Business Circuit

“Experience is a dim lamp, which only lights the one who bears it.”- Louis Ferdinand Celine, French author, Writers at Work, 1967

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Court restrains BPI

Makati RTC Judge Selma Palacios Alaras has ordered the Bank of the Philippine Islands to freeze the deposits of Philcomsat Holdings pending resolution of ownership or control of the publicly listed company.

According to the ruling, in the case of Philcomsat Holdings vs Bank of the Philippine Islands, defendant, and Philcomsat Holdings Corp. represented by Enrique Locsin as intervenor, the BPI is prevented from allowing … the Locsin Group, their officers employees, agents or representatives to inquire, withdraw, and/or in any manner transact business on any and all Philcomsat Holdings Corp. accounts maintained with the BPI until further notice from the Court.

The plaintiff in the case, largely represented by Ms. Lin Bildner, earlier requested the bank to free the deposits of the company. Denied, she wrote the members of the board of BPI to explain the request.

Our information is that the request never even reached the members of the board. Ms. Bildner was left with no choice except to seek a freeze which was granted by a Makati RTC.

Ms. Zenaida Alcantara, a CPA and the temporary finance officer of Philcomsat, mother company of Philcomsat Holdings, gave a summary of disbursements in the Senate hearing called by its Good Government Committee headed by Sen. Dick Gordon for three years from 2004 to 2006.

The documents were culled from the working papers of the auditors and from the findings of the Securities and Exchange Commission.

According to Bildner, the net losses of PHC increased from P36.912 million to P133.679 million during the three-year period.

Bildner claimed that P125 million was withdrawn from the BPI account without the necessary supporting documents such as approval by the board of directors.

She now claims that if the BPI had accommodated her earlier request to freeze the account, withdrawals could not have been made.

I met Sen. Juan Ponce Enrile during the hearing of the resolutions filed on behalf of media in connection with the Manila Peninsula hotel incident. Told about the freeze of the BPI account, he shot back and said "They will hear from us."
The family of Enrile has substantial holdings in the mother company, POTC.

There are records that show that private accounts were created from among board members and officers of Philcomsat Holdings.

There are also records attesting to the fact that corporate funds were deposited in these accounts.

There are records which show that most of the withdrawals were "pay to cash" to a driver or messenger of the corporation.

But there are no records indicating how the funds owned by the company but held in two private accounts were disbursed.

I have been persistent in denouncing the looting of the corporate funds of Philcomsat Holdings, not just a matter of duty to about 2,500 stockholders, of which I am one.

Even more sad is the fact that trading of PHC shares has been suspended. We cannot sell at a loss even if we want to.

The facts as stated in the decision show that an election committee was constituted to supervise the annual elections in 2004.

However, Ms. Bildner claimed before the Court that the election body was tilted heavily in favor of the Locsin group which had two members while her group had only one.

Since there were two proxies issued, those of Victor Africa and those of Locsin, the proxies had to be validated.

The Locsin group elected themselves as board members and officers.

On January 14, 2006, another Makati court issued an order invalidating the proxy of the Locsin group.

That means the court ruled that the valid proxies were those issued to Ms. Bildner. Consequently, her group should automatically take over.

Based on the writ of execution issued by the Makati court declaring the proxy of the Locsin group as invalid, the Bildner group called its annual stockholders meeting on April 24, 2007. The Africa-Bildner group elected their own board of directors and officers.

But then the Court of Appeals, acting on the second motion for certiorari by the Locsin Group, issued a writ of preliminary injunction enjoining the Makati Regional Trial Court from enforcing its decision declaring that the Africa Group had the valid proxies.

The plaintiff, through Ms. Bildner, argued that when the restraining order was issued the decision of the Makati Court had already been implemented. It was already a fait accompli. Therefore, she said, the Court of Appeals did not have the right to enjoin the Makati Court from implementing a decision that ha already been implemented.

Thus, according to the decision of Judge Alaras, there are two contending parties. This issue was resolved by the Makati Court but the CA resuscitated it through a preliminary injunction.

In other words, a case that had already been resolved and its decision implemented was temporarily halted by the Court of Appeals.

The petition for preliminary injunction to stop the annual meeting of Philcomsat Holdings was signed by 92-year-old Manuel Nieto Jr., original stockholder of POTC.

It turned out later that having periods of non-lucidity, he did not know what he signed. In one of his lucid moments, he asked his friend, lawyer Manuel M. Lazaro, to withdraw the petition.

The justice who issued the original preliminary order is said to have refused to rule on the withdrawal. Lazaro said he asked that his motion be transmitted to the presiding justice for raffle.

Somehow or other, another CA justice took over. He ignored the petition to withdraw and later issued a writ of preliminary injunction.

Even lawyers found this weird. The complainant, Nieto, was withdrawing his petition. It would have been ministerial for the CA to accept it. That was not the way it happened.

In exasperation, Nieto, through his son-in-law, joined the Africa-Bildner group to form a majority of more than 65 percent including the 18 percent share of the State.