Meralco appeals refund ruling anew

The Manila Electric Co. (Meralco) once again sought an en banc Supreme Court hearing of its appeal for the tribunal to overturn its order for the power firm to refund some P28.15 billion to its customers.

The SC earlier threw out Meralco’s appeal for an en banc hearing citing "lack of merit."

In a six-page motion for reconsideration, Meralco’s lawyers, however, cited Article 8, Section 4 of the 1987 Constitution, which provides that no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court sitting en banc.

"Respondent submits that this situation renders the instant cases of sufficient importance to merit (the Court’s en banc) attention. In short, the cases deserve a second look being taken by the entire court," Meralco’s lawyer Manuel Torres said in a motion.

On Nov. 15, 2002, SC’s Third Division ruled that Meralco overcharged its subscribers since February 1994 when the power firm started treating its income taxes as part of operational expenses and included the charges in the consumers’ bill.

In its 21-page unanimous ruling, the High Court’s Third Division said Meralco could not include income taxes in computing its operational expenses to justify the P0.184 per kilowatt-hour increase in its power rates. Instead, it should have collected only P0.017 increase and so it should refund the excess P0.167 it collected in excess since February 1994.

The court further said that "allowing the indiscriminate inclusion of income tax payments as operating expenses may create an undesirable precedent and serve as a blanket authority for public utilities to ... unjustly shift the tax burden to the customer."

Meralco argued that in this ruling, the High Court reversed the "well established doctrine that public utilities are entitled to a 12 percent return on rate base" as laid down in its ruling on the case of Republic vs. Medina.

"...it must be pointed out that in Republic vs. Medina, the Honorable Court affirmed that franchise tax, a commutative tax which commutes, among others, income tax is allowed as an operating expense," Meralco said in its motion.

Likewise, Meralco noted that a comment made by the Office of the Solicitor General on March 7 "in effect stated that the Feb. 16, 1998 decision of the (defunct) Energy Regulatory Board, with respect to the treatment of income tax for rate determination is wrong."

The ERB disallowed Meralco’s treatment as expense of its income taxes in fixing its rates in February 1998. The Court of Appeals reversed the ERB decision, but the SC, in its Nov. 15 ruling, virtually reaffirmed the ERB decision, Meralco said. — With Marichu Villanueva