MANILA, Philippines — Winston Garcia had one card left, played it and lost. At least for now. Manuel Lopez did not blink and won. At least for now.

At the end of a dramatic, daylong corporate battle on Tuesday, Lopez remained in control of the power retailer Manila Electric Co. (Meralco), which he heads as chairman and chief executive.

Garcia, president and general manager of the state pension fund Government Service Insurance System (GSIS), vowed at the rowdy annual meeting of Meralco stockholders to pursue his bid to oust Lopez in court.

The final results showed the Lopez family had garnered enough direct and proxy votes to have six of its nominees elected to Meralco’s 11-member board of directors.

The elected nominees of the Lopez group were Manuel Lopez, Felipe Alfonso, Jesus Francisco, Christian Monsod and Cesar Virata. Former Chief Justice Artemio Panganiban was the Lopez nominee for one of two seats for independent directors.

The rival government side—led by the GSIS—mustered enough direct and proxy votes to corner the remaining five seats.

Elected nominees of the GSIS were Winston Garcia and Bernardino Abes; Daisy Arce and Jeremy Parulan of the GSIS-allied Philippines First Insurance Co. Inc. were also voted in. Banker Vicente Panlilio was the government side's choice to fill up the other remaining seat for independent director.

To the surprise of many present in the Meralco Theater, at the Meralco headquarters in the Ortigas business district, long-time Lopez ally Peter Garrucho Jr. didn’t get enough votes to make it to the company's board for 2008-2009.

The results narrowed the Lopez family's lead over the GSIS-led group, which until Tuesday had only four nominees.

The outcome of the board elections were announced at 10:40 p.m., bringing to a close the annual meeting of stockholders that lasted for nearly 14 hours, making it—according to veteran observers—the longest in Philippine corporate history.

Canvassing for the votes Ernst & Young’s local partner, SGV & Co., took around seven hours.

"I feel great because we won and that is how it should be," said Oscar Lopez, chairman of First Philippine Holdings Corp., a holding firm of the Lopez family, which owns 33 percent of Meralco.

"It was a diabolical plan of Winston," he told Reuters.

Winston Garcia had sought changes in the Meralco management, citing inefficiency and lack of transparency of the Lopez-controlled leadership, which he blamed for the high power rates in Metro Manila.

SEC order

Armed with a "cease-and-desist order" from the Securities and Exchange Commission, Garcia had sought to stop the counting of proxy votes, accusing the Lopezes of "rigging" the process.

"They have a valid complaint lodged with the SEC, challenging the proxies solicited by certain members," Hubert Guevara, a director of compliance and enforcement at the SEC, told reporters.

The move disrupted the meeting, but after an hour and a half of consultations by the Meralco board, assistant corporate secretary Anthony Rosete announced that the SEC order was "null and void."

Rosete said the SEC order did not carry a docket number to show when it was filed and officially received, had no official seal, and was only signed by an officer in charge and not by the commission sitting en banc.

"This is the last recourse to stop the election," said Oscar Lopez, the family patriarch.

He said Garcia's move was a "low blow" because Garcia even wanted to invalidate the Lopezes' ballots.

Charged atmosphere

True to form, the atmosphere at Meralco Theater was charged with electricity—none of which came from any of the distribution utility's power lines.

Hours before the 9 a.m. meeting, the Meralco compound was already crawling with people, many of them employees who also held shares in the company.

In the hour leading to the start of the meeting, queues of stockholders snaked in front of designated registration tables in the Meralco main building lobby, eager to take part in what could be a battle royal between Garcia and the Meralco management.

Most of the members of the current Meralco board occupied the front row of the center aisle seats, with Lopez and Garcia conspicuously ignoring each other despite their adjacent seats.

An unexpected twist came immediately after the opening ceremonies when the SEC’s Guevara stepped up to one of the microphones and read the order seeking to prevent the counting of the votes of six Meralco shareholders plus those of the proxies solicited in their name.

During the recess that followed the announcement of the SEC order, Garcia told reporters that the Lopez family and its allies in Meralco were "trying to put in manufactured proxies."

