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By William B. Depasupil and Likha C. Cuevas-Miel,
Reporters
The Manila Electric Co. (Meralco) on Thursday
sought the intervention of the Court of Appeals to stop the
Securities and Exchange Commission (SEC) from implementing a
cease-and-desist order served during the utility’s recent
stockholders’ meeting.
Tuesday’s meeting saw Meralco nominees win
majority of board seats, enabling the utility’s Lopez owners to
retain control of management. The election was immediately contested
by Winston Garcia, the president and general manager of the
Government Service Insurance System (GSIS), which had challenged the
Lopezes for control of the country’s biggest power distributor.
The SEC, however, said also on Thursday that it
will proceed with today’s scheduled hearing on the
cease-and-desist order that was ignored during the stockholders’
meeting.
Lawyer Gerard Lukban, the regulator’s
secretary, told reporters during a telephone interview that they can
hold the hearing since the appellate court has not served them a
temporary restraining order (TRO).
“In the absence of an injunction or TRO from a
higher body, it [hearing] will proceed,” he said.
Lukban said members of the hearing panel include
lawyers Gerardo del Rosario of the SEC’s Company Registration and
Monitoring department, Celso Virgilio Ylagan of the Market
Regulation department and Alexis Cervantes of the Non-Traditional
Securities and Instruments department.
Those that are expected to attend the hearing
are three top Meralco executives, GSIS chief legal counsel Estrella
Elamparo, and the rest of the state pension fund’s legal team.
Lukban said their urgent motion to declare the
“correct” results of the Meralco election was received by the
SEC late Wednesday, but the panel will still see if this matter can
be heard today given lack of time.
GSIS files motion
The government pension fund responded quickly to
the Meralco petition before the Court of Appeals by filing an
“urgent ex parte motion to defer action on any incident of the
petition pending resolution of re-raffle.” An ex parte motion is
one that is filed from a one-sided or partisan point of view.
Garcia, during a phone interview, said they
wanted the appellate court to turn down a temporary restraining
order sought by Meralco. He cited the absence of a lawyer from the
state pension fund during the raffle of the petition filed by
Meralco, the country’s biggest power distributor.
“We were not represented during the raffle.
That is why we are asking the Court of Appeals not to grant their
petition,” Garcia told The Manila Times.
Elamparo said they filed the ex parte motion to
ask the presiding justice of the appellate court for the re-raffle
of the Meralco petition.
According to her, a special raffle was held and
the petition was assigned to the court’s ninth division. They,
however, did not contest the court’s move.
“It was alright. But it would [have been]
better if the GSIS had a representative during the raffle,” she
told The Times.
Meralco’s appeal
In its 55-page petition, Meralco appealed for
the issuance of a temporary restraining order enjoining the SEC from
implementing its show-cause order of Wednesday against Anthony
Rosete, the Lopez-owned utility’s acting corporate secretary.
During Tuesday’s election of Meralco’s
board, Rosete allowed validation of 1.9 billion proxy shares. The
questioned proxies supposedly enabled the Lopez Group to retain
control of the board.
The Meralco petitioners included Rosete; Manuel
Lopez, chairman of the board and chief executive officer; Jesus
Francisco, president; Christian Monsod and Felipe Alfonso, board
members; Elpidio Ibañez, president and chief operating officer of
First Philippine Holdings Corp.; and Francis Giles Puno, chief
officer, treasurer and executive vice president of Philippine
Holdings.
“It would be futile, if not outright foolish,
for petitioners to try to exhaust their remedies before the SEC with
respect to the CDO [cease-desist-order], 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,” the Meralco petition said.
“Respondents are bent on wresting management
control [from] Meralco, a privately owned listed corporation . . . .
The facts . . . will show the premeditated, grossly abusive and
malicious conduct of the respondents, who are conspiring to transfer
control [of] 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,” it
added.
The government regulator earlier ordered Meralco
to explain why they should not be cited in contempt for ignoring the
restraining order. Meralco has until noon of May 30 to submit its
reply.
Meralco maintained that the GSIS’ complaint
about the authority of Rosete to conduct the proxy validation on May
17, 2008 formed part of an intra-corporate dispute.
It said the cease-and-desist order was invalid
because it was signed only by one commissioner and had no docket
number, no date and no seal of the SEC. Meralco claimed that the
regulator has no more authority to issue such order as such power
was long vested in regional trial courts as provided under Republic
Act 8799 or the Securities and Regulation Code.
The Meralco petitioners also questioned the
manner with which the restraining order was served, saying that
lawyer Hubert Guevarra, director of the SEC’s compliance and
enforcement department, only served it after the stockholders’
meeting began, not prior to the start of the meeting.
They noted that under Section 5.2 of the code,
the adjudicatory powers and functions granted to the SEC had been
transferred to the regional trial courts, which have been designated
as special commercial courts under Republic Act 8799.
The Meralco petitioners said the
cease-and-desist order was “a patent nullity, having been issued
without or in excess of jurisdiction by [SEC] Commissioner Jose
Enrique Martinez.”
Named as respondents in their petition were
Guevarra; Martinez, in his capacity as SEC officer-in-charge; and
the GSIS.
The petition described the events that happened
during the stockholders’ meeting as a “classic case of
government tyranny” by the SEC and the GSIS.
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