SC stops wrong reliance on Lu v. Ym's obiter dictum

QUOTED FROM G.R. No. 224834, March 15, 2017: 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 v. Lu Ym,  Sr. (658 Phil.156, 2011).

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) 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."

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. 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," viz.:
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. 
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, 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."
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. xxx xxx xxx

The Supreme Court (SC) has revised the rules on payment of docket fees involving intra-corporate disputes. In a 12-page decision promulgated on March 15, the high court’s First Division modified the jurisprudence that set the amount of filing fees in an intra-corporate case based on the value of contested property. The SC held that not all corporate disputes involve recovery of money so the filing fees should not be based on contested amounts. “Depending on the nature of the principal, an intra-corporate controversy may involve a subject matter which is either capable or incapable of pecuniary estimation,” read the ruling penned by Associate Justice Estela Perlas-Bernabe. The SC made the ruling in the case between tuna canning firm Alliance International Inc. (Alliance) and its Singaporean minority shareholders from Harvest All Investment Limited (Harvest).

Read more: Punay, Edu. April 17, 2017 - 12:00am. SC revises rules on docket fees for intra-corporate cases. The Philippine Star. www.philstar.com/nation/2017/04/17/1686490/sc-revises-rules-docket-fees-intra-corporate-cases.

Alliance and Harvest have been embroiled in a management conflict following the acquisition of Strong Oak Inc. of the firm’s shares worth P563.675 million, which resulted in the dilution of the latter’s stake to 14 percent from 34 percent. The case stemmed from Alliance’s board resolution dated May 29, 2015 providing for an indefinite postponement for the conduct of its Annual Stockholders Meeting pending complete subscription to its Stock Rights Offering (SRO) consisting of shares amounting to P1 billion. Harvest filed a complaint before the Pasig City Regional Trial Court (RTC) against Alliance and sought nullification of the board’s resolution. The Pasig RTC Branch 159 initially assessed Harvest with filing fees amounting to P8,860, which the complainant paid accordingly. The lower court dismissed the complaint on the basis that Harvest failed to pay correct filing fees. The lower court held that Harvest should have failed P20 million in filing fee based on Alliance’s SRO of P1 billion. The SC said the lower court should instead based the required docket fee from the amendment schedule of legal fees to be collected in commercial cases set by the high court in October last year. The SC ordered the Pasig RTC to proceed with the resolution of Harvest’s complaint based on the merits of the case and after determination of proper filing fees from the new rule.

Read more: Punay, Edu. April 17, 2017 - 12:00am. SC revises rules on docket fees for intra-corporate cases. The Philippine Star. www.philstar.com/nation/2017/04/17/1686490/sc-revises-rules-docket-fees-intra-corporate-cases.

Rules on payment of docket fees pertaining to intra-corporate squabbles have been revised by the Supreme Court (SC). The revision stemmed from the case of Alliance International Incorporated (Alliance), a tuna canning firm, which is embroiled in a management conflict after the acquisition by Strong Oak Inc. of the firm’s 430.286 million shares worth P563.675 million. The acquisition resulted in dilution of the stake of the company’s Singaporeans’ shareholders to 14 percent from 34 percent.

Read more: Canlas, Jomar. April 17, 2017. SC sets new jurisprudence on payment of docket fees. The Manila Times. www.manilatimes.net/2017/04/17/news/latest-stories/sc-sets-new-jurisprudence-payment-docket-fees/322639/322639.

The High Tribunal’s First Division particularly decided on a consolidated petition filed by Alliance led by its president Jonathan Dee and its minority shareholders led by Harvest All Investment Limited (Harvest All). In its 12-page decision promulgated on March 15, 2017 and penned by Associate Justice Estela Perlas-Bernabe, the First Division denied the petition of Alliance and partly granted the plea of Harvest All as it ruled that an intra-corporate controversy may involve a subject matter that is either capable or incapable of monetary estimation. Alliance’s board resolution dated May 29, 2015 provided for an indefinite postponement of its Annual Stockholders Meeting (ASM) pending complete subscription to its Stock Rights Offering (SRO) consisting of shares with a total value of P1 billion. Alliance’s by-laws state that its ASM should be held every June 15. Harvest All, in opposing the postponement of the ASM, filed a complaint before the Pasig Regional Trial Court (RTC) involving intra-corporate controversy against Alliance. It argued that the subscription to the new shares through the SRO cannot be made a condition to the exercise of the current stockholders of their right to vote in the 2015 ASM. Hence, Harvest All sought nullification of the May 29, 2015 board resolution. The Pasig RTC Clerk of Court assessed Harvest All with filing fees amounting to P8,860.00, which the firm paid accordingly. The Pasig RTC Branch 159, however, dismissed the complaint of Harvest All as it ruled in favor of Alliance’s argument that Harvest All failed to pay correct filing fees. Alliance believed that the court has no jurisdiction over the case because Harvest All should have paid P20 million as docket fee based on the worth of SRO, which is valued at P1 billion. Harvest All brought the case before the Court of Appeals (CA), which ordered the reinstatement of the case. The CA directed the Pasig RTC to conduct proceedings but only after the proper legal fees were paid. It agreed with the RTC that the basis for the docket fees should be P1 billion. Both the Pasig RTC and the CA, in deciding the case, relied on a pronouncement made by the Supreme Court in the case of Lu vs Lu Ym: “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 case of Lu mentioned amendments made in Rule 141 of the Rules of Court on July 20, 2004, which “imply that there can be no case of intra-corporate controversy where the value of the subject matter cannot be estimated.” The Supreme Court in its latest ruling, however, clarified that such pronouncement is just an obiter dictum or a mere opinion and does not bind the courts in deciding similar cases. The ruling mentioned an amendment made by the High Court to the schedule of legal fees to be collected in various commercial cases that it passed on October 5, 2016. The amendment states that applicable legal fees shall depend on the nature of the action.

Read more: Canlas, Jomar. April 17, 2017. SC sets new jurisprudence on payment of docket fees. The Manila Times. www.manilatimes.net/2017/04/17/news/latest-stories/sc-sets-new-jurisprudence-payment-docket-fees/322639/322639.

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