Meralco appeals SC ruling on P28-B refund

The Lopez-owned Manila Electric Co. (Meralco) asked the Supreme Court yesterday to reverse its Nov. 15 ruling that ordered the power firm to pay back P28 billion it overcharged its customers since 1994.

Meralco lawyers said the country’s largest power distributor should be allowed to include in its operating expenses the income taxes it paid.

They contended the scheme has been the company practice since 1986, contrary to the position made by the Energy Regulatory Board (ERB), now the Energy Regulatory Commission.

Meralco lawyers led by former SC justice Camilo Quiason insisted US laws should have been applied in this particular case since the country adopted American jurisprudence after becoming a colony in 1922.

"It is basic that when we borrow a law from another jurisdiction, we also borrow all the jurisprudence interpreting said law. The decisions of the US-SC automatically became part of the legal system of the Philippines," Quiason stated in his 47-page appeal.

Quiason said the decision of the ERB gave "false hopes to millions of people by replacing it with a popular decision."

He said he "cannot understand the logic" of the SC’s distinction between US and Philippine laws when it brushed aside the arguments that US jurisprudence on business practices should be applied in the case.

In granting the appeal made by the ERB, the SC third division held Meralco should pay back its Metro Manila consumers the 0.167 centavos per kilowatt-hour it overcharged since 1994.

The SC said the payment of Meralco’s income taxes should not be borne by the consumers saying the business practice was unjust.

The high court stressed that allowing Meralco to use such a scheme would set a dangerous precedent.

Meralco, however, explained their return on rate base "means net income after tax."

The Lopez-owned firm insisted on including income taxes it paid on its operating expenses.

Quiason reasoned out the income tax should be treated "expenses and charges" since they are "separate items of deduction from gross revenue."

"The statement of ERB should be read in connection with the phrase expenses and charges, not income tax," he said.

Meralco also compared the increases of other government-regulated utility firms, saying the rates of these companies have actually surpassed what the power firm has been collecting from its customers.

Meralco officials said that since 1990, phone rates have gone up by as much as 240 percent and public transport by 230 percent.

The power distributor also said fuel prices surged by as much as 265 percent, LPG and diesel by 224 and 200 percent, respectively.

In the same contention, Meralco urged the high court to uphold the February 1999 ruling of the Court of Appeals in their favor.

Meralco warned anew that if the P28 billion refund ruling becomes final, the firm would suffer liquidity problems in paying out their P31.74 billion loans, as well as the P10 billion cut to their cash position on the government order for them to reduce the collection of purchased power adjustment (PPA) last April.

Meralco said they are already "on the verge of bankruptcy."

In a statement, they said "prospects of an economic recovery may be thwarted by the failure of Meralco to provide the quality of electric service needed to power the industries and commercial establishments it serves."

They also warned of "longer daily rotating (power) outages which may last for weeks" adding that a refund would "throw the country into financial turmoil, hence, the inevitable collapse of the economy."