CA upholds Pichay’s dismissal as LWUA chief

MANILA, Philippines - The Court of Appeals (CA) has upheld the dismissal of former Surigao del Sur congressman Prospero Pichay as chairman of the Local Water Utilities Administration (LWU) over the agency’s allegedly unlawful investment of P780 million in Express Savings Bank Inc. (ESBI).

In a 15-page decision released Friday, the CA’s fourth division affirmed the 2011 resolution of the Office of the Ombudsman that found Pichay and two others guilty of grave misconduct and dismissed Pichay’s petition questioning the order.

“There is substantial evidence to prove that the acts complained of are inspired by an intention to violate the law, or constitute flagrant disregard of established rules. Indeed, the elements particular to grave misconduct were adequately proven,” read the ruling penned by Associate Justice Amelita Tolentino.

Associate Justices Magangal de Leon and Rodil Zalameda concurred in this ruling.

The CA agreed with the anti-graft office that Pichay failed to comply with the mandatory requirements for the acquisition of ESBI, a bank under rehabilitation by the Bangko Sentral ng Pilipinas (BSP).

It noted that the BSP had written Pichay on April 17, 2009 and July 30, 2009 reminding him of the required prior Monetary Board approval on the ESBI transaction.

The BSP, in its letter dated July 10, 2009 ordered LWUA to submit documentary requirements in connection with the acquisition of ESBI’s voting equity, including proof of capital infusion in the bank.

Also, in its Sept. 10, 2009 letter, the BSP informed LWUA that ESBI’s articles of incorporation should be amended to accommodate LWUA’s additional P400 million capital subscription in ESBI, subject to BSP’s validation.

“It appears that the LWUA, chaired by the petitioner, despite the directives from the BSP failed to comply with the mandatory requirements,” the CA held.

The appellate court also did not give credence to Pichay’s claim that he sought the legal opinion of the Office of the Government Corporate Counsel and the approval of the Office of the President to dispel any impropriety on his part.

The CA observed that there was no approval from the Office of the President through then Executive Secretary Eduardo Ermita for the grant of authority to LWUA to acquire equity investment in ESBI.

The case stemmed from the administrative complaints filed with the Ombudsman by several LWUA officials against Pichay, then LWUA chair of the board of trustees; Wilfredo Feleo, LWUA acting deputy administrator for investment and financial services; and lawyer Arnaldo Espinas, LWUA corporate legal officer and board secretary.

The petitioners insisted that the investment was disadvantageous to the government as no income had been realized by LWUA from the investment and the P400 million capital subscription was not supported by any memorandum of agreement or certificate of investment, which would have protected LWUA’s interest.