (October 5, 2016); previously mandated that fees for intra-corporate controversies be computed only under Section 7(a).
• Section 7(a), (b)(1), and (b)(3), Rule 141, Rules of Court — Section 7(a) provides fees for actions where the value of the subject matter can be estimated; Section 7(b)(1) for actions where value cannot be estimated; Section 7(b)(3) for all other actions not involving property.
• A.M. No. 04-02-04-SC (October 5, 2016) — Deleted Section 21(k) and provided that intra-corporate controversies may be filed under Section 7(a), 7(b)(1), or 7(b)(3) depending on the nature of the action.

Maria Lourdes P.A. Sereno (Chairperson), Presbitero J. Velasco, Jr., Teresita J. Leonardo-De Castro, Alfredo Benjamin S. Caguioa.