BY EVANGELINE DE VERA

THE Court of Appeals yesterday declared null and void the order of the Securities and Exchange Commission stopping Manila Electric Co. from accepting proxy votes during its last annual stockholders meeting on May 27.

The SEC order was prompted by a complaint filed by the Government Service Insurance System over alleged anomalies in the validation of proxy forms.

In a 57-page decision penned by Associate Justice Vicente Roxas, the CA’s Eighth Division also granted the petition filed by Meralco questioning the validity of the SEC order issued a day after the meeting telling the company officials to show cause why they should not be penalized for defying its earlier order.

The court also dismissed GSIS’ complaint against Meralco before the SEC for the latter’s lack of jurisdiction and for GSIS’ forum shopping and splitting of causes of action.

Concurring in the ruling were Bienvenido Reyes and Apolinario Bruselas.

The CA said the GSIS complaint before the SEC is barred from being considered, out of equitable considerations, as an election contest in the regional trial court because the prescriptive period of 15 days had already run its course.

The appellate court transmitted to the Office of Chief Justice Reynato Puno 17 copies of the decision and three copies to the Office of the Court Administrator for possible sanctions by the Supreme Court against the "GSIS law office" for unauthorized practice of law.

It also sought to discipline GSIS lawyers led by Estrella Elamparo-Tayag, Marcial Pimentel Jr. and Enrique Tandan III.

The court said the "GSIS law office" violated public policy in displacing the Office of the Government Corporate Counsel from its duty as the exclusive lawyer of the pension fund and by filing and defending cases as well as appearing as counsel for GSIS without authority to do so.

The CA also said the GSIS lawyers should be disciplined for violating the lawyer’s oath by engaging in forum shopping, for violating provisions of law especially those on jurisdiction which are mandatory, and for splitting causes of action.

On the merits of the case, the CA held that the SEC’s undated cease and desist order and show cause order of May 28 are void due to absence of jurisdiction, considering that the Securities Regulation Code has transferred to regional trial courts the original and exclusively jurisdiction over "election contests" and "intra-corporate controversies."

"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 said.

The appellate court also declared that the rules on proxy solicitation formulated by the SEC cannot divest regional trial courts of jurisdiction over election contests and intra-corporate controversies.

It noted that the complaints filed by the GSIS in the Pasay regional trial court and in the SEC are almost identical since its main objective was to invalidate the May 27 election of directors by excluding the 1.9 billion proxy votes in favor of the Lopez group.

The CA said GSIS is guilty of forum shopping since the RTC case was still pending when the agency filed its complaint in the SEC.

It said that the notice of withdrawal filed by the GSIS in the Pasay RTC on May 26 did not automatically dismiss the case.

Elamparo denounced the CA decision as a "patent nullity," saying that the case was decided by the CA’s Eighth Division when the case was raffled to and was heard by the CA’s Special Ninth Division.

The GSIS said none of the parties involved in the case was notified of the "mysterious and sudden transfer of the case."

Elamparo said 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.

The GSIS had sought the inhibition of Roxas on account of reports that he met with lawyers of Meralco on the day a temporary restraining order was issued by the CA barring the SEC from taking jurisdiction on the GSIS complaint against Meralco.

Elamparo also questioned the decision for declaring that the GSIS legal department has no authority to act as counsel for GSIS.