The BENECO Surrender

I’ll continue my expository series on the popular myths surrounding the BENECO-NEA controversy.

The second most popular myth I want to address is this: NEA cannot do anything with BENECO (especially “privatizing” it) without going through the member-consumers. The member consumer have the final say.

I hate to say this but that is NOT TRUE—or to be precise, it is no longer true.

It was true before BENECO and its MCO’s surrendered.

Had BENECO and its MCO’s not compromised last January 12, 2023, had they NOT allowed NEA to exercise its “step-in rights” over BENECO, had they NOT accepted the implied stipulation that BENECO was an “ailing” electric cooperative (despite all KNOWN indicia to the contrary), then the ultimate fate and destiny of BENECO would still rest in the hands and collective determination of its DULY-ELECTED Board of Directors.

That’s because Section 24, par. “a” of PD 269 is VERY SPECIFIC: “The business of a cooperative shall be managed by a board of not less than five directors, each of whom shall be a member of the cooperative… The by-laws shall prescribe the number of directors, their qualifications other than those prescribed in this Decree, the manner of holding meetings of the board and of electing successors to directors who shall resign, die or otherwise be incapable of acting. The by-laws may also provide for the removal of directors from office and for the election of their successors.”

So it was a colossal blunder for BENECO and the MCO’s (or at least the noisy self-promoting faction among them) to give up so easily on the Magnificent Seven directors and to strike a critical submissive “alliance” with NEA Administrator Almeda—just because NEA “levelled up” its assault against the Board from suspension to termination.

In hindsight, without the pacifying intervention of Mayor Benjie Magalong, that January 12, 2023 “soft takeover” of South Drive wouldn’t have succeeded. Almeda could not pull it off by himself.

Just the same, even while paying due respect to Magalong, BENECO and the MCO’s could still have drawn the line and not allowed NEA to kick out the Board if only they had realized that protecting the Magnificent Seven is really what mattered most if they wanted to retain control of BENECO’s fate.

Why? Because the law at that point was STILL on their side, as I just quoted.

Even if one, some or all of BENECO’s regular directors are removed—let’s say by NEA—the law does not say NEA can name their replacements.

Such removal only brings the situation under the operation of the phrase “or otherwise be incapable of acting” (they’ve been suspended or terminated so how can they still “act?”) as provided within the SAME provision.

The removal—or many say the “massacre”—of the regular board of directors Esteban Somngi, Jeffred Acop, Mike Wayway Maspil, Peter Busaing, Jonathan Obar, Josephine Tuling and Robert Valentin—created a vacancy in the positions they each occupied. The law SPECIFICALLY says if those vacancies must be filled, it must be done according to the procedure outlined in the BENECO By-laws.

It is axiomatic in statutory construction (the discipline of “construing statutes”) that if one law’s provision is sufficient and clear enough to resolve an issue, there should be no resort to other extrinsic devices to discover what it MIGHT still mean OTHERWISE.

In other words, you cannot go beyond the four corners of PD 269 just to fill up those vacancies because PD 269 already provides that mechanism.

But extending beyond the intrinsic boundaries of PD 269 is exactly what NEA Administrator Almeda did—even though he does not expressly acknowledge it.

He pulled out Section 7 of RA 10531, a law that is extrinsic to (outside of) PD 269. It was not originally part of PD 269 as, in fact, it AMENDS it by adding a “Section 4-B.”

Ni hindi na nga maisingit as “Section 5” because there is already an EXISTING Section 5, 6, 7, etc. in PD 269. So it had to inserted in the intertices of Section 4 by making it “Section 4-B.”

This is the body of provisions that define NEA’s “step-in rights” over BENECO. Almeda wouldn’t say that NEA is invoking “Section 4-B” in any official statement. But all the actions NEA has taken unmistakably indicate that he most likely read that portion of Section 19, par. “f” especially, Item No. 2 under Roman numeral “ii,” which allows NEA to “appoint or assign third persons to the Board of the EC until NEA decides that the election of a new board of directors to manage the EC is necessary. The NEA may create a management team for the purpose.”

What purpose?

The purpose of holding district elections to form a NEW REGULAR board of directors to fill the vacancies—the very thing that the BENECO By-laws already prescribe its OWN procedures for.

