SC grants Singaporean investors plea on payment rules for intra-corporate cases

The Singaporean investors, lead by Hedy Yap-Chua and Albert Hong Hin Kay, insist on opening the books of Alliance but the majority continue to refuse. (Photo: B_cool/ Flickr)

MANILA–The Supreme Court (SC) granted the plea of Singaporean investors and revised the rules involving payment of docket fees in intra-corporate dispute cases.

The high tribunal made the ruling in the case involving the intra-corporate dispute between tuna canning firm Alliance International Inc. (Alliance) and its Singaporean minority shareholders from Harvest All Investment Limited (Harvest).

In its 12-page decision promulgated on March 15, 2017 and penned by Associate Justice Estela Perlas-Bernabe, the SC’s 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 which is either capable or incapable of monetary estimation.

The high court corrected such jurisprudence and stressed that the said portion in the Lu case was a mere opinion that does not bind the courts in deciding similar cases.

It held that the case of Harvest vs. Alliance 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.”

The SC explained that this case does not involve recovery of sum of money since the main purpose of the complaint of Harvest All is to have Alliance hold its 2015 ASM on the date set in the corporation’s by laws so that their voting interest with the corporation would somehow be preserved.

The SC said the lower court should instead based the required docket fee from the amendment schedule of legal fees to be collected in various commercial cases set by the high court in October last year.

The amended schedule of docket fees, which is clarified for the first time in this case, stated that applicable legal fees shall depend on the nature of the action.

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 (ASM) pending complete subscription to its Stock Rights Offering consisting of shares with a total value of P1 billion. The Alliance’s by laws states that its ASM is held every June 15.

Harvest All, in opposing the postponement of the ASM, filed a complaint before the Pasig Regional Trial Court involving intra-corporate controversy against Alliance. It argued that the subscription to the new shares through SRO cannot be made a condition to the exercise of the current stockholders of their right to vote in the 2015 ASM. Hence, they sought the nullification of the May 29, 2015 board resolution.

The Pasig RTC Clerk of Court assessed Harvest All with filing fees amounting to PHP8,860.00 which they paid accordingly.

However, the Pasig RTC Branch 159 dismissed the complaint of Harvest All as it ruled in favor with the Alliance’s argument that Harvest All failed to pay correct filing fees. Alliance’s believed that the court has no jurisdiction over the case because Harvest All should have paid PHP20 million as docket fee based on the worth of SRO which is valued at PHP1 billion.

Harvest All brought the case before the Court of Appeals which ordered the reinstatement of the case. It directed the Pasig RTC to conduct proceedings, but only after the proper legal fees was paid. The appellate court agreed with the RTC that the basis for the docket fees should be PHP1 billion.

Both the Pasig RTC and CA, in deciding the case, relied on the pronouncement made by the Supreme Court in the case of Lu vs Lu Ym which 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 case of Lu mentioned the amendments made in the 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.”

With this, the SC directed the Pasig RTC to proceed with the resolution of Harvest’s complaints based on merits of the case and after determination of proper filing fees from the new rule.

The majority shareholders of Alliance lead by Dee as its president and George Sycip as its chairman. Harvest, on the other hand, is composed of minority stockholders who are Singaporean investors.

The ruling also mentioned the amendment made by the High Court to the schedule of legal fees to be collected in various commercial cases which it has passed on Oct. 5, 2016. Said amendment states that applicable legal fees shall depend on the nature of the action.

The conflict stemmed from the alleged questionable acquisition of Strong Oak Inc of Alliance Select’s 430 million shares which has resulted in the dilution of the Singaporeans’ shares in the corporation, from 34 percent to 24 percent.

The Singaporean investors, lead by Hedy Yap-Chua and Albert Hong Hin Kay, insist on opening the books of Alliance but the majority continue to refuse. The foreign investors wanted to know the truth behind the deal of Alliance and Strong Oak which they accuse of being a questionable company.

“Who is Strong Oak and what they plan to do? Their plans are not clear to us. This is very detrimental to the company and the shareholders. The performance of the company is highly questionable. We know nothing about it,” Yap-Chua said.