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Saturday, May 31, 2008
CA grants Meralco's petition vs SEC
MANILA -- The Court of Appeals (CA) granted Friday Manila Electric Company's (Meralco) petition for a temporary restraining order (TRO) against the Securities and Exchange Commission (SEC) and Government Service Insurance System (GSIS).
The 60-day TRO enjoins the SEC and GSIS from implementing its cease and desist order (CDO) served during Meralco's annual stockholders meeting last May 27.
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It was served after the GSIS through legal counsel Estrella Elamparo filed an ex-parte motion, asking the CA's Special Ninth Division to defer action on Meralco's petition for certiorari and prohibition, and to re-raffle the case to another division.
In a resolution by Associate Justice Vicente Roxas, the CA ordered a status quo commencing from the time that the Lopez-led group was elected to the 2006 Meralco board. Concurring in the ruling were Associate Justices Myrna Dimaranan Vidal and Jose Sabio.
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Meralco asks court to nullify SEC order
The appellate court also directed the respondents to comment within 10 days on Meralco's petition, after which the petitioners are required to submit their reply within five days.
The CA set the hearings on the case on June 23 and 24. Both parties were likewise ordered to submit their respective memoranda, and after 45 days, the case will be submitted for prosecution.
"In order not to render the decision of the court moot and academic, a TRO is hereby issued for a period of 60 days from service of notice, restraining, enjoining and prohibiting respondents, their representatives, agents, assignees and all persons and officers acting for and in their behalf, from proceeding on and causing the implementation of the undated CDO (cease and desist order) and the show-cause order dated May 27, 2008," the CA ruled.
Meralco alleged that the CDO has been rendered moot and academic due to lack of jurisdiction by the SEC.
Citing Section 5.2 of the Securities Regulations Code, the CA said all the SEC powers have been transferred to the regional trial courts (RTCs), which shall exercise original and exclusive jurisdiction as special commercial courts.
The CA noted that since the GSIS has filed a complaint on May 23 before the Pasay City RTC questioning the appointment of lawyer Anthony Rosete as corporate secretary for the stockholders' meeting, the RTC has already assumed original and exclusive jurisdiction over the election controversy.
The GSIS, however, later withdrew the case and filed the same complaints with the SEC.
In its petition, Meralco led by Rosete; Manuel Lopez as chairman of the Board of Directors and chief executive officer; Jesus Francisco, president and chief operating officer; board directors Felipe Alfonso and Christian Monsod asked the CA to declare null and void the undated SEC's CDO enjoining the power-distributing firm from counting proxy votes in favor of the Lopezes.
Joining the petition were Elpidio Ibanez, president and chief operating officer (COO) of First Philippine Holdings Corporation (FPHC); and Francis Giles Puno, chief finance officer, FPHC.
Named respondents were the SEC, Commissioner Jesus Enrique Martinez, the GSIS, and Hubert Guevara in his capacity as director of the compliance and enforcement department of the SEC.
The SEC's CDO restrained Rosete from recognizing the validity of proxies in favor of Lopez, Francisco, and directors Alfonso and Monsod, Ibanez, and Puno.
On the other hand, the show cause order was issued after Meralco refused to acknowledge the undated CDO it earlier issued.
The SEC gave Meralco officials two days, or until Friday to explain why they should not be declared in contempt for ignoring its CDO, stopping the counting of proxies in favor of pro-Lopez directors during the meeting.
Meralco officials also asked the CA to enjoin the SEC from further taking cognizance of and illegally exercising jurisdiction over the ongoing intra-corporate dispute between Meralco, 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 RTCs, which have been designated as special commercial courts under Republic Act (RA) 8799 or the Securities Regulation Code.
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 Company Inc.
Two independent directors, retired Chief Justice Artemio Panganiban and Vicente Panlilio, were also voted to the 11-man board.
The GSIS claimed that former Prime Minister Cesar 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.
Press Secretary Ignacio Bunye meantime said the TRO issued by the CA would not in any way affect or prevent the on going efforts of the government and Meralco to come up with measures to lower the current electricity rates.
He said the legal matter, which stemmed from the internal row among the Meralco board members and stockholders, is corporate that the government does not wish or plan to meddle with.
"Let the courts decide on this particular issue, while the Executive Department and the Meralco officials will continue separately discussing ways and means of trying to lessen the cost of electricity," he said.
Bunye considered Meralco's move "a recognition of the rule of law," adding that while they await the final decision of the court, there remains an open discussion among the government and Meralco officials, which the administration expects to result in an agreed and acceptable solution to the current high cost of power rates.
He also said technical working group being formed by Finance Secretary Margarito Teves would go over the proposals made during meetings of the Economic Team's Study group, including those with Meralco and the GSIS officials and come up with a recommendation for the President's approval.
"We can segregate these two events, the work of working group and the legal questions that have to be resolved by the courts and I think the recommendations once approved by the President can be implemented separately without having to wait for a decision form the courts," he added. (ECV/JMR/Sunnex)For more Philippine news, visit Sun.Star Davao. (May 31, 2008 issue)
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