The crucial difference is that the By-laws use the word “SHALL” which is mandatory, while Section 4-B uses the permissive word “MAY” which is optional. Between the two, the By-laws IS the more compelling directive.

Note that the management team contemplated by Section 4-B is NOT the same as the Task Force that NEA formed ostensibly to “normalize” BENECO’s operations.

I searched in vain, but I could not even find the words “Task Force” anywhere in PD 269, RA 10531 or its detailed IRR. Or even the term “Interim Board” for that matter.

But all “p-r” materials released by NEA through its new golden girl unmistakably refer to the “Interim Board” and “Task Force BENECO” as interchangeably one and the same. That’s why people are confused, because that is NOT in the law.

What is in the law is that an electric cooperative SHALL TAKE CARE OF ITS OWN BUSINESS IF IT IS HEALTHY.

The only time the By-laws, which for all intents and purposes is the very “Constitution” of BENECO, can be set aside is if there is a definitive finding that BENECO is “ailing.”

And the term “ailing” is NOT subjective, discretionary or arbitrary. Section 20 of RA 10531 lists SIX (6) specific conditions that must occur before NEA can declare BENECO as “ailing” and I have paraphrased their long descriptions as follows: (1) “negative SALN” meaning its liabilities are greater than its assets, (2) incurring arrears to its power suppliers in excess of 90 days, (3) pattern of failure to provide efficient service, i.e. ‘omnibus mismanagement,’ (4) inability to continue business, (5) failing to meet operational standards set by NEA, and (6) inability to sustain participation in the Wholesale Electricity Spot Market or “WESM.”

My question is WHEN—if at all—did NEA conduct its evaluation of BENECO against these criteria that enabled it to conclude that BENECO is ailing?

And granting that it came to that conclusion anytime—WHENEVER that was—in WHAT instrument, report, resolution or formal statement is that verdict contained?

This is crucial because THAT document is what a lawyer can bring to court to QUESTION IT. You cannot attack, question, let alone litigate against an UNWRITTEN INFORMAL CONCLUSION.

Back to my point about how crucial the January Surrender was.

The most significant impact of ACCEPTING THE “AILING STATUS” is not just that we lost the Magnificent Seven, even if we were able to “keep” the demoted Mel S. Licoben. (That is almost an insignificant gain given that NEA is only too willing to keep him as a lameduck AGM anyway, to buy them time to figure out how to load the dice to put someone like Philreca’s Janeene Colingan in his place, for example.)

Never mind that. The scarier scenario is Section 21, par. “c” which enumerates the smorgasbord of options that NEA can choose from, on what to do with an “ailing” EC.

Accordingly, it says NEA may “enter into partnership with a qualified private sector investor under any of the following frameworks: joint venture, investment management contract, management contract, operations and maintenance contract, special equipment and materials lease agreement, CONCESSION, MERGER AND CONSOLIDATION, and other variants deemed applicable to the EC.

Of course your reflex reaction might be, “So long as the Members allow it, so NEA has to consult with the Members first and obtain authority from the Members.”

You wish.

The LAST paragraph in that provision EXPRESSLY provides: “For this purpose, the NEA is hereby constituted as the AGENT of the concerned EC.”

That is a direct commission from the State itself, no less. It enables NEA to bypass the membership and it wouldn’t have kicked into play had BENECO and the MCO’s NOT surrendered last January and given up on the Magnificent Seven who, it turns out, were really the LAST LINE OF DEFENSE for BENECO. It wasn’t even MSL.

Don’t get me wrong—the man is an amazing general manager. But a general manager does NOT make policy, he just implements them. In fact, that’s even the main reason he stayed on the job while the Magnificent Seven were axed. His defense is that he was only following the directives of the Board who were the ones making all the bold decisions that infuriated NEA–even if the public, being starved of correct information, were awarding bravery points to everyone but the Magnificent Seven.

So there was nothing harmless, strategic or cute about the January Surrender, no matter what anyone does to sugarcoat the episode. It was a disastrous capitulation, there is no “waiting for the right timing to move”—whatever that means—to undo or reverse its effect.

So is this whole thing about defending BENECO–or “powering on” and “fighting ladta!” as some guilt-stricken people love to say–a totally lost cause?

Not yet, but that’s another post.*

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