The Arroyo-Lopez War

PerryScope
by Perry Diaz

The Arroyo-Lopez War

Finally, after almost 80 years of a family feud between two wealthy clans, it seems that the final battle has started. On one side of the conflict is the Arroyo clan, wealthy merchants of Chinese origin who gained political supremacy in the early 1900's when their patriarch, Jose Arroyo, was elected Senator in 1919. With the help of his close friend -- then Senate President Manuel L. Quezon -- his younger brother, Dr. Mariano Arroyo, was appointed provincial governor in 1928.

On the other side is the Lopez clan headed by Eugenio "Ening" Lopez who used his newspaper El Tiempo -- founded in 1901 by his father, Benito Lopez, the first governor of Iloilo in 1906 who was assassinated two years later by a rival political faction -- to expose the jueteng ring that Governor Arroyo and a Chinese trader named Sualoy started in Iloilo. El Tiempo's incessant exposure of the jueteng operations finally paid off. Sualoy was charged, found guilty, imprisoned, and then deported to China.

That was the beginning of the Arroyo-Lopez War. As a result of the crackdown on the jueteng operations, Governor Arroyo filed a libel suit against Lopez and El Tiempo. Lopez retaliated by filing administrative charges against Governor Arroyo. Governor General Davis was also informed about the case and he sent Judge Francisco Moran to investigate. Moran discovered that Governor Arroyo was involved in the jueting operations including a gambling den. Consequently, Moran dismissed the libel charges against Lopez and his newspaper. In 1930, the administrative trial found Governor Arroyo guilty of corruption and Governor General Davis relieved him from his post.

Humiliated, Jesusa Lacson Arroyo, the widow of Senator Arroyo who died in 1927, picked up the pieces and moved her entire family to Negros Occidental. One of her sons, Ignacio, would become the father of the current First Gentleman, Jose Miguel "Mike" Arroyo.

Meanwhile, Eugenio Lopez progressed in business and his brother Fernando entered into politics and was elected three times as Vice-President. Don Eugenio established the first airline in Asia and expanded his newspaper business. In 1962, he purchased Meralco, the country's largest electric company. His son, Eugenio "Geny" Lopez, Jr., built ABS-CBN to become the country's undisputed leader in broadcasting.

In 1972, the Lopez family suffered under the martial law regime of Ferdinand Marcos. Geny Lopez was implicated in an alleged plot to kill Marcos. Under obscure circumstances, Lopez escaped from detention and slipped out of the country. Marcos' brother-in-law, Kokoy Romualdez, then took over Meralco. When Marcos was ousted in 1986, Cory Aquino returned Meralco and ABS-CBN to the Lopezes.

For more than 20 years, the Lopezes had undisputed control of Meralco. They also diversified into new business ventures. Over the past several years, ABS-CBN became a pain in the neck of President Gloria Macapagal Arroyo. Their coverage of the various scandals involving the First Couple have contributed to the Arroyos' negative public image.

It is no wonder then that Meralco is now in the crosshairs of President Arroyo's sight. The joint congressional hearing chaired by Senator Miriam Defensor Santiago and Congressman Juan Miguel "Mikey" Arroyo has stirred into life a family feud that has been dormant for 78 years. There were speculations that the real reason for the Meralco "witch hunt" is for the government to take over Meralco and break it up into smaller companies. If this would happen, guess who would take over a divested Meralco?

Let's look at someone who has been at the forefront of the battle: Winston Garcia, President and General Manager of the Government Service Insurance System (GSIS). His aggressive and arrogant demeanor in the Meralco board room -- he is a recent member on the Meralco board representing GSIS which has 23% ownership of Meralco -- has made a lot of people wonder what his ulterior motive is. Many believe that Garcia is on the board to wage a "proxy war" for the Arroyos.

For one thing, Garcia is not the typical government bureaucrat. He is a scion of a powerful political dynasty in Cebu with close ties to Malacanang. His father, Pablo, is a congressman and concurrently Deputy Speaker of the House. His brother, Pablo John, is also a congressman. And his sister, Gwendolyn, is the current Governor of Cebu. She announced recently that she is a candidate for Vice President in 2010.

In addition, the Garcia family has large stockholdings in the Aboitiz-owned Visayan Electric Company (VECO), the country's second largest private electric utility. The corporate officers include three Garcias, to wit: Dennis A. Garcia, President and General Manager; Ramontito A. Garcia, Treasurer; and Jess Anthony N. Garcia, legal counsel and Assistant Corporate Secretary. Of the 11 members of the VECO Board of Directors, five are Garcias, namely, Dennis N.A. Garcia, Ramontito E. Garcia, Gil A. Garcia II, Charles Sylvester A. Garcia, and Antonio V. A. Garcia de Escaño. The Aboitizes, have five members of the Board. Recently, a news account reported that Winston Garcia is serving VECO as a lawyer on retainer. The question is: What would VECO -- and Winston Garcia -- stand to gain if Meralco were broken up into smaller companies?

It is also a common knowledge that the Aboitizes are business cronies of the First Couple. With the Lopezes trying hard to defend themselves from a pack of wolves, it would probably take a miracle to survive these attacks. But miracles do happen and they happen when it's least expected to happen. And the last and final question is: What would the Arroyos stand to gain when Meralco breaks up?

(PerryDiaz@gmail.com)