Republic v. Meralco, G.R. No. 141314, Nov. 15, 2002 [Case Digest]

 

Republic v. Meralco,

G.R. No. 141314, Nov. 15, 2002

Facts:

            MERALCO filed with the ERB an application for revised rates with an average increase of P0.21 per Kwh in its distribution charge. ERB granted the provisional increase of P0.184 per kWh. In February 1998, ERB authorized MERALCO to adopt a rate adjustment of P.017 per kWh for its billing cycles beginning 1994.  The ERB further directed MERALCO to credit the excess average amount of P0.167 per kWh to its customers starting with MERALCO's billing cycles beginning February 1994. The said ruling of the ERB was affirmed by SC in its decision dated November 15, 2002.

            In its Motion for Reconsideration, respondent MERALCO contends that the deduction of income tax from revenues allowed for rate determination of public utilities is part of its constitutional right to property and others and cited American Jurisprudence to support their view.

 

Issue:

            Whether or not the deduction of income tax from revenues allowed for rate determination of public utilities is part of its constitutional right to property of MERALCO.

 

Held:

            No.

 

Ratio:

            American decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive for no court holds a patent on correct decisions. Rate regulators should strain to strike a balance between the clashing interests of the public utility and the consuming public and the balance must assure a reasonable rate of return to public utilities without being unreasonable to the consuming public. What is reasonable or unreasonable depends on a calculus of changing circumstances that ebb and flow with time. Yesterday cannot govern today, no more than today can determine tomorrow.

SC reject MERALCO's insistence that the non-inclusion of income tax payments as a legitimate operating expense will deny public utilities a fair return of their investment. This stubborn stance is belied by the report submitted by the COA on the audit conducted on MERALCO's books of accounts and the findings of the ERB.