"They never sent us the list of the validated proxies and the total number of votes,” he said. Management solicited proxies without regard to certain rules and regulations that should have been followed. They haven't been very transparent."

"We're very apprehensive of what will happen here,” Garcia added. “They're trying to put in illegal proxies. These meetings usually have an attendance of just 70-75 percent [of shareholders], but now we have around 86 percent and an unusually high number of proxies."

Garcia said Meralco management should have relinquished control of the meeting and let the SEC assume jurisdiction over it, including the election for the new board of directors.

Assistant corporate secretary Rosete and the incumbent board members came out of a conference with their lawyers, armed with a statement that obviously shocked both Garcia and Guevara.

Null and void

"After a review of the order, we deem such order null and void," Rosete said, pointing out 10 reasons for this conclusion, including that the order did not have the official seal of the SEC and was signed by only one commissioner, Jesus Martinez.

"Upon verification, we have received information that this order was issued without the benefit of a commission meeting, and that we are not aware of any complaint filed with the Compliance and Enforcement Division of the SEC," Rosete said.

He added that Martinez, although designated officer in charge in the absence of SEC Chairperson Fe Barin, had "no authority to issue this order on his own."

The fact that Martinez was the only signatory to the order, Rosete said, made it violative of due process as Martinez, in effect, "predetermined the validity of the GSIS proxies without proper investigation."

Rosete said neither Meralco nor any of its directors were not given notice of the order, denying them the opportunity to be heard—another violation of due process.

Also, since the matter between the GSIS and the Lopezes of Meralco was an intra-corporate matter, the regular courts and not the SEC had jurisdiction over it, he said.

He also said the GSIS was guilty of forum shopping as it also filed a similar complaint with the Pasay City Regional Trial Court. A GSIS lawyer later said that the complaint was subsequently dropped.

Rosete then declared that Meralco would push through with the election despite the SEC order.

While the SEC noted Meralco's objections to its order, Guevara said the company's lawyers should look more closely at the Securities Regulation Code, particularly at the rules on proxy validation.

"You may proceed with the election, but subject to the decision of the SEC at a later date," he said.

Garcia stood up, grabbed a microphone and called the meeting "bogus," as it was held "in defiance of an SEC order."

At a press conference later, Meralco regulatory management head Monico Jacob said that pushing through with the election was "the prudent thing to do so our stockholders will not be kept in limbo."

Jacob said proceeding with the board election would be a defiance of the SEC order “only if it's a valid, lawful order.”

“But since it isn't valid and lawful, this is about protecting the right of the company and of the stockholders," he said.

Asked if the results of Tuesday's election would end all the controversy over who should be at the helm of Meralco, Jacob said: "We're hoping that people will come to their senses and this will settle things. But we're prepared for any eventuality."

’Sweetheart deals’ and high prices

Garcia has charged Meralco with inefficiency and a lack of transparency that allowed Meralco to forge "sweetheart deals" with Lopez-owned power-generating companies that result in electricity prices he described as the highest in Asia next to Japan.

President Gloria Macapagal-Arroyo's allies in the Senate and the House of Representatives followed suit, threatening to revoke and divide the Meralco franchise covering Metro Manila and nearby areas, which together make up 60 percent of the nation's power consumers.

Some analysts and commentators say Arroyo instigated the GSIS campaign to silence the Lopez-owned radio-television network ABS-CBN Broadcasting Corp. for its hard-hitting stand against government corruption.

Palace officials and Garcia have denied any government involvement in the fight with the Lopezes.

Philippine electricity rates are among the highest in Asia due to expensive deals with private power producers, the country's reliance on imported oil to generate electricity, and widespread illegal tapping.

Meralco says it has to pay high prices for power bought from all generating companies, including state-owned National Power Corp., whose aging plants mean it costs more to produce energy.

The Lopezes, one of the Philippines' most powerful economic dynasties, also control two power plants and the geothermal power producer PNOC Energy Development Corp.

Meralco shares were unchanged at P63 on Tuesday. The company's stock has dropped nearly 29 percent since late April when GSIS started its moves against management.