MANILA, Philippines -- The Court of Appeals has voided the cease and desist order issued by the Securities and Exchange Commission against the election of board members by the Manila Electric Co. (Meralco).

In its decision, the appellate court said the SEC has no jurisdiction over the case that was filed before the commission by the Government Service Insurance System against Meralco and that it should be the regional trial court (RTC) that should rule over matters involving elections and contests of corporations.

The Court of Appeals also asked the Supreme Court to sanction GSIS lawyers Estrella Elamparo-Tayag, Marcial Pimentel Jr., and Enrique Pandan III for allegedly violating the lawyers’ oath and displacing the Office of the Government Corporate Counsel (OGCC).

The appellate court also said that the OGCC should act as counsel for GSIS, being a government-owned and -controlled corporation.

The Meralco board was elected despite GSIS’ insistence on the validation of all the 4,483 proxies before voting could be allowed.

The appellate court agreed with Meralco’s position that Section 5.2 of Republic Act 8799 designated the RTC as "commercial courts," removing from SEC jurisdiction over cases involving intra-corporate disputes and election contests, among others.

"SEC had lost its jurisdiction to take cognizance of "election contests" and "intra-corporate controversies" which necessarily include "validation of proxies," "validity of elections, and "proclamation of winners," the decision said.

It also said the GSIS has engaged in forum shopping because it filed a petition with the SEC despite a similar case pending before the Pasay City RTC.

The appeals court said the GSIS cannot separate the action seeking to stop Antonio Rosete from acting as corporate secretary which was filed with the RTC and the SEC case with regards to the validation of proxy votes.

"GSIS is not allowed by the rules to split one single cause of action of election contests into many causes of action of involving parts of the process of election…This practice of splitting causes of action engenders multiplicity of actions and is considered procedurally unsound and obnoxious to the orderly administration of justice," the appeals court said.

“Let copies of this decision be transmitted to the Office of the Chief Justice for sanctions by the Supreme Court of GSIS lawyers for violation of the Revised Rules of Court and for defying public policy in deliberately displacing the OGCC from its duty as the exclusive lawyer of GSIS,” the court said.