Lopez Holdings


A statement from the Lopez family
Who owns Meralco? A number of misinformed statements have been made by various sources ranging from a paid ad in this newspaper on June 3, 2002, remarks by the daughter of the late dictator Ferdinand Marcos to forces led by a former coup leader and agit-prop spokesmen from radical leftist groups, about how the Lopez family regained their position at Meralco.

We are appalled at the brazen attempt to mislead the Filipino people with outright falsehoods and in the process cast aspersions not just on our good name but on other people as well, such as former President Corazon C. Aquino. In the interest of fairness, allow us to set the record straight based on verifiable documents in the public domain.

Falsehood no. 1 - Mrs. Aquino (then) returned Meralco to its previous owners without making them pay despite the fact that both Meralco's generation and distribution facilities were earlier paid them by the government for about P1.2 billion.

First of all, Mrs. Aquino was not involved in the reacquisition by First Philippine Holdings Corporation (FPHC), previously known as Meralco Securities Corporation (MSC) of some of its Meralco shares. Before the Marcos dictatorship, MSC owned 100% of Meralco.

The fact is, in 1978, Meralco Foundation Inc (which is not a government entity but a private foundation organized in 1973) acquired all the Meralco shares then owned by MSC on an installment basis for a total price of P872,754,365. Meralco Foundation made payments up to 1985 when it defaulted. In accordance with the Share Purchase Agreement between FPHC and MFI, the default caused unpaid shares to revert to FPHC to the extent of the unpaid balance.

Accordingly, Meralco Foundation returned 13.9 million shares (including stock dividends) equivalent to 32.41% ownership of Meralco to FPHC in 1988. The basis of the reversion was reviewed by then Secretary of Justice Sedfrey Ordonez and former Chief Justice Claudio Teehankee who separately gave opinions that it was fair and just that the unpaid Meralco shares should be reconveyed to FPHC. A second review was conducted by the heads of government financial institutions after which, the negotiations were reopened with regards to certain terms of the agreements.

In its decision dated September 30, 1991, the Supreme Court affirmed the reversion of the 13.9 million shares to FPHC. As a result of that decision, and because FPHC subsequently sold or bought shares in the market, FPHC now directly and indirectly owns 20% of Meralco compared to the 100% it owned before martial law.

All in all, it took five long years, from 1986 to 1991, for FPHC to finally regain possession of its Meralco shares. Furthermore, the only shares FPHC took back are the shares Meralco Foundation failed to pay for.

On the second point about Meralco's generation and distribution facilities having been earlier paid by the government for about P1.2 billion, the facts are:

The transaction involved was the acquisition by Napocor during martial law of Meralco's generation facilities only. FPHC has never reclaimed those generation facilities. They are, today, still owned by Napocor.

Falsehood no. 2. Prior to its return to its previous owners, Meralco was owned by the government which set up the Meralco Foundation from public funds and since Mrs. Corazon Aquino did not make them pay, logically, Meralco should belong to the Filipino people today.

The government never owned Meralco, before or during martial law. Meralco was purchased by Meralco Foundation, a private entity set up without public money and, in fact, without any capitalization at all. It derived its income from the dividends of Meralco and used those dividends to pay FPHC for those shares. In other words ginisa nila ang FPHC sa sariling mantika. What happened to FPHC (and the Lopez family) is similar to a village bully buying your house and paying you in installment out of the rental from the house.

The second point is, Meralco Foundation was not set up with government funds. In fact, Meralco Foundation was set up with no funds, as previously explained above.

Thirdly, on the allegation that "Mrs. Aquino did not make them pay", Mrs. Aquino couldn't have made FPHC pay because it was, as explained above, merely reacquiring shares that were not paid for by Meralco Foundation. Besides, the entire process of returning the shares was thoroughly reviewed as described above. The only role of Mrs. Aquino as President was to make sure that the transaction was done in the most transparent manner and that's why the shares were sequestered by the PCGG, making it necessary to go to the Supreme Court for a final review of the transaction and the release of the shares.

