The Depth of Corruption at the Appeals Court

The Meralco case is not about public interest; it is all about conflicting business interests. And it is being decided not on the basis of the strength of arguments but by the power of money and influence. This is the depth by which our system of governance, and of rendering justice have been corrupted.

Vol. VIII, no. 30, August 31- September 6, 2008

First came the seeming whistle blower, Justice Jose Sabio Jr. who claimed that he was offered P10 million ($217,746 at an exchange rate of $1=P45.925) by someone close to the Lopezes to step aside and let Justice Bienvenido Reyes preside over the division that would decide on the intra-corporate dispute between the Lopez family and GSIS (Government Service Insurance System) Chair Winston Garcia in the battle for control over the Manila Electric Company (Meralco). But suspicions shifted to purported whistle blower Sabio after businessman Francis de Borja appeared saying that Sabio told him he was offered a Supreme Court seat and an undisclosed amount of money to rule in favor of GSIS. Sabio, according to Borja, said that it would take P50 million ($1,088,731) for him to resist pressures from the Arroyo government.

Who is telling the truth?

It did not help any that at the hearings of the investigation panel formed by the Supreme Court (SC), which was comprised by retired justices, the honorable justices of the Court of Appeals (CA) started bickering and accusing each other of violating judicial processes to favor one of the contending parties. What was revealing during the hearings was that the bickering justices gave inconsistent statements; and worse, there were numerous violations of judicial processes and ethics putting into question the integrity of the second highest court of the land. Clearly, partisan interests were at work and the (dis)honorable appellate court justices were acting in behalf of opposing parties.

Then came the admission of Justice Sabio that his brother Presidential Commission on Good Government (PCGG) Chair Camilo Sabio called him up suggesting that he rule in favor of GSIS. But that was not all, Camilo Sabio, during his testimony, revealed that he decided to call his brother after Jesus Santos, lawyer of Jose Miguel Arroyo and GSIS trustee, told him that the division handling the Meralco case, of which his brother was a member, was about to issue a Temporary Restraining Order (TRO) in favor of Meralco.

The SC investigation panel was rightfully appalled at the obvious leakage of what was transpiring inside the walls of the appellate court. But what was more appalling was the PCGG chair who supposedly does not have anything to do with the workings and decisions of the Court of Appeals suddenly calling his brother lobbying for a decision favorable to GSIS. (Much like a Commission on Elections chair getting involved in the approval of a government contract that has got nothing to do with elections!) And he found nothing wrong with it? The investigation panel hit the nail in the head when they said that Sabio was blurring the line between what was ethical and not, between what was right and what was wrong.

Worse, he admitted that he did so because he was prompted by a GSIS trustee who just happens to be, or so they claim, the lawyer of the husband of the president. Santos was quick to claim that Jose Miguel Arroyo has got nothing to do with his act of trying to influence the decision of the CA.

The root of the controversy

The whole controversy and intra-corporate battle for control over Meralco began when Pres. Gloria Macapagal-Arroyo unleashed her trusted enforcer Winston Garcia of the GSIS to wrest control of the electric distribution company purportedly to stop Meralco from overcharging its customers. PCGG Chair Sabio was using the same argument to justify his actions.

If the Arroyo government is really serious in bringing down electricity rates and preventing Meralco from overcharging, it should have reviewed and repealed the Electric Power Industry Reform Act, which deregulated and privatized the power industry thereby enabling power generating and distributing companies to set rates without seeking the approval of the government. It also enabled the Lopez family to purchase power generating companies, giving it the opportunity to control rates further and to profit twice: from generation and distribution charges. Meralco’s being the largest power utility company providing power to 4.5 million people in 25 cities and 86 municipalities including Metro Manila, its vertically-integrated position – owning both power generation and distribution companies – and its profitability make it a favorite target of dictators and their greedy business partners.

Meralco posted a net income of P2.48 billion ($54,001,088) from January to June 2008 compared to P2.34 billion ($50,952,640) in the same period in 2007. Its distribution revenues alone amounted to P12.85 billion ($279,804,028) while its total revenues reached P49.1 billion ($1,069,134,458). These do not yet include the profits of its power generation companies. Some quarters suspect – and not without basis – that the Arroyo government is interested in wresting Meralco from the Lopez family to hand it over to a favorite business partner, which is also into power distribution and generation, albeit not even half as big as Meralco.

The major issues involved

The controversy surrounding the handling of the Court of Appeals of the Meralco-GSIS case has turned out to be not merely a simple case of bribery nor has it put into question the integrity of only one or two justices; it is all about the independence of the second highest court of the land and the competence, or rather integrity, of its justices.

It is also not merely an intra-corporate battle, it is a tug of war between an economically powerful and monopolistic family, the Lopezes, and the Arroyo government, which allowed monopolies to exist, in the first place, because of its policies of deregulation and privatization. The only problem for the Arroyo government is that the Lopez family is more identified with the opposition than part of its retinue of political supporters and business partners.

The Meralco case is not about public interest; it is all about conflicting business interests. And it is being decided not on the basis of the strength of arguments but by the power of money and influence. This is the depth by which our system of governance, and of rendering justice have been corrupted. And as we have mentioned in an earlier analysis, this case manifests the failure of justice and the failure of governance under the Arroyo government, where the distinction between what is right and what is wrong has been obfuscated.(

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