Lopez family retains control of Meralco after hostile meet

MANILA, Philippines - The Lopez family retained control of the Manila Electric Co. on Tuesday, after its stockholders awarded five board seats to its representatives, and only four seats to the representatives of the government. It took independent auditor SGV and Co. seven hours to come out with the results of the voting but all in all, Meralco stockholders' meeting dragged on for more than 13 hours, one of the longest stockholders' meetings in Philippine corporate history. The elected representatives of the Lopez family in the Meralco board are Manuel M. Lopez, Jesus P. Francisco, Christian S. Monsod, Felipe B. Alfonso, and Cesar PA Virata. The representatives of the government in the Meralco board are Winston F. Garcia, Daisy P. Arce, Bernardino R. Abes, and Jeremy Z. Parulan. There are 11 seats on Meralco's board of directors. The company's two independent directors are former Chief Justice Artemio Panganiban and Vicente Panlilio. Temporary victory? The Lopez family victory might be temporary after the Government Service Insurance System (GSIS) said it would question the validity of proxies that were voted for the Lopez representatives. "We will definitely be filing more cases. We will still contest the validity of this meeting," said Estrella Elamparo, GSIS legal counsel. The GSIS has been engaged in a word and legal war with the Lopez over control of Meralco, operations of which, it said, unfairly benefit Lopez-owned independent power producers. GSIS chief Garcia has also accused Meralco of jacking up its electricity prices unfairly. The agency's first course of action, however, would be to pursue the case it has filed against Meralco before the Securities and Exchange Commission. Early Tuesday, the SEC issued ex-parte a cease and desist order enjoining the tally of votes assigned by proxy to Lopez representatives by minority shareholders of Meralco. The order was in response to a complaint filed by the GSIS questioning the validity of the proxies, and the validation process of the proxy forms. SEC order null and void The Meralco board proceeded with the company's stockholders' meeting in defiance of the order. In a statement read by assistant corporate secretary Anthony Rosete, majority of the Meralco board said that the SEC order is null and void because it has no docket number and does not bear the official seal of the SEC. Meralco also questioned the jurisdiction of the SEC on inter-corporate disputes, which it said lies solely on the courts. The company also pointed out that it was highly irregular that the order was only signed by one Commissioner, Jesus Martinez, who they said has no authority to sign in behalf of the SEC chair who is abroad, a fellow commissioner who is out of town, and another commissioner who is in the hospital. The board also noted that due process was not observed in the issuance of the injunction order because Meralco was not served notice of the action beforehand. The board also questioned SEC's intervention, saying the commission had ceded jurisdiction over the settlement of intra-corporate disputes to the courts. It noted that GSIS had already filed a similar charge before the Pasay City regional trial court. GSIS president and general manager Winston Garcia and another government representative in the Meralco Board opposed the decision to resume the stockholders' meeting. Hubert Guevara, director of SEC's compliance and enforcement division, said the SEC order was not meant to stop Meralco's stockholders' meeting, but rather to make sure that the voting is carried out in a transparent manner. Guevara said the Meralco board's decision to proceed with the stockholders' meeting remains subject to the SEC's action. "We're not here to stop the annual meeting of stockholders but to ensure that the voting is transparent. Proceed if you want, but this will be subject to whatever actions as may be decided by the commission later on," Guevara said. Earlier in the day, SEC served an injunction order preventing proxies of Meralco from being voted on the board. The injunction order also allowed SEC to take over the stockholders' meeting proceedings. The issuance of the SEC order, signed by commissioner and officer-in-charge Jesus Enrique G. Martinez, prompted members of the Meralco Board to declare a recess. - Patricia de Leon, GMANews.TV