PETITIONERS GUILTY OF FORUM SHOPPING
The Court of Appeals (“CA”) upheld the dismissal of a civil complaint filed in 2015 by minority shareholders of Alliance Select Foods International, Inc. (“ASFII; PSE: FOOD”) finding, among others, that the minority shareholders had committed forum shopping.
In a March 28, 2023 Decision, the CA’s Thirteenth Division upheld the February 20, 2020 Omnibus Order of dismissal issued by the Regional Trial Court of Pasig City, Branch 265 (“RTC”) in Commercial Case No. 15-234 (the “2015 Civil Case”).
The case was filed on July 31, 2015 by Harvest All Investment Limited, Victory Fund Limited, Bond East Private Limited, Estate of Albert Hong His Kay, as minority shareholders of ASFII and by Hedy S. C. Yap-Chua, as then-ASFII Director and shareholder (collectively, the “Hedy Group”).
The complaint (which was amended on August 2015) sought to enjoin ASFII and the majority of its then-Board of Directors and Corporate Secretary, from implementing and carrying out a Stock Rights Offering (SRO) prior to and as a condition for the holding of ASFII’s 2015 Annual Shareholders’ Meeting.
The SRO had been approved via a Board Resolution in a special meeting of the ASFII Board of Directors on February 17, 2015 (the “February 2015 Resolution”) and was completed on October 28, 2015.
FORUM SHOPPING AND MOOTNESS; PREVIOUS CASE FILED
The CA affirmed the RTC’s dismissal, finding that the Hedy Group had filed a previous case seeking similar relief. Under the Rules of Court, willful and deliberate forum shopping is a ground for the summary dismissal of the case. The CA ruled that: “Clearly, in both the [2015 Civil Case] and the [Derivative Suit], Petitioners sought the nullity of the February 17, 2015 Resolution. Petitioners’ filing of an Amended Complaint which deletes the prayer for the nullification of the February 17, 2015 Resolution will not erase the fact the Petitioners already committed forum shopping.”
The previous case was a derivative suit filed by the complainants on March 30, 2015, seeking the nullification of the February 2015 Resolution approving the Stock Rights Offering (the “Derivative Suit”).
The CA also confirmed that the issue of the validity of ASFII’s 2015 Annual Stockholders’ Meeting is moot and academic since: (a) the Stock Rights Offering was already completed; and (b) the Annual Stockholders Meetings for 2015, 2016 and 2017 had already been held.
2020 SEC CASE
In 2020, another case seeking similar reliefs was filed by the Hedy Group, this time with the Securities and Exchange Commission -Market Securities Regulation Department (the “SECMSRD”). The SEC-MSRD ruled in favor of ASFII, also on the grounds of forum shopping and prescription of action, since the SEC case was filed beyond the prescriptive period under the Securities Regulation Code. Late last year, on appeal to the SEC En Banc, this decision was reversed. ASFII contested the reversal via a Petition for Review with the Court of Appeals, where the case is now pending.
The Company believes the SEC case is another instance of forum shopping by the minority shareholders. ASFII expects the Court of Appeals to rule in its favor and put an end to the slew of similar cases filed by the Hedy Group.
