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THE
Lopez bloc of the Manila Electric Co., insisting the
Securities and Exchange Commission (SEC) has no
jurisdiction over intracorporate disputes, Thursday
asked the Court of Appeals to nullify the SEC
cease-and-desist order (CDO) and the show-cause order on
the 1.9 billion proxy shares that Meralco’s acting
corporate secretary allowed to be validated at Tuesday’s
annual stockholders’ meeting, allowing the Lopez group
to retain control.
The
Lopez bloc, composed of Anthony Rosete, acting corporate
secretary; Manuel Lopez, chairman of the board and chief
executive officer; Felipe Alfonso, vice chairman; Jesus
Francisco, president and chief operating officer;
Christian Monsod, board member; Elpidio Ibañez,
president and chief operating officer of First
Philippine Holdings Corp. (FPHC) and Francis Giles Puno,
chief officer, treasurer and executive vice president of
FPHC, argued that jurisdiction is primarily lodged in
the Regional Trial Court (RTC).
“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,” argued
the Lopez bloc.
They
also asked the appellate court to issue a temporary
restraining order and/or preliminary injunction seeking
to enjoin the SEC from conducting further proceedings in
connection with its show-cause order.
The bloc
accused the Government Service Insurance System (GSIS)
of being “bent on wresting management control over
Meralco, a privately-owned listed corporation, from the
current management. The facts...will show the
premeditated, grossly abusive and malicious conduct of
the respondents [SEC, GSIS] who are conspiring to
transfer control over Meralco to respondent GSIS. Unless
immediately restrained by the Honorable Court,
petitioners, not to mention Meralco, would be subjected
to undue consequences attributable to or arising from
patently void orders and processes of the SEC.”
They
said Section 5.2 of the SEC Code transferred the
adjudicatory powers and functions of the SEC to the RTC
and added the Supreme Court had also ruled the authority
to issue a CDO is conferred upon the appropriate
regional trial court.
Furthermore, the Lopez bloc noted that even the SEC, in
its August 22, 2002, opinion issued by respondent SEC
Commissioner Jesus Enrique Martinez, acknowledged that
issues involving proxies is a matter that is best left
to the proper courts and not with the SEC. They also
accused the SEC of ignoring their fundamental right to
be accorded due process when it issued the CDO without
proper investigation and hearing.
They
said since the SEC is a collegial body, its
commissioners should have deliberated first before the
issuance of a CDO, but noted, possibly inferring the
reason for allegedly void orders, that it was at that
time impossible for the SEC to act as a collegial body
to deliberate on the matter because the other
commissioners were not at the SEC office at the time it
was issued.
The
absence of the three commissioners, argued 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.
“Respondent Commissioner Martinez practically arrogated
unto himself the authority to rule on the merits of the
urgent petition without proper investigation and
verification in violation of the right of petitioners
due process....This is certainly grave abuse of
discretion amounting to lack or excess of jurisdiction,”
said the petitioners.
The
petitioner said the CDO would disenfranchise Meralco’s
stockholders, which is a violation of their right to
vote their shares.
“If the
writ is not issued, the disenfranchisement will be
totally complete. To repeat, the disenfranchised
stockholders will never know that their votes were not
counted or their proxies invalidated. No person or
entity will ever be able to remedy this nonexercise of
the right to vote. On the other hand, the issuance of
the writ, though it may also be unknown to the
stockholders, will give full and proper effect to the
right to vote.”
They
reiterated their earlier reason for ignoring the
order—noting that the order does have a docket number,
is undated, does not bear the official SEC seal, and was
signed by only one commissioner, Martinez.
The CDO
had respondents Lopez, Alfonso, Francisco, Monsod,
Ibañez and Puno, among those named in the proxies sought
to be invalidated, and are also impleaded to restrain
them from voting the challenged shares solicited by
Meralco management in violation of the Securities
Regulation Code [SRC].
The
assailed undated CDO, according to the petitioners, also
sought to restrain Rosete from any committing any act
that would render ineffective the proxies duly assigned
in favor of the GSIS, in particular those of the other
government agencies all of which were submitted in
conformity with SEC rules.
Meralco’s Francisco later said, “The newly-elected board
could start performing its functions since there is no
restraining order issued against it. What was just
issued was a show-cause order asking Meralco to explain
its actions during the stockholders meeting.” |
