BIZ BUZZ: A possible BSP reappointment
At a time when slaying inflation appears to be a herculean task globally, President Marcos’ choice of well-respected economist and two-term Monetary Board (MB) member Felipe Medalla as Bangko Sentral ng Pilipinas (BSP) Governor (to fill the void when Benjamin Diokno was appointed finance secretary) last year was largely welcomed by stakeholders.
But is Medalla only a benchwarmer? His term is expiring this July and everyone is waiting with bated breath for who will be appointed BSP chief for the next six years.
Even assuming that Mr. Marcos wants to reappoint Medalla for a second term as BSP chief, some people are concerned about the legal “kinks.” After all, the BSP charter specifically states that a member of the MB can’t be appointed for more than two terms. Since the BSP charter also states that the BSP governor is a member of the MB, this is assumed to apply to the governor as well.
But someone who knows all the pertinent laws and court rulings affecting the BSP begs to disagree.
Juan de Zuñiga Jr.—a former MB member (2014 to 2020), longtime BSP general counsel (2000 to 2013), BSP deputy governor (2010 to 2013) and 1970 bar examination fifth placer—opines that Medalla could be reappointed for another term as BSP governor beyond his second term as MB member.
The legal expert cited the April 24, 2012 Supreme Court ruling on Dennis Funa vs Commission on Audit (COA) chair, Reynaldo Villar. In that case, Funa challenged the constitutionality of Villar’s appointment as COA chair during the term of Gloria Macapagal-Arroyo (GMA). Villar was then on his fourth year as COA member and he would have exceeded the fixed seven-year term.
In its ruling on this case, the Supreme Court clarified that “reappointment” meant “movement to one and the same office (such as commissioner to commissioner or chair to chair).
“On the other hand, an appointment involving a movement to a different position or office (commissioner to chair) would constitute a new appointment and, hence, not, in the strict legal sense, a reappointment barred under the Constitution,” the ruling stated.
At that time, Villar decided to step down anyway to avoid any further controversy, but the high court still resolved the case to establish jurisprudence.
“The Supreme Court held in the Villar case that the position of COA commissioner and COA chair are different from each other, and thus the appointment of Villar as COA chair by GMA did not violate the seven-year term limit under the Constitution,” Zuñiga said.
“This precedent can be applied to BSP. The positions of MB member and of governor are different from each other. The MB member has no executive role but functions only collegially with the other MB members. The governor, aside from being an MB member, exercises also chief executive functions and is the official representative and signatory of the BSP,” he added.
By analogy, he stressed that this would apply to both Medalla and Peter Favila who had already been twice appointed to the MB. Their previous terms as MB members are “not counted,” he said.
A win for minority shareholders
It took a while, but the Securities and Exchange Commission (SEC) finally delivered a victory for minority shareholders in the dispute in publicly listed tuna cannery firm Alliance Select Foods International Inc. (ASFII).
In particular, the corporate regulator showed that it will not allow anyone to violate the Securities Regulation Code with impunity and get away with it.
In a ruling released early this year, the SEC en banc reversed and set aside the earlier decision of its Markets Securities Regulation Department, and declared void the corporate actions that resulted in Strongoaks Inc. taking control of 55.32 percent of Alliance Select at the expense of minority shareholders, including several Singaporean investors, whose shares were subsequently diluted.
Those transactions drew international attention as foreign businessmen were worried that money placed in local companies could be easily diluted through various schemes.
Strongoak, a local company associated with Alliance Select founders, managed to take control of the firm through the private placement and stock rights offer without conducting a tender offer.
This prompted a group of Singaporean minority investors led by Hedy S.C. Yap-Chua, Harvest All Investment Limited, Victory Fund Limited and BondEast Private Limited to file a complaint with the SEC in October 2018 and again on November 2020.
The SEC’s Markets Securities Regulation Department (MSRD), however, issued a 2022 decision dismissing the case for alleged forum shopping and prescription of action without looking into the substantive portion of the complaint. But the minority shareholders persevered in their search for justice and filed an appeal.
Fortunately for them, the SEC en banc took a closer look at the case this time and found that the MSRD had erred. The corporate regulator led by its chair, Emilio Aquino, granted the appeal made by Chua and other minority shareholders, and voided the ASFII shares acquired by Strongoak Inc. under the 2014 private placement and 2015 stock rights offer.
It is a victory for the minority shareholders who were eased out by the Alliance Select/Strongoak management.
But the seven-year quest isn’t over yet. The aggrieved parties want justice to be served immediately, saying that under the rules, the decision rendered by the SEC en banc is immediately executory. But that hasn’t happened yet.
Will the SEC issue a writ of execution soon and let justice finally be served for minority shareholders? Abangan!