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Timeline: GSIS-Meralco controversy

Philippine Daily Inquirer
First Posted 02:46:00 07/31/2008

Filed Under: Judiciary (system of justice), Graft & Corruption, Electricity Production & Distribution

MAY 1, 2008?The Government Service Insurance System accuses Manila Electric Co. of turning a deaf ear to its repeated requests for access to corporate documents despite the GSIS? holding four seats in the 11-member Meralco board.

At the same time, GSIS president and general manager Winston Garcia dismisses speculations that the pension fund has plans to wrest control of the power utility from the Lopez family.

MAY 2?President Gloria Macapagal-Arroyo, announcing an effort to bring down high power rates in Luzon, asks business leaders to join the government in what could be a ?tough legal fight? with Meralco before state energy regulators.

Christian Monsod, Meralco director and senior consultant to the chair, issues a statement saying the claim that the power utility has been denying access to corporate documents is untrue. He says Meralco has always been careful to comply with the law regarding the right of a director or stockholder to examine its records.

MAY 3?Press Secretary Ignacio Bunye says the Palace is backing Garcia?s demand for full transparency and accountability in Meralco operations.

MAY 6?Sergio Apostol, Ms Arroyo?s chief legal counsel, says the Lopez family can lose control of Meralco in a boardroom battle but this should not be interpreted as a government takeover.

Meralco vice president for corporate communications Elpi Cuna says the issue of Meralco ownership and management is for its around 80,000 shareholders to decide.

MAY 8?Stressing that he is voicing his own sentiment and not that of his family, Oscar M. Lopez, chair of First Philippine Holdings Corp., declares he is ?sick and tired? of the rates issue and that the government ?can do everything they want,? even buy out the Lopezes.

MAY 11?Garcia says he plans not only to buy out the Lopez family and other shareholders in Meralco but also to break up its concession to promote efficiency and transparency.

He says he will cut up the P75-billion power distribution company the same way the Manila Waterworks and Sewerage System franchise area was divided after it was privatized in 1997.

But Cuna says he doubts Meralco?s 50-year franchise can be subdivided because it is ?a total package.?

MAY 12?At the Joint Congressional Power Commission hearing on power rates, Meralco president Jesus Francisco admits that 72 million kilowatt hours of electricity used by the firm for its corporate use have been passed on to its customers at a cost of P427.5 million annually.

MAY 16?Meralco chair and CEO Manuel Lopez says he personally has no intention of selling out of the utility.

MAY 20?Ms Arroyo directs her economic managers headed by representatives of the National Economic and Development Authority to recommend ?how to push forward? a resolution of the controversy between Meralco and GSIS and measures to bring down power costs.
The directive is issued during a four-hour Cabinet meeting in Panglao, Bohol, where Meralco executives and Garcia present their respective sides.

Garcia accuses the Lopezes of engaging in ?dirty tricks? to foil his bid to gain control of Meralco.

He says the Lopez-controlled management has continued to solicit proxies, even after the deadline for getting votes lapsed on May 18, in order to cut the number of representatives of government financial institutions in the Meralco board from four to three.

MAY 25?Garcia expresses pessimism that there will be management change in Meralco during its May 27 stockholders? meeting.

MAY 26?GSIS officials concede that Garcia?s attempt to wrest control of Meralco has fizzled out, with the Federation of Philippine Industries declaring that it prefers Meralco to remain a private enterprise.

GSIS calls a press briefing to announce that it has uncovered an alleged plan by Meralco employees to heckle and harass Garcia at the stockholders? meeting.

MAY 27, 2008?Armed with a ?cease-and-desist order? from the Securities and Exchange Commission (SEC), Garcia seeks to stop the counting of proxy votes during the stockholders? meeting at the Meralco Theater. He accuses the Lopezes of ?rigging? the process.

The move disrupts the meeting, but after an hour-and-a-half of consultations by the Meralco board members, assistant corporate secretary Anthony Rosete announces that the SEC order is ?null and void.? (The order does not carry a docket number to show when it was filed and officially received, has no official seal, and is signed only by an officer in charge and not by the commission en banc.)

After nearly 14 hours, Meralco retains its five seats and the government its four. The two others are independent directors Artemio Panganiban and Vicente Panlilio.

Aside from Manuel Lopez, the Meralco directors elected are Jesus Francisco, Felipe Alfonso, Christian Monsod and Cesar Virata.

The government board members elected aside from Garcia are Bernardino Abes, Daisy Arce and Jeremy Parulan.

MAY 30?The Lopez group succeeds in getting the Court of Appeals (CA) to issue an order restraining the SEC from acting on a plea by GSIS to overturn the election results.

JULY 24?The court voids the SEC order stopping Meralco from including proxy votes in the stockholders? meeting and election.

The court?s 8th Division chaired by Associate Justice Bienvenido Reyes unanimously upholds Meralco?s argument that the SEC has no jurisdiction over the issue.

?In a letter to Presiding Justice Conrado Vasquez Jr., Justice Myrna Dimaranan Vidal, a member of the Special 9th Division, questions the decision of the Reyes-led division. She asks: How can the 8th Division issue an order when it is the 9th that has been hearing the complaint of alleged irregularities in the Meralco election?

Vidal adds that it is also the 9th Division that issued the temporary restraining order on the SEC order to Meralco on May 30.

JULY 28?Justice Jose Sabio comes out to say something ?stinks? in the court ruling involving Meralco.

JULY 29?Oscar Lopez says the Arroyo administration is moving to take over Meralco because of the negative publicity that it is getting from the Lopez-owned ABS-CBN Broadcasting Corp. He says that with what has been happening, it was as though the Marcos dictatorship had not ended.

Lopez also accuses Garcia of trying to orchestrate a takeover of Meralco in a ?reverse privatization.?

?GSIS chief legal counsel Estrella Elamparo says GSIS wants the Supreme Court to step into the dispute in the appellate court among justices claiming jurisdiction over the case. Eliza Victoria, Inquirer Research

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