JONATHAN Y. DEE vs. HARVEST ALL

DEE vs. HARVEST ALL

GR No. 224834
March 15, 2017

DOCTRINE:

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 Courts of First Instance 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 Courts of First Instance.

FACTS:

Harvest All, et al are 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. As per Alliance’s by-laws, its Annual Stockholders’ Meeting (ASM) is held every June 15. 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]. 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) involving  an  intra-corporate  controversy  against  Alliance, and  its other  Board  members,

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. 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 SRO. The Clerk of Court of the RTC assessed Harvest All, et al. with filing fees amounting to P8,860.00 which they paid accordingly. Later on, Harvest All, et al. filed an Amended Complaint: (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.

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.

The RTC dismissed the instant complaint for lack of jurisdiction due to Harvest All, et al.‘s failure to pay the correct filing fees. 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.

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.CA held that the prevailing rule is that all intra-corporate controversies always involve a property in litigation.

ISSUE:

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.

HELD:

NO. Harvest All paid the correct filing fees. In Cabrera v. Francisco, 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 Courts of First Instance 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 Courts of First Instance.

Harvest All, et al.’s Complaint reveals that its main purpose is to have Alliance hold its 2015 ASM on the date set in the corporation’s bylaws, 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 and the complaint does not involve the recovery of sum of money. Therefore, Harvest All paid the correct filing fees.

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 – However, after a careful reading of Lu, it appears that Harvest All, et al. correctly pointed out 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.

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