In an order, CA Associate Justice Aurora Santiago-Lagman said: "We have carefully examined and considered the issues and arguments presented by the petitioner and in its comment/opposition thereto within five days from receipt of copy of this resolution."
The amended by-laws approved by EPCI Bank prevented competitors from getting into the bank’s board of directors.
The temporary restraining order (TRO) was issued by the CA in response to the petition filed by the Sy-owned Sysmart Inc. which has been struggling to secure a seat in the board of EPCI Bank. Sysmart is a minority shareholder in EPCI Bank, the country’s third largest banking network.
Sysmart alleged that the amendments were made without the requisite approval of two-thirds of the bank’s outstanding capital stock.
Sysmart said the amended by-laws states that the decision of the nomination committee, once confirmed by the board of directors, rejecting the nomination or disqualifying the nominee is made final and may no longer be questioned.
It added that the nomination committee is effectively composed of members of the founding Go family and their allies.
In seeking a reversal of the CA order, EPCI Bank said the court was not able to consider its arguments and discussions in its comment/opposition prior to the issuance of the said TRO.
EPCI Bank alleged that Sysmart "failed to establish that it is a majority shareholder of the bank as it could not even muster enough ballots sufficient to vote for a director, hence, it has no right in esse that must be protected by an injunctive order."
The TRO issued by the CA effectively upheld the Securities Exchange Commission (SEC) order revoking EPCI Bank’s amendments to its by-laws which were seen to disenfranchise the majority shareholders of the bank and deprive them of their right to participate in internal affairs.
EPCI Bank earlier said the SEC had no authority to revoke the bank’s by-laws on the ground that the case involves an intra-corporate dispute which is now under the jurisdiction of the regular courts.
It claimed that there is an existing alliance between the Go family composed of Antoni, John Go, Peter Go Pailan and Genevieve Go with EPCI Bank president Rene Buenaventura, Antohony Conway as well as independent directors Roberto Romulo, Cesar Bautista, and Antonio Basilio.
This gives the Go group control over the bank despite having only 25 percent interest while state pension fund managers Social Security System and Government Service Insurance System have only five board seats in the 15-man board despite its combined 40 percent stake.
The Sy group tried but failed to win a board seat in EPCI Bank during the bank’s stockholders’ meeting in April 2004.
Its nominees to the board were rejected by EPCI Bank management, citing conflict of interest.
EPCI Bank argued that its by-laws and a precedent set by the Supreme Court allowed it to protect itself by preventing competitors from getting into its board.
A Supreme Court ruling in the 1980s had barred businessman John Gokongwei from entering the board of food and beverage conglomerate San Miguel Corp. because he had a competing food company, Universal Robina Corp.