Manila Electric Company v. Philippine Consumers Foundation Inc. et al.

Sandoval-Gutierrez, J. January 23, 2002 G.R. No. 101783

Res judicata. Res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by judgment.
Doctrine 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.

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, between the two cases identity of parties, subject matter and causes of action.
Former Pres. Marcos enacted PD 5511 reducing franchise tax of electric companies from 5% to 2%.
Facts February 5, 1982, respondent Philippine Consumers Foundation, Inc. (PCFI) filed with the Board of Energy a petition
for specific performance and damages: PCFI sought the refund of the savings made by Meralco due to the reduced franchise
tax, pursuant to Sec. 4 of PD 5512. They wanted the savings to be given to the ultimate consumers.
Meralcos answer: alleging that BOE authorized it to retain its savings, as held in BOE Case 79-692 dated March 10, 1980.
BOE dismissed PCFIs petition: upheld Meralcos argument. The authority granted to Meralco in the previous BOE decision
leaves no room for interpretation. BOE noted that PCFI, in the BOE Case 79-692, didnt appeal the decision, it became final.
PCFI MR was denied, so PCFI filed with SC a petition for certiorari which was dismissed: SC held that the March 10,
1980 decision in BOE Case 79-692 was not appealed by PCFI, instead, they filed the petition for specific performance and
damages almost two years later raising the same issues against the same parties. PCFI, in effect, is asking for readjudication.
Four years after the SC decision, PCFI filed with the RTC a petition for declaratory relief: they prayed for a ruling on
the issue of who should be entitled to Meralcos savings. They argued that the savings belonged to the ultimate consumers.
Meralco filed motion to dismiss based on res judicata, citing the previous SC decision: RTC granted MTD citing Justice
Teehankees dissent in the previous decision, that BOEs decision was ultra vires and hence, null and void.
Meralcos MR denied: hence this petition for review on certiorari.

Ratio/Issues I. W/N the case for declaratory relief before the RTC is barred by res judicata (YES)
(1) Meralco: RTC erred in not granting the MTD because that case is barred by res judicata based on the SC decision on
PCFIs certiorari, the BOE Case 79-692, and the BOE decision on PCFIs petition for specific performance and damages.
(2) PCFI: SC decision doesnt operate as res judicata because it didnt resolve the issue of who is entitled to the savings.
(3) SC: Yes to Meralco. The issue of whether or not Meralco is entitled to the savings has long been settled. DOCTRINE.
(4) Applied, all requisites satisfied:
a. First req the SC decision on PCFIs certiorari affirming the BOE decision on specific performance and
damages attained finality on December 4, 1985. The SC decision already became final.
b. Second req the BOE has jurisdiction over the subject matter. Under PD 1206, the BOE is the agency
authorized to "regulate and fix the power rates to be charged by electric companies." As such, it has jurisdiction
over Meralco, an electric company, and over the savings it realized under PD 551.
c. Third req BOE Case on PCFIs petition for specific performance and damages is a judgment on the merits. A
judgment is on the merits when it determines the rights and liabilities of the parties based on the facts. After
giving both parties the opportunities to be heard, the BOE resolved the case by adjudicating the rights of the
parties under PD 551. BOE declared in a clear and unequivocal manner that Meralco "has been duly authorized
to retain the savings realized under the provisions of PD 551. That decision was affirmed by the SC.
d. Fourth req
i. There is identity of parties. In the BOE cases, the dispute was between PCFI and Meralco. In the RTC
case, Edgardo Isip was joined as a petitioner but his inclusion is immaterial. A party cannot escape res
judicata simply by adding another party to the case.
ii. There is also identity of subject matter. The subject matter of an action refers to the thing, wrongful
act, contract or property which is directly involved in the action, concerning which the wrong has
been done and with respect to which the controversy has arisen. In both cases, the controversy is how
the disputed savings shall be disposed of - whether they shall be retained by Meralco or be passed on
to the consumers.
iii. There is identity of cause of action. The act alleged to violate PCFIs right is the retention of the
savings. Though the case before the BOE is for specific performance and damages and the one before
the RTC is declaratory relief, they pray for only one relief which is refund of the savings to the
ultimate consumers.
(5) The RTC decision clearly contravenes the principle of res judicata.

Note: SC was disappointed by how RTC based the reversal of the SC decision on a dissent. Only SC can do that.
Held Petition GRANTED.
Prepared by: Lemarie Suing [ Admin | Prof. Waga ]

1
SECTION 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all grantees of franchises to
generate, distribute and sell electric current for light, heat and power shall be two (2%) of their gross receipts received from the sale of electric
current and from transactions incident to the generation, distribution and sale of electric current.
2
Sec. 4. All the savings realized by electric franchise holders from the reduction of the franchise tax under Section 1 and tariff reductions and tax
credits under Sections 2 and 3, shall be passed on to the ultimate consumer. The Secretary of Finance shall promulgate rules and regulations and
devise a reporting systems to carry out the provisions of this Decree.