Manuel stuck with Martinez.
Matsui ripped an 0-2 pitch into center field for a two-run single to give the home team a 4-1 lead.
And the Yankees were on their way to a 7-3 victory and their 27th World Series title.
"I had to let him face that guy," Manuel said. "Pedro knows how to pitch. He's an experienced guy. Plus, we could go down 4-1 and still come back."
That was just one of dozens of decisions Manuel and his Yankees counterpart, Joe Girardi, made on a cold night in the Bronx.
Girardi's decisions worked out better, mainly because Matsui tied a World Series record with six RBIs, Yankees starter Andy Petitte worked 52/3 solid innings, and Mariano Rivera finished the game by pitching 12/3 scoreless innings.
Manuel seemed disappointed with the outcome but also proud of his team for reaching the World Series for the second year in a row.
"I told them I love the way they play the game," Manuel said of his comments to his team after the game. "They never quit. We've got to keep what we've got as far as attitude, chemistry, our philosophy as far as how we play the game.
"These guys have a lot of resistance or endurance. They love to play baseball.
"That's what got us here and that's what's going to keep us here."
Manuel's third-inning decision might have been irrelevant. He brought Happ in the game in a similar situation in the fifth inning, and the result was the same.
This time, the rookie replaced Chad Durbin to face Matsui. And the Yankees' designated hitter ripped a two-run double for his fifth and sixth RBIs.
Manuel ended up using six pitchers. Martinez surrendered four runs in four innings, and Durbin allowed three more in the fifth inning, two of which scored on Matsui's double off Happ.
Chan Ho Park, Scott Eyre, and Ryan Madson combined to shut out the Yankees over the final three innings. But the Phillies weren't able to overcome that 7-1 deficit.
"I have to give credit to the Yankees pitchers," Manuel said. "It seems like our offense, we couldn't get the big hit and take command when we needed to."
With his team behind by six runs, Manuel had to hope the Phillies' bats would come alive, close the gap, and create some suspense in the late innings.
It never happened in Game 6. But Manuel believes the Phillies will get another chance.
"We'll be back, like MacArthur said," Manuel said. "I hope we play the Yankees."
Contact staff writer Phil Anastasia at 856-779-3223 or panastasia@phillynews.com