SEC summons Meralco officials

PHILIPPINE NEWS SERVICE — THE Securities and Exchange Commission yesterday ordered the top executives of Manila Electric Co. to explain why they should not be cited for contempt for defying an order to exclude the proxies in the election of its new board Tuesday that were being questioned.

The commission issued its order to Meralco chairman and chief executive Manuel Lopez, president and chief operating officer Jesus Francisco, and acting corporate secretary Anthony Rosete.

The commission ordered the three Meralco officials to submit their response by noon Friday, before a 2 p.m. hearing scheduled on the same day.

“Your non-appearance at the said meeting will constitute a waiver of the right to be heard on the matter,’’ the commission said.

The show-cause order was signed by officer-in-charge Commissioner Jose Enrique Martinez.

Meralco’s chief of regulatory management, Monico Jacob, said the power company would abide by the commission’s order and present its side on Friday.

The commission last Tuesday issued a cease-and-desist order to exclude proxies in favor of the Lopez group, after the Government Service Insurance System, a 25-percent stakeholder, questioned their validity.

But Meralco’s board declared the commission order ‘‘null and void” at a contentious stockholders meeting Tuesday and proceeded to elect a new board.

Rosete said the order was not valid because the order was undated, was signed by only one commissioner, and did not bear the commission’s official seal.

But commission secretary Gerard Lukban said the order was valid, and that most of the commissioners had agreed to issue it. He added that the commission did not have an official seal, and that the lack of a date was ‘‘an oversight.’’

The Philippine Stock Exchange yesterday imposed a one-hour trading halt on Meralco’s shares following the results of the company’s shareholders’ meeting last Tuesday. The order was lifted at 10 a.m.

The Palace yesterday said it supported any legal moves that GSIS president and general manager Winston Garcia might take against Meralco, but added it would not take sides in the management struggle within the largest power distributor.

At his regular weekly press briefing, Executive Secretary Eduardo Ermita said the Palace was hoping the meetings that economic managers were holding with both parties would defuse the controversy and lower power rates.

Garcia yesterday asked the commission to void the board election results.

“Garcia can very well take care of himself as representative of the GSIS in the Meralco board,” Ermita said. “We will support what he does within the law.”

He added: “The stockholders’ meeting is a corporate matter, and Meralco just went on to exercise its right on this. As I stated earlier, they just have to answer to the SEC on the legal aspect. Malacañang does not have to lift a finger on that matter.”

In a press conference yesterday, Garcia said that without the questioned proxies, the GSIS would have taken five board seats, to be occupied by himself, Bernardino Abes, Daisy Arce, Jeremy Parulan and Eusebio Tanco.

The Lopez bloc would only get four board seats, to be occupied by Manuel Lopez, Felipe Alonso, Jesus Francisco and Christian Monsod.

But counting the proxies gave the Lopez group five seats and deprived the government bloc of one, Garcia said.

He urged the SEC to confirm “the true winners” in Tuesday’s board election.

The new 2008 to 2009 board is composed of Lopez, Alfonso, Francisco, Abes, Arce, Garcia, Monsod, Parulan and Cesar Virata. Retired Chief Justice Artemio Panganiban and Vicente Panlilio were elected as independent directors.

Lopez, Alfonso, Francisco, Monsod and Virata were nominated by the management. Abes and Garcia were nominated by the GSIS, while Arce and Parulan were nominated by Philippine First Insurance Co. Inc.

Jacob said the disputed proxy votes in favor of the Lopez Group were counted.

The Lopez Group owns 33.47 percent of Meralco through First Philippine Holdings Corp., while government-owned financial institutions hold 32.32 percent. Other stockholders own 31.10 percent, Meralco’s Employees Stock Purchase Plan, 1.01 percent, and Meralco Pension Fund 2.10 percent.

In the House, administration allies attacked the Lopez family for defying the SEC order.

Also yesterday, Meralco said it would lose P250 million month if the Energy Regulatory Commission approved the government petition that it absorb the lifeline subsidy for poor consumers.

Francisco said it would be unfair for the government to make Meralco absorb that subsidy while other distributors and electric cooperatives did not have to.

“Last year, our return on rate base was 6.9 percent, which means we are not earning a reasonable return,” said Ivanna dela Pena, Meralco vice president for utility economics.