CA halts Cebu RTC from liquidating VECO holding firm

The Court of Appeals (CA) has stopped the Cebu Regional Trial Court from implementing an earlier order appointing a management committee to take over Hijos de F. Escano Inc.

This was in response to the petition filed by Vivant Corp., a publicly-listed firm majority-owned by the Garcia family, opposing the RTC order dated Jan. 8, 2004.

The temporary restraining order, which is effective for 60 days, also enjoins the return of Visayan Electric Co. (VECO) shares from Vivant to Hijos and the partial liquidation of Hijos. VECO is 30 percent owned by Aboitiz Equity Ventures Inc. (AEVI).

The Appellate Court’s Fifth Division has set the hearing on petitioners’ application for the issuance of a writ of preliminary injunction on Feb. 18.

Hijos is a privately-owned holding company whose assets include controlling shareholdings in VECO.

In its extreme urgent motion, Vivant alleged that the Aproniano Taypin, presiding judge of the Cebu RTC, acted with grave abuse of discretion amounting to lack or in excess of jurisdiction by issuing certain orders in favor of the Aboitizes.

The partial liquidation of Hijos calls for the surrender by AEV of all its shares in Hijos (which constitute 46.66 percent of the total Hijos shareholders).

In exchange for those shares to be surrendered and cancelled, AEV is to receive 1.66 million VECO shares and a distribution of 46.66 percent of Hijos‚ cash and liquid assets after payment of debts. The share capital of Hijos is to be reduced to the extent necessary.

The Aboitizes claimed that the share swap transaction signed by Hijos with Vivant on April 29, 2003 resulted in a misappropriation of shares of minority owners and 14,000 shareholders amounting to a total of more than P250 million.

AEV said the transaction was approved and implemented by the Garcia group despite objections of the minority shareholders.

The questioned transaction involved the swap of 2,086,385 shares of Veco owned by Hijos in exchange for Vivant shares.

AEV sought P613 million in damages and a return of the transferred properties so that Hijos could be dissolved and its assets distributed proportionately among its shareholders.