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By Likha C. Cuevas-Miel Reporter
The Securities and Exchange
Commission (SEC) ordered the Manila Electric Co. (Meralco) to
explain its defiance of a cease-and-desist order that the government
regulator issued during the power firm’s stockholders’ meeting
Tuesday.
The regulator said Meralco has
until Friday to respond to the order.
Based on the SEC order served
Wednesday, the regulator asked Meralco Chairman Manuel Lopez,
President Jesus Francisco and acting Corporate Secretary Anthony
Rosete to explain why “the commission should not cite you in
contempt for impugning the validity” and categorically declaring
the injunction “null and void.”
During the stockholders’
meeting, SEC served the restraining order signed by SEC Commissioner
Jesus Enrique Martinez based on a petition filed by the Government
Service Insurance System (GSIS). The order sought to bar Rosete or
any corporate secretary for the meeting from counting and tabulating
the proxy votes solicited from the public in favor of the Lopezes,
owners of Meralco.
The Meralco management and its
lawyers, however, decided to disregard the order and proceeded with
the meeting and the election of the utility’s board of directors.
Among the reasons why Meralco declared the restraining order null
and void were the lack of a docket number, date and official seal of
the government regulator. The management also questioned the
validity of the order, saying it was signed by only one
commissioner, and Martinez’s authority to issue the injunction
without a commission meeting.
The jurisdiction of the SEC was
also questioned, since based on Section 2 of the Securities and
Regulation Code, intra-corporate disputes were already transferred
to the regular courts.
Gerard Lukban, SEC secretary,
said the government regulator’s order that was served Wednesday
was prepared right after the announcement of Meralco’s new board
of directors late Wednesday night. This announcement, the commission
said, “confirms the defiance of our order [of May 27].”
The show-cause order stated that
Meralco’s response should be filed before the commission on or
before May 30 at 12 noon. The SEC will hold a hearing on this order
and on the contested proxy votes on Friday at the regulator’s
office.
“Your non-appearance at said
hearing will constitute a waiver of the right to be heard on the
aforementioned matter,” the order stated.
Lukban said the proper venue for
Meralco to declare the SEC injunction null and void is the Court of
Appeals. “If you’re questioning it, go to the proper forum. We
know that your opinion is null and void but it would be highly
irregular for us to declare [that view] null and void [without]
hearing your side. Then, we’ll say, ‘Yes, our order was null and
void,’” the lawyer added.
If Lopez, Francisco and Rosete
fail to appear before the SEC and explain their side, they may be
held in contempt, and Meralco may be slapped with P50,000 to P5
million in penalties under Section 73 of the Corporation Code.
“But, of course, our contempt
powers also carry the suppletory effect of the rules of court
wherein the powers given to the courts under the law were also given
to the SEC. It could include imprisonment also. This is under the
Securities and Regulation Code, Section 5J,” the commission
secretary said.
The SEC can only decide on its
course of action after the respondents have aired their side and the
commissioners have decided on the contested proxy votes. After
threshing out the issues on Friday, it can decide on whether to
invalidate the proxy votes and hold another election.
On questions on the government
regulator’s jurisdiction over intra-corporate disputes, such as
those involving issuance of cease-and-desist orders, Lukban said the
agency acts as a regulator, not as an adjudicator. “We’re like
the police, not the judge, so we act on the complaint. If you have
questions on our actions, you go to the courts,” the lawyer added.
Lukban conceded that Meralco has
a lot of possible legal maneuvers up its sleeve. The company’s
management can go to the appellate court since all orders of the SEC
may be appealed. The Court of Appeals can restrain the SEC and keep
it from issuing decisions.
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