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Saturday, August 23, 2008
Meralco execs face 'syndicated estafa'
MANILA -- The Department of Justice (DOJ) on Friday filed charges of syndicated estafa against the corporate owners of (Meralco) for misappropriating electricity consumers' deposits amounting to P889 million.
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The charges were filed before the Pasig Regional Trial Court (RTC) after Manila Electric Company (Meralco) officials failed to controvert the allegations of complainant National Association of Electricity Consumers (Nasecore) by filing a counter-affidavit during preliminary investigation.
Syndicated estafa is a non-bailable offense punishable under Article 315 (1) (b) of the Revised Penal Code and/or in relation to Presidential Decree 1689.
In a resolution penned by Regional State Prosecutor Jaime Umpa, the DOJ panel of prosecutors found probable cause to indict officials of the publicly listed utility firm, namely: Chairman Manuel Lopez and the 2006 board of directors Arthur Defensor Jr., Gregory Domingo, Octavio Victor Espiritu, Christian Monsod, Federico Puno, Washington Sycip, Emilio Vicens, Francisco Viray and Cesar Virata.
Also impleaded were Daniel Tagaza, executive vice president and chief financial officer of Meralco; Rafael Andrada, first vice president and treasurer; Helen de Guzman, vice president and corporate auditor and compliance officer; Antonio Valera, vice president and assistant comptroller; and Manolo Fernando, senior assistant vice president and assistant treasurer.
Prosecutors said Meralco is allegedly converting as its income the interest earned by the meter and bill deposits of its subscribers in the amount of P889 million.
"There is clear evidence that the act of appropriation and/or conversion as indicated above had been committed, and that the same had been decided upon, approved and implemented with full knowledge and intent on the part of respondents who are members of the board and ranking officers of Meralco in the instant case," the panel stated.
The DOJ said there is strong and sufficient evidence to support a finding of probable cause for the commission of estafa, and that respondents as responsible corporate officers, being members of the board of directors and/or ranking officials, committed "felonious acts," resulting in the misappropriation of funds which had been solicited/collected by Meralco from consumers desiring to engage its services as a distribution utility.
Court records showed that the consumers had delivered to Meralco amounts denominated as "deposits" for meters and bills, and the same earned corresponding interests at the rates prescribed by orders, regulations and relevant issuances promulgated by concerned government regulatory agencies.
Meralco acknowledged 10 percent interest on deposits submitted by its subscribers pursuant to Energy Regulatory Board (ERB) Resolution 95-21.
In anticipation of a favorable approval of its request for reduction of the said rate to six-percent per year, Meralco provisionally divided the 10 percent into six percent as "customer deposits" account and four percent as operating reserves account.
Its request was denied by the Energy Regulatory Commission (ERC) in 2004, thus the power firm reclassified the four-percent portion by transferring the same to its "customer deposits" account, which clearly indicated that the amounts are being maintained and held for purposes of complying with its obligations as mandated under ERB Resolution 95-21.
The ERC resolution and the Electric Power Industry Reform Act of 2001 (Epira) mandate Meralco to return the principal and fruits of the money submitted by its subscribers for meter and bill deposits.
Instead of maintaining the money under its "customer deposits" account, Meralco again reclassified on December 31, 2006 the four percent portion of the interest, which accrued from September 1995 to May 2003 by transferring the said amount to its interest and other income.
The complaint was filed by Nasecore president Petronilo Ilagan, who insisted the conversion was illegal because the money was in the nature of a fund that should have been held in trust by Meralco for its consumers because it must be paid back to them.
Before 2004, Nasecore noted that Meralco required every applicant for electric power connection to make a deposit for the meter used by Meralco in computing power consumption. Without the require meter deposit, Meralco will not sell electricity to the applicant.
Meralco also requires every applicant to pay a bill deposit to guarantee payment of bills equivalent to their estimated monthly billing. Without it, Meralco will also deny selling electricity to the applicant.
In the event that a subscriber is no longer interested to acquire electricity from Meralco, it is legally obligated to return to the subscriber the amount deposited for the said meter, plus interest. The power firm is also obliged to return the bill deposit also with interest.
Nasecore said Meralco only allotted six percent payment per consumer instead of 10 percent while the remaining four percent has been reclassified to "interest and other incomes."
Meanwhile, Meralco clarified that their unwillingness to have their books be examined by the Commission on Audit (COA) is not because they are hiding something but merely because of legal considerations.
"We stated earlier that we welcome the COA audit because we are not hiding anything, and that in itself is a manifestation of our desire to be transparent. On hindsight, however, transparency should not be the only thing to consider," said Meralco vice president for corporate communication Elpi Cuna.
"Upon consultation with our lawyers, we have been advised that allowing a COA audit of the company would run counter to what the Constitution says. The Constitution states that the COA only has the authority to audit the government and government-owned and controlled corporations," he added.
Cuna said "it appears to us that the request of COA to audit Meralco is not premised on the decision of the Supreme Court in the case of Meralco vs Genaro Lualhati, which directed the ERC to request COA to conduct an audit on the books and records of Meralco. The fact is COA's move to audit Meralco (now) is based on the request of Nasecore, a private entity. This is quite alarming since if this is allowed, it would create a dangerous precedent since anybody can now go to COA and demand to audit the books of private sectors."
At the same time, Cuna is surprised by the decision of COA to audit their books when in its April 26, 2004 letter to the ERC, COA clearly said: "We regret to inform you that this Office (COA) could not extend such assistance (the conduct of an audit of Meralco) as this is not among the mandated functions of this commission."
He maintained: "We are ready and willing to allow COA to conduct an audit on our books and accounts pursuant to the SC decision on Meralco's unbundling case. However, the company believes that any such audit must be made only for the purpose of ensuring that the rates being charged by the company strictly comply with those approved by the ERC in its unbundling decision." (ECV/MSN/Sunnex)For more Philippine news, visit Sun.Star General Santos. (August 23, 2008 issue)
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