Makati trial court denies injunction bid vs SEC rule on independent directors’ term limit

The Makati Regional Trial Court (RTC) Branch 138 has junked the petition to stop the implementation of a memorandum circular issued by the Securities and Exchange Commission (SEC), which imposes a strict term limit on independent directors of publicly listed companies.

In a decision promulgated on May 11, the RTC denied the plea for a writ of preliminary injunction filed by GMA Network, Inc. over the Commission’s implementation of SEC Memorandum Circular No. 7, Series of 2026 (MC 7).

MC 7, which took effect on February 1, mandates that an independent director may serve a maximum cumulative term of nine years in the same company, reckoned from 2012. After serving the maximum cumulative term limit, independent directors are now barred from being an independent director of the same company, they can however, be elected as a regular director.

The prayer for a writ of preliminary injunction was incorporated into the petition for certiorari filed by GMA on March 26, which sought to nullify and set aside MC 7. The petition also included an urgent prayer for the issuance of a TRO, which the RTC has likewise denied in an earlier order.

In denying the prayer for injunction, the RTC ruled that GMA failed to establish that it will suffer a grave and irreparable injury should MC 7 be implemented.

The RTC held that the non-retention of specific individuals on a board of directors is “merely an administrative inconvenience and a corporate hardship, not an irreparable legal injury that justified the transcendent remedy of halting a vital government regulation.”

“[The SEC] cannot allow the Philippine capital market to remain globally uncompetitive simply because a single corporation finds the vital task of board renewal as administratively inconvenient,” the RTC ruled, noting that many publicly listed companies have already complied with MC 7.

"The State's paramount interest in protecting the investing public and fostering robust economic growth far outweighs the administrative inconvenience claimed by [GMA]," it added.
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The ruling further affirms that MC 7 is in accordance with the Commission’s express power to determine term limits for independent directors, ensuring a consistent standard across the country's regulatory landscape.