For the record, Meralco Foundation was the same entity that acquired the Lopez family's 27.5% ownership of FPHC in 1974 for an unbelievable downpayment of P10,000 pesos out of a purchase price of P150,000,000. Any money due to the Lopezes, after paying the banks, was on a "pay when able" basis. Does that look like a transaction that any sane and savvy businessman like the late Eugenio Lopez Sr. would do out of his own free will? The letters being cited leading to the transaction that made it seem like a voluntary sale initiated by Mr. Lopez Sr. were letters dictated by Marcos emissaries. Given the martial law situation and the fact that the son of Lopez Sr., Eugenio "Geny" Lopez Jr. was at the time rotting in jail, can there be any doubt that it is a transaction done under duress?

Thus, on August 23, 1990, the above-mentioned transaction between Benpres and MFI was partially rescinded in arbitration proceedings under R.A. 876 presided by retired Supreme Court Justice J.B.L. Reyes. This resulted in 10,645,047 FPHC shares being returned to the Lopez family.

Don't change history

It is unfortunate that in the course of the highly emotional debates about the PPA, those who were involved in implementing the draconian martial law measures of Mr. Marcos have chosen to once again make fresh a dark and traumatic time in our family's history. But in so doing, we find it totally disgusting that an attempt is also being made to rewrite history with falsehoods.

Suffice it to say that the Lopez family has done nothing we should be ashamed for with regard to Meralco. When our father bought Meralco from its American owners, it was out of a sense of nationalism and an expression of his belief that not only should Filipinos take control of their destiny, but also that they are capable of doing so. The buyout of Meralco from its American owners was a milestone in our nation's economic history, the largest financial deal at the time. It should be a source of pride for every Filipino.

We are also proud to point out that during the time when Meralco controlled generation, transmission and distribution of electricity in its franchise area, the cost of electricity was the second lowest in the region as verified by a United Press International survey. Service efficiency also marked our watch. Recurrent blackouts were not in the vocabulary of Metro Manilans until the martial law government of Marcos took control of the generating plants and ran Napocor to the ground.

Who owns Meralco?

Who owns Meralco? Meralco is a publicly-held corporation. It is not owned by the Lopez family alone. We are but one of the many groups and individuals who have placed their savings and investible funds in Meralco. Customers and employees of Meralco have also been given the chance to own Meralco shares through an affordable stock purchase plan. Through FPHC, we account for 20% ownership of Meralco. Government owns 22% and occupies 3 board seats. There are about 70,000 individuals, corporations and partnerships registered as Meralco stockholders, including about 6,000 Meralco employees. It was obvious in the fully packed auditorium during the last stockholders meeting that the owners of Meralco represent a broad segment of our society.

Finally, we want to take this opportunity to reiterate our public service philosophy to always strive to give our people the best service at the lowest possible price. Reductions in PPA charges are now being implemented by government with payments to be postponed to later years. But there are more permanent solutions. For instance, the PPA can be reduced by about P1.00/kwh if Napocor dispatches the contracted volumes from Meralco's more efficient IPPs and if Meralco customers are finally rid of the onerous burden of subsidizing other Napocor customers in Visayas, Mindanao and non-Meralco areas of Luzon through Napocor rates that impose a charge of P0.40/kwh on Meralco consumers for electricity they do not consume. Meralco has also refused to pay Napocor accumulated penalties/charges of P5.7 billion to be passed on to consumers because Meralco believes that the penalties/charges are onerous.

We hope these facts help clear the air of the falsehoods being peddled lately. We want to reassure the public that as part of the legacy of our father, the late Eugenio Lopez Sr., we are always at the service of the Filipino. Oscar M. Lopez Manuel M. Lopez Presentacion L. Psinakis Eugenio Lopez III For Eugenio Lopez Jr.

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Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009
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