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Friday, May 30, 2008
Meralco asks court to nullify SEC order
MANILA -- Officials of the Manila Electric Company (Meralco) on Thursday asked the Court of Appeals (CA) to declare null and void the cease and desist order (CDO) of the Securities and Exchange Commission (SEC) enjoining the power-distributing firm from counting proxy votes in favor of the Lopezes.
Filing the suit were Anthony Rosete, acting corporate secretary; Manuel Lopez, chairman of the Board of Directors and chief executive officer; Jesus Francisco, president and chief operating officer; and board directors Felipe Alfonso and Christian Monsod.
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Joining the petition were Elpidio Ibanez, president of First Philippine Holdings Corp. (FPHC); and Francis Giles Puno, chief finance officer, FPHC.
Named respondents were the SEC, Commissioner Jesus Enrique Martinez, the Government Service Insurance System (GSIS), and Hubert Guevarra in his capacity as director of the compliance and enforcement department of the SEC.
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In a petition for certiorari, Meralco officials asked the CA to issue a temporary restraining order (TRO) enjoining the SEC and the GSIS from implementing the undated CDO and a show cause order served last May 27 during Meralco's annual stockholders' meeting.
The SEC orders gave Meralco officials two days or until May 30 to explain why they should not be cited for contempt for ignoring its order to stop the counting of proxies in favor of pro-Lopez directors during the meeting.
"This is a classic case of government tyranny by two agencies of government, the SEC and GSIS. As evident by recent events, the GSIS is hell-bent on wresting management control over Meralco, a privately-owned listed corporation, from its current management at all cost," the petitioners said.
Unless restrained by the court, Meralco said respondents will not only be able to deprive them of their property without due process through the CDO, but also threaten some of the individual petitioners' liberty without due process and authority through the show cause order.
Meralco officials also asked the appellate court to enjoin the SEC from further taking cognizance of and illegally exercising jurisdiction over the ongoing intra-corporate dispute between Meralco as well as its present management and the GSIS.
According to Meralco, the CDO issued by the SEC is null and void as the authority to issue such had already been transferred to the regional trial courts, which have been designated as special commercial courts under Republic Act (RA) 8799 or the Securities Regulation Code.
The CDO restrained Rosete from recognizing the validity of proxies in favor of Lopez, Francisco, and directors Alfonso and Monsod, Ibanez, and Puno.
They also said the show cause order was invalid as it was issued by the SEC, which has no jurisdiction over the controversy.
"It would be futile, if not outright foolish for petitioners to try to exhaust their remedies before the SEC with respect to the CDO, the show cause order, or for that matter any related incident because the SEC is without jurisdiction over the controversy at the outset. Moreover, being an incident of the CDO, this show cause order is likewise a patent nullity," they stated.
Petitioners also accused the SEC of ignoring their fundamental right to be accorded due process when it issued the CDO without proper investigation and hearing.
Since the SEC is a collegial body, the petitioners argued that its commissioners should have deliberated first before the issuance of the CDO.
However, Meralco noted that it was possible for the SEC to act as collegial body to deliberate on the matter as the other commissioners were not at the SEC office at the time it was issued.
The absence of the three commissioners, according to the petitioners, prevented the SEC from having a quorum to validly deliberate on the GSIS urgent petition filed on May 26, 2008 seeking to restrain Rosete from honoring proxy shares solicited by the Lopez bloc.
During its annual stockholder's meeting Tuesday, Meralco stockholders had voted five pro-Lopez directors into the board, having received the highest number of votes. They are Lopez, Francisco, Monsod, Alfonso, and Cesar Virata.
The next highest number of votes went to Garcia and Bernardino Abes, followed by Daisy Arce and Jeremy Parulan from Philippines First Insurance Co. Inc.
Two independent directors, retired Chief Justice Artemio Panganiban and Vicente Panlilio, were also voted to the 11-man board.
The GSIS said former Prime Minister Virata illegally occupies the place of Eusebio Tanco in the Meralco board.
The GSIS also said the Lopezes blatantly used "illegal proxies" during the annual stockholders' meeting.
Meanwhile, the advocacy group National Association of Electricity Consumers for Reforms (Nasecore), Inc. criticized Meralco for defying the SEC order.
Nasecore president Pete Ilagan said the defiance showed disrespect to the SEC.
"If the Lopezes can be allowed to defy such lawful decision, where can a customer like me can go to seek redress over Meralco's questionable decisions that resulted in unjust, burdensome electricity rates?" Ilagan asked.
He also asked GSIS president Winston Garcia to continue his fight in court to invalidate the election of Meralco directors. (Sunnex)
For more Philippine news, visit Sun.Star Davao. (May 30, 2008 issue)
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