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The Supreme Court ruled that the doctrine of res judicata applied and barred the Philippine Consumers Foundation from relitigating its claim that Manila Electric Company was required to refund savings from a reduced franchise tax to consumers. An earlier decision of the Board of Energy, which was upheld by the Supreme Court, had already resolved this issue and determined Meralco could retain the savings. As the elements of res judicata were satisfied, lower courts could not reverse the earlier final decisions and allow the same claim to be relitigated.

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78 views

Manila

The Supreme Court ruled that the doctrine of res judicata applied and barred the Philippine Consumers Foundation from relitigating its claim that Manila Electric Company was required to refund savings from a reduced franchise tax to consumers. An earlier decision of the Board of Energy, which was upheld by the Supreme Court, had already resolved this issue and determined Meralco could retain the savings. As the elements of res judicata were satisfied, lower courts could not reverse the earlier final decisions and allow the same claim to be relitigated.

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Genesis Leal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MANILA ELECTRIC CO. v. PHIL.

CONSUMERS FOUNDATION (2002)


Sandoval-Gutierrez, J. | Res Judicata

Petitioner: MANILA ELECTRIC COMPANY


Respondents: PHILIPPINE CONSUMERS FOUNDATION, INC., EDGARDO ISIP,
JUDGE MANUEL CALANOG, JR., and JUDGE TIRSO VELASCO

Summary: PCFI filed a complaint before BOE for the refund of Meralco’s savings under
PD 551. BOE dismissed it on account of its prior determination that Meralco was entitled
to retain the disputed savings. On certiorari, SC sustained BOE. Four years after, PCFI
filed a petition for declaratory relief before RTC, with the same goal of refunding the
savings to consumers. RTC granted the relief, holding that the dissent in the prior SC
ruling was correct. SC reversed RTC because of res judicata, plus the settled rule that
lower courts cannot set aside decisions of superior courts.
Doctrine: For a claim of res judicata to prosper, the following requisites must concur: 1)
there must be a final judgment or order; 2) the court rendering it must have jurisdiction
over the subject matter and the parties; 3) it must be a judgment or order on the merits;
and 4) there must be identity of parties, subject matter and causes of action between the
two cases.

Facts
Prior BOE case
 On September 11, 1974, former President Marcos promulgated PD 551 providing
for the reduction from 5% to 2% of the franchise tax paid by electric companies.
 On February 5, 1982, the Philippine Consumers Foundation, Inc., (PCFI) filed with
the Board of Energy (BOE) a complaint against Manila Electric Company
(Meralco), seeking immediate refund to its customers of all the savings it realized
under PD 551. It moored its petition on Sec. 4 of said PD, providing that “All savings
realized by electric franchise holders from the reduction of franchise tax and tariff
reductions and tax credits, shall be passed on to the ultimate consumer”.
 Meralco answered that it was duly authorized by BOE in its Order dated March 10,
1980 to retain the disputed savings, and that the said Order had long become final.
 On November 25, 1982, the BOE dismissed PCFI's petition, declaring that Meralco
was indeed authorized by the BOE to retain the disputed savings. MR denied.
 PCFI went to SC via petition for certiorari. In a Resolution dated October 22, 1985,
SC dismissed the petition for lack of merit, holding that when the petition before it
was filed on January 27, 1983, the ruling of BOE was already final and executory.
It also opined that BOE’s authorization for Meralco to defer the passing on of
benefits but without the planned rate increases is wise, instead of giving back
money to consumers and then taking back the same in terms of increased rates.
Present civil case
 Four years thereafter, PCFI and a certain Edgardo Isip filed with RTC Quezon City,
a petition for declaratory relief. Once again, they insisted that pursuant to Section
4 of PD 551, the savings belong to the ultimate consumers.
 Meralco prayed for dismissal on ground of res judicata, citing SC’s prior resolution.
 RTC rendered a decision declaring null and void the prior Resolution of SC, ruling
that Justice Teehankee’s dissenting opinion therein was correct.
 MR denied. Hence this petition for review on certiorari before SC.
Issues, Held
WON res judicata apply in this case – YES
 In res judicata, the judgment in the first action is considered conclusive as to every
matter offered and received therein, as to any other admissible matter which might
have been offered for that purpose, and all other matters that could have been
adjudged therein.
 All the requisites of RJ are present.
o First, that there be a final judgment: SC Resolution sustaining BOE’s
Decision which dismissed PCFI's petition, attained finality on December 4,
1985.
o Second, that the court which rendered the final judgment must have
jurisdiction over the subject matter and the parties: Under PD 1206, the
BOE is the agency authorized to regulate and fix the power rates to be
charged by electric companies.
o Third, that it be a judgment on the merits: A judgment is on the merits when
it determines the rights and liabilities of the parties based on the disclosed
facts, irrespective of formal, technical or dilatory objections. After according
both parties the opportunities to be heard, BOE resolved the rights of the
parties under PD 551, and it was sustained by SC.
o Fourth, that there must be identity of parties, subject matter and causes of
action between the two cases.
 Identity of parties: The civil case involves the same contenders in the
BOE case, except that respondent Isip joined PCFI as plaintiff. But a
party by bringing forward, in a second case, additional parties cannot
escape the effects of RJ when the facts remain the same. RJ does
not require absolute but only substantial identity of parties.
 Identity of subject matters: Both refer to the savings realized by
Meralco from the reduction of the franchise tax under PD 551.
 Identity of causes of action: While it is true that the BOE case is one
for specific performance, while the one filed in RTC is for declaratory
relief, both are directed towards one relief, i.e., the refund of the
disputed savings to the consumers.
Miscellaneous
 Petitions for declaratory relief may be entertained only before the violation of the
statute, deed, contract, etc., to which it refers. Here, respondents brought the
petition long after the alleged violation of PD 551.
 A lower court cannot reverse or set aside decisions of a superior court, especially
of SC, for to do so will negate the principle of hierarchy of courts and nullify the
essence of review. As Justice JBL Reyes once penned, "There is only one
Supreme Court from whose decisions all other courts should take their bearings."
GRANTED.

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