No management change at Meralco

MANILA, Philippines – The bid of Government Service Insurance System (GSIS) president and general manager Winston Garcia to oust the Lopezes from the management of the Manila Electric Co. (Meralco) fizzled out yesterday after the power firm ignored an order from the Securities and Exchange Commission (SEC) to stop the stockholders’ meeting.

Meralco’s annual stockholders’ meeting started at 9 a.m.  After a quorum was declared by Meralco corporate secretary Anthony Rosete, a cease-desist-order (CDO) was served by Hubert Guevera, SEC compliance and enforcement department director.

The Meralco board temporarily stopped the meeting and reviewed the order reportedly signed by SEC Commissioner Jesus Enrique Martinez.

After a few hours of deliberations with lawyers, Rosete, speaking for the board, announced that they had decided to go on with the meeting as they have deemed the order void.

“After review of such order and upon advise of counsel, we deem such order to be null and void for, among others, the following reason: the Order does not have a docket number; the Order is undated; the Order does not bear the official seal of the SEC; the Order is signed by only one Commissioner – Commissioner Jesus Martinez,” Rosete said.

“Upon verification, we have received information that this order was issued without the benefit of a commission meeting and that we are not aware of any complaint filed with the compliance and enforcement division of the SEC.

“The authority of Commissioner Jesus Martinez as OIC is on a day-to-day basis, and has no authority to issue this order on his own in the absence of the SEC Chairman –who is out of the country – and other Commissioners.”

In the order, the SEC has restrained Rosete from recognizing the validity of the proxies in favor of Meralco chairman and chief executive officer Manuel Lopez, Meralco president and chief operating officer Jesus Francisco, director Felipe Alfonso, director Christian Monsod, First Philippine Holdings Corp. president Elpidio Ibañez, and First Holdings chief finance officer Giles Puno.

Guevarra told Meralco officials their action to continue the meeting is in defiance of the SEC rules.

“The SEC issued the order today after a valid challenge was lodged by the GSIS with the SEC, challenging the validity of the proxies,” he said.

The results of the Meralco election will be subject to a review by the SEC, Guevarra said.

Among those nominated for the 11-man Meralco Board were Lopez, Francisco, Alfonso, Monsod, Peter Garrucho, Jr., Cesar E. A. Virata, and Generoso Tulagan for the management bloc; Garcia, Bernardino Abes, Daisy Arce, Eusebio Tanco, and Jeremy Parulan for the government bloc; and Artemio Panganiban and Vicente Panlilio as independent directors.

The result of the canvassing of votes was not yet available as of press time.

Rosete said the Order was issued in violation of due process, because Martinez has pre-determined the validity of GSIS proxies without proper investigation.

“(Further) this matter is an intra-corporate issue, a jurisdiction of which based on Section 5.2 of the Securities Regulation Code has been transferred to the regular courts.

“GSIS is guilty of forum shopping, having previously initiated a similar case with Branch 118 of the Pasay City Regional Trial Court docketed as Civil Case No. R-ESY-08-05777-C4.”

Garcia vowed to bring to court the Lopez group for defying the SEC order.

“Today is the beginning of the end of Mr. Manolo L. Lopez,” Garcia said.

“I see the light at the end of the tunnel because I firmly believe whatever Meralco has accomplished this morning will not last long. Truth and justice is on our side.”

Garcia told reporters after the meeting he is confident that he will succeed in changing the management of Meralco.

“And once we do that, we assure you that power rates will go down,” he said.

“At least to the level the rest of the country is paying right now.”

‘Bogus’ meeting

Garcia decried yesterday as “bogus” the Meralco stockholders’ meeting since it was held in defiance of an SEC order.

“I ask this bogus meeting be stopped and let the SEC supervise this meeting,” he said.

“This meeting cannot be decided by a mob,” he added as pro-Lopez people in the gallery jeered and heckled him.

“The defiance (by Meralco) of the SEC order to supervise the event is what made this meeting illegal.”

Garcia said he would file a complaint with the SEC to void the stockholders’ meeting and the election of the 11-member Meralco board.

He would move for the SEC to cite responsible Meralco officials for contempt, he added.

Aside from the complaint at the SEC, Garcia also vowed to file charges of large-scale estafa and fraud against the Lopezes and their allies in the Meralco board, who “obviously conspired to make a mockery of the stockholders’ meeting.”

Enrile dares SEC to discipline Meralco

Sen. Juan Ponce-Enrile challenged the SEC yesterday to discipline Meralco.

“That shows the inutility of the SEC,” he said.

 “I think if they cannot make their orders stick, better to abolish them. What for should they exist if they cannot make their orders stick?”

 Enrile said it would be up to the SEC to “show its teeth” as Meralco defied its order preventing proxies from being voted on the board.

“I can just assume that SEC is inutile and Meralco is powerful. It has all the best lawyers, best accountants and the best supporters,” he said.

Senate Minority Aquilino Pimentel Jr. said it was possible that Meralco could be summoned and imposed a penalty for defying the SEC order.

 “That meeting will be good only until it is stopped by the SEC again,” he said.

Meralco must answer – Palace

Malacañang warned Meralco yesterday it was answerable to the government for defying an order from the SEC.

“I suppose the (Meralco) board is answerable to the SEC if there is a legitimate cease-and-desist order,” Executive Secretary Eduardo Ermita said.

“Let them be answerable to the SEC. They have to comply. These are regulatory bodies, it is within their mandate to do such things. While it is a separate body but part of government, it doesn’t mean there are instructions coming from Malacañang.”

Ermita said the GSIS is just acting on the interest of its members, being a major stockholder in Meralco.

The Cabinet study group tasked to review the claims of Meralco and GSIS would factor in the results of the stockholders’ meeting, he added.

Meralco must pay over P100 B in taxes

A government informant accused Meralco yesterday of tax evasion to the tune of more than P100 billion.

Danilo Lihay Lihay, a registered informant of the Bureau of Internal Revenue, has asked the Supreme Court to exempt him from paying a filing fee when he filed the tax evasion case against Meralco before the Court of Tax Appeals.   

In a letter to Chief Justice Reynato Puno dated March 26, 2007,  Lihay Lihay said he couldn’t pursue the case in the CTA for the collection of his reward because of the huge filing fee.

“This is very discouraging,” he said.

“ I have already spent money, time and efforts and risked my life just to help the government in its economic recovery programs for national survival under executive order issued by President Aquino only to be required later to pay for the hundred million pesos docket fees just to get the  reward accorded by law,” he said.

Lihay Lihay was supposed to file last week a suit before the CTA in Quezon City to compel the BIR to collect more than P100 billion in taxes due from Meralco and First Gas Power Corporation.

But he deferred his filing after he was asked to pay a filing fee of more than P400 million. — With Iris Gonzales, Eliza Ososrio, Marvin Sy, Paolo Romero, Aurea Calica, Perseus Echeminada, Shiela Crisostomo, Edree Estaura