DOJ files estafa raps vs Meralco

MANILA, Philippines – The Department of Justice (DOJ) yesterday filed syndicated estafa charges against executives of the Manila Electric Co. (Meralco) for allegedly misappropriating funds collected from its customers.

The Lopez-controlled Meralco meanwhile announced that it will implement the refund on meter deposits starting November.

The schedule is earlier than the order of the Energy Regulatory Commission (ERC) for the power utility firm to carry out the refund process by January next year.

“We will expedite the refund. We will implement it in November than the January schedule prescribed by the ERC,” Meralco vice president for corporate communications Elpi Cuna said.

Charged before the Pasig City Regional Trial Court were Meralco chairman Manuel Lopez, Felipe Alfonso, Jesus Francisco, Arthur Defensor Jr., Gregory Domingo, Octavio Victor Espiritu, Christian Monsod;

Federico Puno, Washington Sycip, Emilio Vicens, Cesar Virata, Daniel Tagaza, Rafael Andrada, Helen de Guzman, Antonio Valera, Manolo Fernando, and Francisco Viray.

In its 31-page resolution, the DOJ, led by Regional State Prosecutor Jaime Umpa, acted on the complaint filed by the National Association of Electricity Consumers (Nasecore), a consumers group which had accused Meralco of allegedly converting as its income, interest earned by the meter and bill deposits of its customers in the amount of P889 million.

The DOJ recommended no bail for the accused.

“This panel finds that the evidence on record are sufficient to support a finding of probable cause for the commission of estafa and that herein respondents as responsible corporate officers – being members of the board of directors and/ or ranking felonious acts complained of, resulting in the misappropriation of funds which had been solicited/collected by Meralco from members of the general public desiring to engage its services as a distribution utility.”

“Otherwise stated, there exists on record sufficient facts and circumstances as would excite belief in a reasonable mind that respondents had indeed committed the crime for which they should be prosecuted,” the DOJ’s resolution said.

Meralco had acknowledged 10 percent interest on deposits submitted by its subscribers pursuant to Energy Regulatory Board (ERB) Resolution No. 95-21.

“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 DOJ said.

In its complaint to the DOJ last May 29, Nasecore said Meralco’s conversion was illegal and constituted large-scale estafa because the money is in the nature of a fund that should have been held in trust by Meralco for its customers as it must be refunded to them.

Nasecore said the case stemmed from a 1995 ruling by the ERC that the interest rate for the meter and bill deposits for Meralco customers should be 10 percent per annum.

Meralco has contested the 10 percent interest, insisting that it should only be 6 percent.

Nasecore said 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 to a provisions account.

It added that 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.”

Nasecore said Meralco should have kept the money in trust since the company has yet to refund its customers.

‘Long been settled’

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

In 2003, the Supreme Court ordered Meralco to refund P30 billion of its income tax, which it passed on to consumers from 1994 to 2002, while in 2004, the court also disallowed a provisional increase Meralco charged its customers without public hearing.

As of end of December 2007, the total principal amount of meter deposit collected by the company amounted to P1.5 billion, while interest stood at P1.3 billion.

The company charged only half or 50 percent of the meter cost from its customers. The latest figure of meter cost of the company is P820.

This means Meralco only collected around P410 meter deposit for its residential customers, even lower in the previous years.

The amount of meter for non-residential customers varies. The most expensive costs between P8,000 and P10,000 per meter.

Cuna, on the other hand, said they are surprised with the reports that the DOJ has recommended the filing of syndicated estafa charges against Meralco officials for allegedly misappropriating customer deposits on electric meters amounting to P889 million.

“We have not seen such recommendation, but we will surely explore all possible legal actions to act on this. We will study all our legal options,” Cuna said.

The Meralco official said the company should also be given “due process.”

It would be recalled that the Securities and Exchange Commission (SEC) had dismissed a complaint filed against the giant utility for allegedly misstating in its books the interests it had collected from meter deposits.

The dismissal by the SEC ruling en banc affirmed the earlier dismissal issued by the SEC’s Office of the General Accountant (OGA) by its resolution dated last Jan. 28.

In a decision, the SEC denied a petition filed by Leonardo Aurelio appealing its decision to throw away a previous complaint that he filed against Meralco and its officials.

In dismissing the petitioner’s claims against Meralco, however, the SEC said Meralco has extensively disclosed the background and basis for the reversal of the P889 million.

Meralco said the P889 million represents the excess of the 10-percent interests on the deposits that should have only been 6 percent based on a series of issuances by the ERC.

The SEC added that it was not within its jurisdiction to question whether the regulator’s decision is justified, as the ERC is the agency vested with the authority to review and approve any changes in the terms of service of utilities.

“The (SEC) could not have ruled on the conflicting interpretations by complainant-appellant and respondent-appellee Meralco of ERC’s issuances without violating the doctrine of primary jurisdiction,” it said.

Aurelio filed a complaint against Meralco for alleged misstatement of the company’s 2006 financial statements, which reversed the accrued interests of P889 million that the company made from meter deposits of non-residential customers and bill deposits.

Meralco had transferred the amount from “Customer’s Deposit” account to “Interests and Other Income” account.

Because of this apparent switching, Aurelio called on the SEC to stop the trading of Meralco shares at the bourse, amend its 2006 financial statements, and impose sanctions on the company and its officers. – With Donnabelle Gatdula