By Victor C. Agustin

SGV PLUNGED into a leadership crisis after partners identified with Ernst & Young the other night voted to remove its managing partner, David Balangue, in favor of the second-ranking Cirilo Noel, sources from the country?s largest auditing firm said yesterday.

And as if to confirm the crisis, both Noel and Balangue, who is due to retire next year, yesterday fired off their respective memos to the SGV staff, with both claiming the managing partner?s position.

?The pro-Ernst & Young group organized a signature campaign on Feb. 3 to oust Balangue,? an SGV partner said.

?They released various statements to partners and staff and even clients of SGV that Noel had assumed the top position,? he said.

?However, the coup failed and Balangue remains the managing partner, continuing to resist the Ernst & Young takeover because of potential violations of the Constitution, Philippine Accountancy Act and Anti-Dummy Law.?

One source said the majority of the 84 SGV partners had signed a manifesto calling for a partnership meeting Tuesday night and declaring Balangue?s position initially as vacant.

And as a face-saving measure, Balangue, who assumed the managing partner position in 2004, was allowed to keep the mainly honorific title of chairman, the source said.

Another source said SGV founder Washington Sycip, who is overseas, had been informed of the partners? revolt and had prior knowledge of Tuesday night?s coup.

?The issue is not a struggle for power per se, but it strikes at the heart of the partnership as regard SGV?s international affiliations,? said a former SGV chairman who declined to go into specifics.

The former SGV chairman was apparently referring to the so-called ?Internal Agreement? that Ernst & Young, SGV?s de-facto principal, had asked SGV to commit to.

?The rumor is that Ernst & Young has been forcibly implementing global structural changes that are believed to follow the Asean Framework Agreement on Mutual Recognition Arrangements,? former SGV partner Alfredo Non said.

He said that was ?in spite of objections from concerned local partners who believe that the resulting Internal Agreement between EY and SGV is in violation of the Constitution and other laws.?

Non said he had been informed of the structural changes proposed by Ernst & Young, which would give it total control of SGV.

?The proposal was apparently discussed among the partners and later embodied in an internal agreement that was opposed by some partners,? Non said.

?These partners consulted their lawyers, who confirmed that, if implemented, [the structural changes] could violate Philippine laws.?