G.R. No. 101783 ; January 23, 2002
MANILA ELECTRIC COMPANY, petitioner, vs. PHILIPPINE CONSUMERS FOUNDATION, INC., EDGARDO S. ISIP, HON. JUDGE MANUEL M. CALANOG, JR., and HON. JUDGE TIRSO D’C. VELASCO, respondents.

FACTS

Presidential Decree No. 551 reduced the franchise tax on electric utilities from 5% to 2%, mandating that all savings be passed on to consumers. In 1982, the Philippine Consumers Foundation, Inc. (PCFI) filed a petition with the Board of Energy (BOE) against Meralco, seeking a refund of these savings to customers. The BOE dismissed the petition, ruling that Meralco had been previously authorized in a 1980 BOE Order (Case No. 79-692) to retain the savings. PCFI’s motion for reconsideration was denied. PCFI then elevated the matter to the Supreme Court via a Petition for Certiorari (G.R. No. 63018), which was dismissed in a 1985 Resolution for lack of merit, the Court finding no grave abuse of discretion in the BOE’s decision. This Resolution became final and executory.
Subsequently, in 1989, PCFI filed a new complaint for specific performance and damages against Meralco before the Regional Trial Court (RTC) of Quezon City, essentially seeking the same relief—a refund of the savings under P.D. No. 551. The RTC ruled in favor of PCFI, ordering Meralco to make the refund. Meralco’s motion for reconsideration was denied. Meralco thus filed the present petition for review on certiorari before the Supreme Court.

ISSUE

Whether the doctrine of res judicata bars the re-litigation of PCFI’s claim for the refund of savings under P.D. No. 551.

RULING

Yes, the doctrine of res judicata applies, barring the subsequent action. For res judicata to prevail, four elements must concur: (1) the former judgment must be final; (2) it must have been rendered by a court with jurisdiction; (3) it must be a judgment on the merits; and (4) there must be identity of parties, subject matter, and cause of action between the first and second actions. All these elements are present. The Supreme Court’s 1985 Resolution in G.R. No. 63018, which affirmed the BOE’s dismissal of PCFI’s petition, constituted a final judgment on the merits rendered by a competent court. The parties (PCFI and Meralco), the subject matter (the obligation to refund savings under P.D. No. 551), and the cause of action (the enforcement of Section 4 of P.D. No. 551) are identical in both the BOE case and the subsequent RTC case. The RTC therefore erred in disregarding the final and binding nature of the prior Supreme Court ruling. Public policy demands an end to litigation, and judicial stability requires that a final judgment, even if potentially erroneous, be corrected only by appeal, not by a new suit. The rights of Meralco, as sustained by the BOE and the Supreme Court, have acquired the character of res judicata.