THE Manila Electric Co. (Meralco) on Monday insisted that the Securities and Exchange Commission (SEC) committed grave abuse of discretion when it issued a cease-and-desist order (CDO) and the show-cause order enjoining the validation of the 1.9-billion proxy shares during the power firms’ annual stockholders’ meeting on May 27.

During the hearing on the petition seeking to declare null and void the said SEC orders, the Lopez bloc through its lawyer, former ombudsman Simeon Marcelo, insisted that the issue on the validity of proxies is within the jurisdiction of the lower court being an intracorporate dispute.

“Election contest is an intracorporate controversy, including the validation of proxies. The moment it went to validation process, that is already within the jurisdiction of a regular court,” Marcelo said.

Marcelo said 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 8799, or the Securities Regulation Code (SRC). He added that the SEC violated his clients’ right to due process when it issued the CDO without hearing the parties involved and without the approval of the SEC’s three commissioners.

The Lopez bloc is 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.

Associate Justice Jose Sabio, chairman of the Court of Appeal’s Ninth Division, told the parties—the Lopez bloc, the SEC, and the Government Service Insurance System—to submit their respective memoranda dwelling on three issues.

Among the issues are whether  the proxy forms that were used by Meralco did not comply with the SEC rules and regulations; whether the issue is an intracorporate one, therefore, should be lodged before the lower court; and whether SEC committed grave abuse of discretion in issuing the CDO, granting that it had authority to issue such.

Sabio also questioned SEC’s authority to prevent the election of Meralco’s board of officers considering that the SRC only empowers it to supervise election process.

“The way the CDO was worded, it had gone beyond to what it ordinarily should exercise because it prevented the election. Does it have an authority to prevent elections?” Sabio commented.

Assistant Solicitor General Amparo Tang, representing the SEC, dismissed allegations that the Lopez bloc was denied due process when the commission issued the CDO.

Tang recounted that the CDO was issued after prior deliberations by the three commissioners of the SEC. She insisted that the commissioners need not be physically present to sign the CDO as long as they were consulted on the matter. 

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