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G.R. No. 141314, April 9, 2003, Republic... v. Manila Electric... - Consti2-CD
G.R. No. 141314, April 9, 2003, Republic... v. Manila Electric... - Consti2-CD
G.R. No. 141314, April 9, 2003, Republic... v. Manila Electric... - Consti2-CD
Facts:
This case pertains to the MERALCO filed a Motion for Reconsideration, arguing against the deduction of
income tax from revenues for rate determination and the application of the "net average investment method"
for property valuation
At first, the MERALCO filed with ERB an application for revised rates on its distribution charge.
Eventually granted by ERB with conditions for a possible refund if an overcharge was determined.
MERALCO argues that the deduction of all kinds of taxes is based on the American Jurisprudence.
The Supreme Court denied MERALCO's Motion for Reconsideration with finality. It upheld the ERB's decision to
exclude income taxes from operating expenses and endorsed the use of the "net average investment method"
for property valuation.
Based on the COA’s audit, even if the income tax is to be included as an operation expense, the MERALCO would
still achieve a return within the 12% rate allowed.
This approach guarantees that MERALCO earns a reasonable return without overcharging customers
The Supreme Court reasoned that the regulatory body's decisions, based on technical expertise, were supported
by substantial evidence and were in line with protecting the public interest.
Lastly, the Supreme Court was not convinced by Meralco's argument for the use of tax deduction on public utility
based on American jurisprudence. These regulatory practices are not automatically binding in the Philippines'
jurisdiction