SC reverses Sandigan on EPCIB election

The Supreme Court has nullified the resolution of the Sandiganbayan disqualifying Trans-Middle East Equities Inc. (TMEE) from voting its shares during the annual stockholders meeting of Equitable PCI Bank last May 23.

Voting 13-0, the High Tribunal also declared invalid the election of another person to a seat on the bank’s board of directors to which TMEE is entitled.

"Pending finality of this decision, respondents board of directors of Equitable PCI Bank and corporate secretary Sabino E. Acut Jr. are directed not to recognize said person whose election to the board of directors is set aside and nullified herein, and to recognize the nominee or representative of TMEE as a duly elected member of the board . . . with all the rights and privileges appertaining to the position," the 34-page decision written by Associate Justice Dante Tinga said.

A day before EPCIBank’s annual stockholders meeting, the Sandiganbayan promulgated a resolution declaring that a temporary restraining order (TRO) initially issued 14 years ago, remained in effect, thus, disqualifying TMEE, a company majority owned by the Romualdez family, from voting its shares and electing its representative to the board.

This prompted the TMEE, through legal counsels Angela dela Cueva and Otilia Dimayuga-Molo, to file a petition with the High Court, seeking to reverse the ruling of the anti-graft court barring the firm from voting the disputed shares at EPCIBank.

TMEQ asserted that it has 51,827,640 EPCIBank shares, equivalent to 7.13 percent of the outstanding capital stock of the bank. On April 15, 1986, some 6,119,067 shares were sequestered by the Presidential Commission on Good Government (PCGG) on suspicion that they were illegally acquired.

These shares are now the subject of a recovery case pending before the Sandiganbayan.

In its decision, the SC said that there is no serious dispute that TMEQ would have been entitled to one seat on the 15-man board had it been able to vote its shares.

"However, relying on the null and void resolution of the Sandiganbayan, respondents board of directors and corporate secretary deprived TMEQ from voting its shares and electing its nominee or representative to the board of directors," the decision pointed out.

It added: "Clearly, TMEQ is entitled to one seat on the board of directors of EPCIBank. There is the option of annulling the entire election, but such step would be too drastic in light of the fact that only one of the 15 seats should be necessarily affected upon the

seating of TMEQ’s nominee to the board of directors. The more prudent step on the part of the Court is to declare that one nominee or representative of TMEQ is entitled to be seated immediately on the board," the SC said.

The SC also directed the EPCIBank board and the corporate secretary to admit and recognize the TMEQ nominee in place of the person who was elected to the board during the recent stockholders meeting.

The High Tribunal also reiterated its admonition for the PCGG and Sandiganbayan to speedily proceed with the hearings and resolutions of the main cases for the recovery and reconveyance of alleged ill-gotten wealth.

Last May 23, hours before the bank’s stockholders meet, the Romualdez family asked the High Court to stop the EPCIBank board from implementing the May 22, 2006 ruling of the anti-graft court that ordered compliance with a TRO issued by the SC in 1997.

That restraining order prevented both the Romualdez family and the PCGG from voting the EPCIBank shares registered under TMEQ.

In its petition, the Romualdez family questioned the validity of the anti-graft court’s decision, noting that they had been voting the TMEQ shares since 1998 until last year.

But the SC did not issue a TRO to stop the annual stockholders meeting. Instead, it resolved the case on its merits after the TMEQ filed last week a petition seeking to dispense with the scheduled oral argument last June 6.

EPCIBank is the country’s third largest bank with assets of P326.2 billion, deposits of P208 billion, and net loans of P138.8 billion as of end-2005.

It declared at net income of P2.4 billion last year, a 33-percent increase from the P1.8 billion earned during the previous year.

Aside from private stockholders led by the SM Group of retail tycoon Henry Sy, two state pension funds — the Government Service Insurance System and the Social Security System — own over 40 percent of the bank.