Title
Barbasa vs. Tuquero
Case
G.R. No. 163898
Decision Date
Dec 23, 2008
Petitioner's electricity disconnected for unpaid rentals; claimed coercion. SC ruled disconnection lawful under lease terms, no coercion; petition denied.
tenant
owner
commercial property

Case Summary (G.R. No. 163898)

Factual Background

Petitioner leased commercial stalls CS-PL 05, 19 and 30 in Tutuban Center from TPI. The record showed that Grace Guarin, then Credit and Collection Manager of TPI, issued to Push-Thru Marketing a notice of disconnection of utilities on June 30, 1999, citing the lessee’s failure to settle outstanding obligations involving Common Usage and Service Area (CUSA) charges, utilities, electricity, and rentals.

Petitioner later settled the charges for CUSA, utilities, and electricity. Private respondent Guarin accepted the payments, but petitioner did not pay back rentals. Thereafter, on July 1, 1999, private respondents Guarin, Sangalang, and Callueng, along with several armed guards, disconnected the electricity in the stalls occupied by Push-Thru Marketing.

Petitioner claimed that he was aggrieved by both the act and the manner of its execution, and he filed a criminal complaint for Grave Coercion. The complaint, dated July 13, 1999, was filed before the Office of the City Prosecutor of Manila against TPI and certain officers, including the herein private respondents. The complaint alleged that the electricity was cut “in a violent and intimidating manner,” and that armed guards were unnecessarily employed to intimidate and frighten petitioner and his employees.

Positions in the Criminal Complaint and Prosecutorial Findings

Private respondents submitted separate counter-affidavits presenting a common defense. They alleged that the disconnection of electricity on July 1, 1999 was performed peacefully as part of their lawful duties and in accordance with written covenants in their lease agreements with petitioner. They also asserted that petitioner was not personally present at the scene when the acts were allegedly committed.

They further pointed to petitioner’s unpaid accountabilities for rentals, CUSA billings, electrical and water bills, and unpaid interest and penalty charges for the period June 1998 to May 1999, totaling P267,513.39 for all the rented stalls, as reflected in three Interest-Penalty Reports that were duly sent to him. The defense also relied on written demand letter-notices, stated in at least three instances, warning that electricity would be cut if arrears were not settled in full. After receipt of the third notice, petitioner allegedly paid only P127,272.18.

Private respondents also invoked petitioner’s substantial outstanding obligation with respect to “Priority Premium Fees” amounting to P5,907,013.10, and emphasized the relevant contract stipulations that granted TPI the option to cut off power and other utility services as a consequence of nonpayment.

The City Prosecutor of Manila, through Prosecutor Venus D. Marzan, dismissed the complaint against some respondents but found probable cause to proceed against private respondents Grace Guarin, Nestor Sangalang, and Victor Callueng. After private respondents appealed, the matter reached the Secretary of Justice, who reversed the City Prosecutor’s resolution and directed the City Prosecutor, with leave of court, to move for dismissal of Criminal Case No. 336630.

Secretary of Justice Review and Court of Appeals Ruling

On August 23, 2000, the Secretary of Justice reversed and set aside the City Prosecutor’s assailed resolution and directed the City Prosecutor to move for dismissal of the criminal case. Petitioner sought reconsideration, but it was denied.

Petitioner then filed a petition for certiorari before the Court of Appeals, challenging the Secretary of Justice’s resolution. The Court of Appeals dismissed the petition for lack of merit and denied petitioner’s motion for reconsideration. The Court of Appeals concluded that there was no reason to reverse the Secretary of Justice’s determination ordering the dismissal of the grave coercion case.

The Issue on Appeal to the Supreme Court

Before the Supreme Court, petitioner raised a sole issue: whether private respondents’ act of disconnecting electricity from petitioner’s stalls, and the manner by which it was carried out, constituted grave coercion.

Elements of Grave Coercion and Application to the Facts

The Supreme Court reiterated that grave coercion has three elements: first, that a person is prevented by another from doing something not prohibited by law, or compelled to do something against the person’s will, whether right or wrong; second, that the prevention or compulsion is effected by violence—either through material force or through such display of it as would produce intimidation and control the will of the offended party; and third, that the one who restrains the will and liberty of another has no right to do so, meaning the restraint is not under authority of law or in the exercise of any lawful right.

The Court held that petitioner’s appeal failed because the records did not show the second and third elements. It found that there was no violence, force, or display of intimidation when electricity was cut. Instead, the act was described as done peacefully and only after written notice had been sent to petitioner.

The Court also rejected petitioner’s contention that the presence of armed guards was inherently calculated to intimidate. It reasoned that the guards were more likely present to prevent any untoward or violent event from occurring while TPI exercised rights under the lease agreements. It further observed that if respondents desired a violent result, they would have done so unannounced or through less desirable and conspicuous methods.

On the third element, the Court stressed the contractual authorization. The lease agreement contained an express penalty clause giving TPI the option to cut off power and other utility services if petitioner failed to pay installments on priority premium, lease rentals, or CUSA and utility charges corresponding to a total of three months, even if not consecutively incurred, until full payment was made. The Court treated the stipulation as clear and unambiguous. It found no grave coercion in the exercise of a right afforded to TPI under solemn covenants petitioner had agreed to and executed.

Contractual Autonomy, Interpretation, and the Absence of Illegality

The Supreme Court relied on the principle that contracts constitute the law between the parties and must be read together and interpreted so that all stipulations may be given life. It held that the intent of the parties, reflected in the clear language used, controls over post hoc explanations not supported by the words of the contract or by the parties’ contemporary conduct and subsequent understanding.

In this light, the Court found it difficult to sustain a finding of probable cause for grave coercion against private respondents when the controlling evidence showed a mutual lease agreement providing for the cutting off of electricity as an agreed penalty for noncompliance. The Court did not deny that the exercise of the contractual penalty could be a matter of dispute. It nevertheless held that mere resort to such a penalty clause, when supported by an agreement petitioner signed, did not automatically expose the lessor to a grave coercion charge.

Justification of Resort to the Penalty Clause and the Role of a Penal Clause

The Supreme Court also considered the magnitude of petitioner’s obligation, noting

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