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THE
Court of Appeals (CA) on Thursday declared null and void
the undated cease-and-desist order (CDO) and the
show-cause order (SCO) issued by the Securities and
Exchange Commission (SEC) enjoining the Manila Electric
Co. (Meralco) from validating the proxy votes in favor
of the Lopez group during the power distributor’s
stockholders’ meeting on May 27.
In a
57-page decision penned by Associate Justice Vicente
Roxas, the CA’s Eight Division also held that the
complaint filed by the Government Service Insurance
System (GSIS) before the SEC is considered an election
contest and an intracorporate controversy; thus, should
be lodged before the regional trial court (RTC).
The
appellate court, however, stressed that the GSIS could
no longer seek refuge before the RTC since the
prescriptive period of 15 days from the May 27, 2008,
Meralco elections to file an election contest before the
lower court had already lapsed pursuant to Section 3,
Rule 6 of the Interim Rules of Procedure Governing
Intra-Corporate Controversies under Republic Act 8799,
or the Securities Regulation Code (SRC), “owing to
deliberate act of GSIS in filing a complaint in the SEC
instead of the RTC.”
The
appellate court also recommended to the Supreme Court
the imposition of sanctions against personnel of the
GSIS legal office, including lawyers Estrella
Elamparo-Tayag, Marcial Pimentel Jr. and Enrique Tandan
III, for unauthorized practice of law, for violating
provisions of law defying public policy in deliberately
displacing the Office of the Government Corporate
Counsel (OGCC) from its duty as the exclusive lawyer of
GSIS by defending cases and appearing as counsel for
GSIS, without authority to do so.
The CA
also said the GSIS lawyers should be disciplined for
violating the lawyers’ oath for failing in their duty to
act as faithful officers of the court by engaging in
forum shopping; for violating provisions of the law,
especially those on jurisdiction, which are mandatory;
and for violating Section 3 Rule 2 of the 1997 Rules of
Civil Procedure by deliberately splitting cause of
action in order to file multiple complaints—in the RTC
in Pasay City and in the SEC—“in order to ensure a
favorable order.”
The
appellate court, in granting the petition of the Lopez
group, held that the SEC’s undated CDO and SCO issued on
May 28 are void owing to total absence of jurisdiction
considering that Section 5.2 of the SRC transferred from
SEC to the RTC original and exclusively jurisdiction
over election contests and intracorporate controversies.
The CA
stressed that election contests and intracorporate
disputes include validation of proxies, validity of
elections and proclamation of winners and all incidents
to a stockholder’s right to vote, in person, or by
proxy, at an election.
“In this
case at bench, GSIS knew and intended from the very
beginning to file an election contest and
intra-corporate controversy and GSIS knew and intended
from the very beginning that it is the RTC, not the SEC,
that had original and exclusive jurisdiction over such
matters and incidents thereto,” the CA averred.
It also
declared that the rules on proxy solicitation formulated
by the SEC cannot divest the RTC of its jurisdiction
over election contests and intracorporate controversies.
The CA
noted that the complaints filed by the GSIS in the Pasay
RTC and in the SEC are almost identical since its main
objective is to invalidate the May 27 election of
directors by excluding the 1.9 billion proxy votes in
favor of the Lopez group.
In its
complaint filed before the RTC in Pasay, the GSIS
assailed the appointment of lawyer Anthony Rosete as
corporate secretary; sought to restrain him from
recognizing, counting, tabulating, or honoring the
shares of the assailed proxies of the Lopez group; and
from allowing the Lopez group to vote the challenged
proxies.
Concurring with the ruling were Associate Justices
Bienvenido Reyes and Apolinario Bruselas Jr.
However,
the GSIS said that the CA ruling is a “patent nullity”
because the case was decided by the CA’s Eighth Division
when the case was raffled off to and was heard by the
CA’s Special Ninth Division.
The GSIS
also said none of the parties involved in the case was
notified of the “mysterious and sudden transfer of the
case.”
Tayag
noted that Justice Jose Sabio, who chaired the Special
Ninth Division, was unceremoniously excluded in the
promulgation of the case, which should have stayed in
his division in the first place.
She
pointed out that while Meralco had filed a motion for
Sabio to relinquish his chairmanship of the Ninth in
favor of Justice Bienvenido Reyes, the plea was never
resolved.
“The
Eighth Division blatantly exceeded its authority when it
dismissed a petition filed by the GSIS before the SEC.
It thus dismissed a case that was not even pending
before it,” she said.
Meralco,
as expected, welcomed the CA’s decision, although it had
not officially received a copy. “We certainly welcome it
since this proves that what transpired in the
stockholders’ meeting was in accordance with the rule of
law,” Elpi Cuna, Meralco vice president for corporate
communications, told reporters.
Based on
reports, the Meralco official said he understands that
the decision states that GSIS lawyers violated the law
when they deliberately displaced the OGCC as the only
and exclusive lawyer of all state corporations.
“This
decision is indeed an indication that Meralco merely
upheld what is lawful, just and proper not only in the
eyes of the public but in the eyes of the court,” said
Cuna.
In their
plea to the CA, Meralco officials being tagged in the
CDO had reiterated that the SEC order does not have a
docket number, is undated, does not bear the official
SEC seal, and was signed by only one commissioner, Jesus
Martinez. (With Paul A. Isla) |
