Friday, July 25, 2008 CA voids SEC orders vs Meralco board election
THE Court of Appeals (CA) on Thursday dealt the Government Service Insurance System (GSIS) with another blow after it declared null and void the order of the Securities and Exchange Commission (SEC) for the Manila Electric Company (Meralco) to stop counting proxy votes in favor of the Lopezes.
In a decision penned by Associate Justice Vicente Roxas, the CA Eighth Division granted the petition filed by Meralco questioning the validity of the SEC's undated cease and desist order (CDO) and May 28 show cause order (SCO) enjoining the utility firm from validating the proxy votes gathered during its May 27, 2008 annual stockholders' meeting as sought by GSIS.
The appellate court said that the May 26, 2008 complaint filed by respondent GSIS in the SEC is dismissed due to SEC's lack of jurisdiction, due to forum shopping and splitting causes of action by GSIS.
"Consequently, the SEC's undated CDO and show cause order are hereby declared void ab initio and without legal effect and their implementation are permanently restrained," the CA ruled.
Concurring in the ruling were Associate Justices Bienvenido Reyes and Apolinario Bruselas.
The CA said the GSIS complaint in the SEC is barred from being considered, out of equitable considerations, as an election contest in the Regional Trial Court (RTC), because the prescriptive period of 15 days from the May 27 Meralco election to file a protest in the RTC had already run its course.
The appellate court likewise transmitted to the Office of Chief Justice Reynato Puno 17 copies of the decision and three copies to the Office of the Court Administrator for possible sanctions by the Supreme Court against the "GSIS Law Office" for unauthorized practice of law.
It also wish to discipline GSIS lawyers led by Estrella Elamparo-Tayag, Marcial Pimentel Jr. and Enrique Tandan III.
The court also claimed that the pension fund agency violated provisions defying the public policy in deliberately displacing the Office of the Government Corporate Counsel (OGCC) from its duty as the exclusive lawyer of the pension fund, by admittedly filing and defending cases as well as appearing as counsel for GSIS, without authority to do so.
The CA likewise said the GSIS lawyers should be disciplined for violating the lawyer's oath for failing in their duty to act as faithful officers of the court by engaging in forum shopping.
The power-distributing firm challenged the jurisdiction of the SEC in ruling on Meralco's stockholders' meeting, saying such authority is lodged with the special commercial courts.
In its complaint filed before the Pasay RTC, GSIS assailed the appointment of lawyer Anthony Rosete as corporate secretary; sought to restrain him from recognizing, counting, tabulating, or honoring the shares of the assailed proxies of the Lopez group and from allowing the Lopez group to vote the challenged proxies.
The GSIS also asked the RTC to stop Rosete from disapproving the proxies issued to GSIS and its president and general manager Winston Garcia.
The GSIS also asked the RTC to invalidate the proxies in favor of the Lopez Group for defiance and violation of the rules made by the SEC on proxy solicitation.
When the Pasay RTC did issue a TRO in favor of GSIS, the agency decided to withdraw the complaint on May 26, 2008 and filed on the same day with the SEC a similar complaint.
The CA said GSIS is guilty of forum shopping since the RTC case was still pending when the agency filed its complaint with the SEC.
It noted that the notice of withdrawal filed by GSIS with the Pasay RTC on May 26, 2008 did not automatically dismiss the case.
In a statement, Elamparo denounced the CA decision as a "patent nullity," pointing out that the case was decided by the CA Eighth Division when the case was raffled to and was heard by the CA Special Ninth Division.
The GSIS said none of the parties involved in the case was notified of the "mysterious and sudden transfer of the case."
Elamparo said Justice Jose Sabio, who chaired the Special Ninth Division, was unceremoniously excluded in the promulgation of the case, which should have stayed in his division in the first place.
The GSIS had sought the inhibition of Roxas on account of reports that he met with lawyers of Meralco on the day a temporary restraining order (TRO) was issued by the CA barring the SEC from taking jurisdiction on the GSIS complaint against Meralco. Roxas's two pending administrative cases were also cited by GSIS in asking for his inhibition.
The CA issued the 60-day TRO enjoining the SEC and GSIS from implementing the CDO covering the annual stockholders' meeting of Meralco. The restraining order was to commence from the time the Lopez group was elected to the 2006 Meralco board. (ECV/Sunnex)
