Arroyo allies in House to file class suit vs Meralco
By Norman Bordadora, Michael Lim Ubac
Philippine Daily Inquirer
First Posted 01:54:00 05/15/2008
President Gloria Macapagal-Arroyo’s allies in Congress announced Wednesday that they would initiate a multimillion-peso class suit against the Metro Manila power retailer Manila Electric Co. (Meralco) for charging customers electricity that Meralco was using worth nearly P500 million annually.
“There’s no legal basis for Meralco to pass on to the consumers the cost of their own use of electricity,” Rep. Elpidio Barzaga, of Cavite province, told reporters. He said he expected other congressmen and civic groups to join his suit against the Lopez-owned power distributor.
Manila Rep. Amado Bagatsing, a member of the administration party Kabalikat ng Malayang Pilipino like Barzaga, said he was joining the suit on behalf of some four million Meralco customers.
“This will be a very big refund if ever,” Bagatsing said. “Why would they charge you and me for electricity their company used?”
Presidential Legal Counsel Sergio Apostol said Meralco’s admission that it was passing on to consumers its own electric bills was enough ground for legal action against Meralco.
“Somebody will have to file the case,” Apostol told reporters. “Meralco already lost in two cases before the Supreme Court,” he said.
At a hearing of the Joint Congressional Power Commission (Powercom) on Monday, executives of Meralco revealed that the company was charging its customers 72 million kilowatt-hours of electricity it was using annually at P5.70 per kilowatt-hour, or a total of P427.5 million.
Losses due to inefficiency
In addition, Meralco also was passing on to consumers “systems losses” arising from pilferage and technical problems in delivery of electricity from generators to end users, according to testimony at the Powercom hearing.
Meralco executives said this practice was authorized by the Anti-Pilferage Act of 2004.
Apostol said, “It’s basically management—if you have a big systems loss, then in other words, you are inefficient.”
He said Malacañang could not go against Meralco now because a pending bill to amend the Electric Power Industry Reform Act.
“We have to wait for the recommendation of both houses of Congress,” Apostol said. “Otherwise, what’s the use of conducting the joint inquiry?”
Executive Secretary Eduardo Ermita, when asked during his regular press briefing Wednesday about the propriety of filing a class suit against Meralco, said, “Why not?”
“That is a course of action and from the legal point of view, maybe, some people or some groups of lawyers might just gather themselves and prepare a class suit on behalf of the consumers,” Ermita said.
He said Malacañang could not sue Meralco pending the outcome of the congressional hearings and the resolution of the petition in the Energy Regulatory Commission (ERC) to lower power rates.
“We go by the rule of law. We have certain ... legal procedures. Yes, let the ax fall where it should,” he said, hinting of “further actions” from government such as cancellation of license of Meralco.
Arroyo not keen on takeover
Ermita agreed with observations that the practice of Meralco to pass on to consumers the systems losses was repulsive, adding that Ms Arroyo had asked the ERC, through the Department of Trade and Industry, to seek lower power rates.
Apostol reiterated that the government was not interested in taking over Meralco. “Taking over is a corporate matter. Malacañang will not intervene,” he said.
Winston Garcia, president of the state pension fund Government Service Insurance System, a major Meralco stockholder, has announced that he is seeking a change in the Meralco management and raised the possibility of breaking up its franchise for its failure to lower electricity rates, one of the highest in the world.
Garcia also has threatened to bring fraud charges against Meralco in connection with a Supreme Court ruling in November 2002 ordering Meralco to reimburse its customers around P30 billion worth of income tax charges passed on to them from November 1994 to April 2003.
In February 2006, the court also declared null and void an increase of P0.1327 per kilowatt-hour in the generation charge that the ERC had authorized Meralco to make in 2004, because it did not notify its customers about the rate increase. It said Meralco had committed a “grave abuse of discretion.”
On Monday, Sen. Miriam Defensor-Santiago said that Meralco’s franchise could be revoked if it could be proven that it had abused its consumers by charging exorbitant fees.
Critics said the administration’s moves against Meralco were prompted by the strongly anti-Arroyo stance taken by television and radio network ABS-CBN Broadcasting Corp., a unit of the Lopez group that runs Meralco. With reports from Dona Z. Pazzibugan, Jerome Aning and Vincent Cabreza; edited by INQUIRER.net
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