Go to court, Bautista tells Coyiuto

Go to court.

This challenge was hurled by Securities and Exchange Commission chairperson Lilia R. Bautista to Philippine Stock Exchange director Robert Coyiuto Jr., who strongly objected to the decision of the SEC to uphold the appointment of Francisco Villaroman and Rodolfo Cruz, as corporate secretary and treasurer, respectively of the bourse.

"We are the interpreter of the law. We have the right to interpret it. if he wants, he can bring us to court," Bautista told reporters yesterday

Bautista said that should the court rule in favor of Coyiuto, the SEC would disqualify him from running as chairman in the next elections. "He is in effect saying that no broker should be appointed to the exchange. If they feel that it is not the right way then the chairman of the exchange should not be a broker," she said.

The Coyiuto group said the appointment of Villaroman and Cruz violated Section 33.2 of the Securities Regulation Code, which expressly prohibits a broker from sitting in the management unless he or she has been detached from the exchange for at least two years prior to such appointment.

Villaroman is the president of broker firm Securitist Specialist Inc. while Cruz heads HK Securities. Both brokerage houses are registered brokers and trading participants of the exchange.

Bautista explained that the commission interpreted the SRC provision liberally in view of the fact that the exchange is still owned and controlled by the brokers despite a provision in the SRC that requires brokers to divest their shares in the exchange.

Under the law, no business group or industry can own more than 20 percent of the voting rights of the exchange.

"So long as they have not done that, we will allow them some liberality. If they want us to be strict then they should divest now and comply with the SRC. This is the reason why I have been pushing for the immediate listing of the PSE. Had they divested, there would have been no problem," Bautista said.

In justifying its order, the SEC said Section 33.2 of the SRC does not apply to Villaroman and Cruz because neither the SRC nor its implementing rules and regulations give a clear definition of officers occupying management positions.

The Commission argued that Villaroman and Cruz are not tasked with the day-to-day concerns, management and operations of the exchange and that there are other officers to discharge management functions in the exchange.

Apart fom Bautista, the order was signed by SEC associate commissioners Fe Eloisa Gloria, Joselia Poblador, and Juanita Cueto.

SEC associate commissioner Jesus Martinez, who had dissented from the majority ruling, said Sec. 33.2 is clear and must be applied accordingly.