MANILA -- Four commissioners of the Energy Regulatory Commission (ERC) have filed a petition before the Court of Appeals (CA) in bid to reverse the order of the Office of the Ombudsman to suspend them for simple neglect of duty for tolerating Manila Electric Company’s (Meralco) misuse of bill deposits by allowing its commingling with the capital or operation cost of the latter.
In a 37-page petition for review, Alfredo S. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia M. Asirit and Geronimo D. Sta. Ana asked the CA to nullify the three-month suspension order by Ombudsman dated May 18 as well as the criminal complaint against them.
They also urged the appellate court to issue a temporary restraining order to halt the implementation of the said order while the case is pending in court.
The suspension stemmed from the syndicated estafa complaint filed by consumer group, the National Association of Electricity Consumers for Reforms, Inc. (Nasecore), against the four ERC commissioners in connection with the alleged unauthorized use by Meralco of the bill deposits of customers, and the unjust fixing of its interest rates and its non-crediting in favor of the consumers.
They argued that by suspending them, the Ombudsman has arrogated upon itself the rule-making authority of the ERC “by making impositions on the rates of interest on bill deposit,” when such expertise rests with them under the Electric Power Industry Reform Act of 2001 (EPIRA).
They insisted that the anti-graft office’s power to conduct administrative investigations does not include the power to interfere in “matters reserved by law to administrative agencies” such as the ERC.
The petitioners explained that the ERC, as an administrative agency, has the inherent power to issue rules and regulations to implement the law which it is tasked to enforce, adding that “it is impracticable, if not impossible, for the legislature to anticipate and provide for the multifarious and complex situations that may be encountered in enforcing the law.”
“Thus, the ERC has issued various rules pertaining to the myriad aspects of the electric power industry. Among those rules promulgated are rules on bill deposit such as those involved in the instant petition.
“When the Ombudsman held in the assailed Decision that petitioners ‘ignore their mandate in promoting, safeguarding and protecting the interest of the public consumers by regulating, monitoring or checking MERALCO’s utilization of the bill deposit,’ and ‘failed to correct the disparity of the low interest rate assigned to the bill deposit and to promulgate and/or adopt measures to advance the interest of the consumers by providing a reasonable return on the latter’s deposits,’ she (Ombudsman Conchita Carpio-Morales) has, in effect, interfered in the rule-making authority of the petitioners because she is pre-empting the ERC or the petitioners for that matter in crafting the rules governing bill deposit,” the petition explained.
The petitioners stressed that the Ombudsman's suspension order will result in the cessation of functions of the ERC as a collegial and quasi-judicial regulatory body envisioned under EPIRA.
In dismissing the criminal charge, the Ombudsman held that the bill deposit is not held in trust because it is in the nature of a loan between Meralco and its consumers. The petitioners then argued, “it follows that the distribution utility can use the said bill deposit, can commingle with its other funds or monies.”
“This is so because in a contract of loan, there is a transfer of ownership. If the Ombudsman is of the view that a loan was created between MERALCO and its consumers on the bill deposit, how can it then conclude that petitioners ‘tolerated’ its ‘misuse’ when her characterization thereof betrays any act of misuse?
“Indeed, as the debtor of the money used for bill deposit, MERALCO is allowed to use it or commingle it with its other funds because when ownership over a thing is transferred, the owner has all the rights to enjoy or dispose it,” the petition stated.
The petitioners insisted that no evidence was presented to prove misuse of bill deposit.
In a 14-page resolution, Graft Investigation and Prosecution Officer III Cherry Bautista-Bolo recommended the suspension of the four ERC Commissioners for three months and it was approved by Overall Deputy Ombudsman Melchor Arthur Carandang.
While the Ombudsman found the respondents not liable for estafa or misappropriation of funds relative to the management of bill deposits, it held that the four ERC commissioners failed to strictly implement the rules defining the nature of bill deposits as “mere guarantee in payment of bills,” which must be returned upon termination of the distribution utilities (DUs) service.
It added that the respondents also failed to perform their mandate to issue rules or policies such as the creation of a separate escrow account to avoid the commingling of bill deposits with the capital or operational expenses of Meralco or any DU for that matter.
“Meralco treated the bill deposits as part of its capital without the benefit of a reasonable return of interest to accrue to consumers – a practice which respondents appeared to have acquiesced in,” the Ombudsman resolution said.
“In fact, without the letter of Nasecore, as represented by complainant herein, respondents will continue to ignore their mandate in promoting , safeguarding and protecting the interest of the public consumers by regulating, monitoring or checking Meralco’s utilization of the bill deposits, at the very least,” the resolution.
Nasecore claimed that based on its projection, the total consumers’ deposits now amount to PHP61.36 billion from 2006 to 2016 but Meralco accounted for the balance of only PHP26.5 billion in its financial statement.
Thus, the group said the consumers have been robbed a total of PHP34.84 billion or more, considering that the amount will still increase after due accounting by the ERC and Commission on Audit (COA) to determine the actual amount accrued and compounded interest earned by the bill deposits.
Although the respondents argued that the utilization of the bill deposits for DUs or Meralco’s operation is an acceptable practice, the Ombudsman pointed out that it does not mean that such practice is legal or advantageous to the public.
The Ombudsman also noted that the respondents were not part of the ERC commissioners nor they were signatories to the ERC Resolution No. 28 in 2010, which led to the reduction of the interest of bill deposits from 10 percent to 0.25 percent as of 2016 when the bill deposits were subject to the interest rates of the Land Bank of the Philippines Peso Savings Account Interest.
But, the resolution pointed out that the despite their knowledge of the low interest rates assigned to the bill of deposits, the four ERC commissioners failed to correct the disparity and adopt measures to advance the interest of the consumers by providing a reasonable return on the latter’s deposits
“Respondents have all the authority to issue resolutions to increase the rate of interest of the bill deposits back to the 10 percent or to such amount just and equitable under the circumstances, but failed to do so,” the Ombudsman held.
The four commissioners were previously meted a one-year suspension by the Ombudsman after they were found guilty of conduct prejudicial to the best interest of the service, aggravated by simple misconduct and simple neglect of duty, for allegedly exempting Meralco and other firms from the competitive selection process (CSP), which mandates that all power supply agreements (PSAs) be covered by public bidding. (PNA)
