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By William B. Depasupil, Reporter
The Court of Appeals has voided a
cease-and-desist order issued by the Securities and Exchange
Commission (SEC) against the Manila Electric Co. (Meralco) in an
attempt by the commission to stop the giant utility’s election of
board members during the annual stockholders’ meeting nearly two
months ago.
The order was issued by the SEC at the behest of
the Government Service Insurance System (GSIS) and was served during
the stockholders’ meeting on May 27.
The appellate court’s Eighth Division, in a
57-page decision penned by Associate Justice Vicente Roxas, said the
commission has no jurisdiction over the case. It added that it is
the regional trial court that should decide on intra-corporate
disputes.
It dismissed the SEC order “due to forum
shopping by respondent GSIS and due to splitting of action by
respondent GSIS,” the court said.
The ruling also declared that SEC’s undated
cease-and-desist order and the commission’s May 28, 2008
show-cause order are void ab initio and without legal effect and
“their implementation are hereby permanently restrained.”
The appellate court said that the May 26, 2008
complaint filed by GSIS before 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, 2008 Meralco election to file an
election contest in the trial court had already run its course,
pursuant to Section 3, Rule 6, of the Interim Rules of Procedure
Governing Intra-Corporate Controversies due to deliberate act of
GSIS in filing a complaint in the SEC instead of the RTC.”
It added that GSIS was guilty of “unauthorized
practice of law.”
“Corporations like the GSIS cannot practice
law by the mere expedience of hiring lawyers under a ‘GSIS Law
Office.’ The misnomer and practice of labeling the GSIS Law Office
as an ‘in-house’ law department of the corporation cannot
authorize GSIS under the auspices of the GSIS Law Office to practice
law. The Supreme Court cannot discipline artificial beings like
corporations which are mere fictions of law that have no feelings
and that have no capacity for respect of the courts and that have no
nobility of being respectable just by being human,” the court
said.
“By itself, [GSIS] can be a monster in the
practice of law—and it can get away with it clean,” it added.
Under the law, the appellate court said, it is
the Office of the Government Corporate Counsel which should have
handled the case.
In a statement, GSIS chief legal counsel and
spokesman Estrella Elamparo denounced the appellate court’s
decision as a “patent nullity.” She pointed out that the case
was decided by the court’s Eighth Division when the case was
raffled to and was heard by its 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.”
The stockholders’ meeting was meant for the
election of 11 board members, two reserved for independent directors
as required by law, five to replace the outgoing directors of the
Lopez Group that owns Meralco and four to replace the outgoing
directors of the GSIS group.
The GSIS group is composed of government-owned
and -controlled corporations namely GSIS, Social Security System,
Land Bank of the Philippines, Home Development and Mortgage Fund and
PhilHealth.
The GSIS went to the Pasay Regional Trial Court
seeking a restraining order against the Meralco board’s move to
proceed with the elections. When no such order was issued, it then
initiated proceedings before the SEC, a move that the appellate
court said smacked of forum shopping.
Petitioners in the case are Meralco acting
corporate secretary Anthony Rosete; Meralco chairman and Chief
Executive Officer Manuel Lopez; Meralco President Jesus Francisco;
Meralco board members Felipe Alfonso and Christian Monsod; Elpidio
Ibanez, chief operating officer of First Philippines Holdings Corp.;
and Francis Gile Puno, chief finance officer of First Philippines.
In its show-cause order, the SEC gave Meralco
until noon of May 30 to submit its reply.
SEC Secretary Gerard Lucban said the Meralco
officials may be fined between P50,000 and P5 million or face
imprisonment if they are found to be in contempt of the regulatory
agency.
Respondents in the Meralco petition were SEC
Commissioner Jesus Enrique Martinez in his capacity as
officer-in-charge of the SEC; Hubert Guevarra, in his capacity as
director of the SEC Compliance and Enforcement Department; and the
GSIS.
In their petition, the 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 current
management and the GSIS.
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