Meralco questions jurisdiction of DOJ over estafa case

MANILA, Philippines – Lawyers for the Manila Electric Co. (Meralco) yesterday said the complaint of syndicated estafa filed against the utility firm by the consumer group National Association of Electricity Consumers for Reforms (Nasecore) before the Department of Justice is invalid.

However, Meralco lawyer Manuel Lazaro said they would explain their argument in their counter-affidavit, which they will file in the next scheduled hearing on July 25 as he was not allowed by the panel of DOJ prosecutors to expound on the matter.

“We might be raising our legal defenses in public. All we are saying in a nutshell is that there is no valid complaint against the respondents. We have indicated to the panel that the complaint is invalid. But I was not allowed to expound on it,” Lazaro said.

In yesterday’s hearing, Meralco lawyers told the panel of investigating prosecutors led by State Prosecutor Jaime Umpa that they were not prepared to file their counter-affidavit for the hearing as the DOJ’s summons only reached the power firm last Thursday.

In yesterday’s hearing, Lazaro also stressed that Nasecore was not also able to pay the needed legal fees in filing their case before the DOJ.

“We tried to go through the records and we cannot find proof that legal fees were paid (by Nasecore),” Lazaro said.

Another Meralco lawyer, Miguel Damaso, questioned the jurisdiction of the DOJ in hearing the case filed by Nasecore. Damaso, however, did not expound on his argument, saying it will be explained in their counter-affidavit.

The DOJ earlier issued a subpoena on ranking officials of Meralco to answer the allegation of Nasecore that it was involved in P899-million syndicated  estafa.

Last May 29, Nasecore lodged a complaint for syndicated estafa before the DOJ against the summoned Meralco officials for alleged questionable conversion into outright income for its stockholders of at least P889 million in interest earned by the meter deposits of its subscribers.

The case stemmed from a 1995 ruling by the Energy Regulatory Commission (ERC) that the interest rate for the meter and bill deposits for Meralco customers should be 10 percent per annum. Meralco has been contesting this, insisting that it should only be 6 percent.

According to Nasecore, Meralco has been juggling the four-percent difference between the ERC-mandated 10 percent interest and the six percent that it espouses between two accounts – the customer deposit account where it rightfully belongs and a provisions account.

According to Nasecore, Meralco showed that it had no intention of ever refunding its customers the four percent difference when it transferred the same (then amounting to P889 million) to its “interest and other income account.”

Meralco, however, earlier said that the issue has long been settled with the passage of the Magna Carta for Consumers in 2004 and it is just waiting for the guidelines from the ERC on how to refund the deposits.

In a related development, the reversal or transfer of some P889 million of customer deposits as entered into the consolidated financial statement (CFS) of Meralco in 2006 was upheld by the Securities and Exchange Commission in its recently issued ruling.

SEC denied for lack of merit the petition filed by Leonardo Aurelio, who alleged that the SEC’s Office of General Accountant (OGA) erred and committed grave abuse of discretion when it affirmed the latter’s verdict that Meralco’s reversal or transfer of the meter and bill deposits of customers was legally done.

According to SEC, Meralco was able to explain sufficiently the foregoing circumstances under Note 21 in its financial statement for the year in question.

The corporate watchdog said it is also lacking jurisdiction in resolving the case, as such function is legally vested within the scope of authority of the ERC, the regulator in the electric power industry.

Aurelio primarily complained that Meralco grievously committed misstatement in its 2006 financial statement “due to the alleged reversal of the accrued P889 million (on customer deposits) on the basis of applicable laws, orders and issuances of the ERB/ERC,” hence, he prayed that such action be suspended and be ordered amended.

The utility firm first entered the amount on its audited financial statement (AFS) as “Customers’ Deposit” and subsequently transferred as “Interest and Other Income Account” in the 2006 CFS following various rulings and issuances by the ERC.

Aurelio thus asked the Commission to impose sanctions on Meralco and its external auditor SGV for committing such act in its financial statement, as provided for under the Securities Regulation Code.

The SEC’s OGA, however, ruled previously that it cannot indict Meralco for committing any wrongdoing in the reversal or transfer of the amount as it found the disclosures of Meralco on it “extensive.”

SEC’s OGA further noted that under Philippine Accounting Standards 10-Subsequent Events, the updating of information on balance sheets is allowed.

A civic group recently hailed the lower power consumption bill charged by Meralco to its customers last June, saying this shows that there are viable solutions to the issue of high electricity rates in the country.

Speaking at a media forum, the Tanglaw ng Bayan cited the 42.34 centavos per kilowatt-hour reduction in the generation charges for the month of June. 

The lower rates were due to the lower prices obtained by Meralco from the wholesale electricity spot market (WESM) in May as explained by Meralco, the group pointed out. - With Donnabelle Gatdula