G.R. No. 160959 - Diaz vs. Davao Light and Power Co., Inc.

Case Summary (G.R. No. 160959)

Key Dates and Procedural Posture

Relevant events and proceedings include DLPC’s disconnection notice of July 25, 1983 and meter disconnection on July 29, 1983; DLPC’s connection of the NFA/KADIWA portion on March 15, 1984 (Meter No. 84738, Account No. 091‑12643); NFA’s vacation in August 1986 and alleged transfer of connection rights to Diaz; Diaz’s mandamus petition (Sept. 26, 1986) and preliminary injunction application (Jan. 7, 1987); DLPC’s removal of Meter No. 84738 on November 20, 1987; Diaz’s unilateral installation of Meter No. 86673509 and subsequent civil actions beginning November 24, 1987; interlocutory and appellate rulings (including CA decision in CA‑G.R. SP No. 14909 and this Court’s denial of a related petition as moot); various criminal complaints filed by DLPC and later dismissed; collateral civil suits for damages and malicious prosecution culminating in the proceedings reviewed in G.R. No. 160959 decided by the Supreme Court (applying the 1987 Constitution).

Applicable Law and Governing Legal Principles

Constitutional framework: 1987 Constitution (decision year after 1990). Statutory and doctrinal authorities relied upon include the New Civil Code (Articles 19, 20, 21; Articles on compromise and moral damages), Revised Penal Code provisions on theft, P.D. No. 401 as amended by B.P. Blg. 876 (penalizing unauthorized utility connections and tampering), and established jurisprudence on compromise, malicious prosecution, probable cause, damnum absque injuria, and the right to litigate.

Factual Background — Service Accounts, NFA/KADIWA and Transfers

DLPC supplied electricity to the Imperial/DoAa Segunda Building under Account No. 087‑10669 (Meter No. 36510). After unpaid bills, DLPC disconnected service in July 1983 and pursued collection (Civil Case No. CEB‑1049). NFA/KADIWA leased ground floor space and obtained its own DLPC service (Account No. 091‑12643, Meter No. 84738) on March 15, 1984. When NFA vacated in August 1986, its provincial manager informed DLPC that the connection would be “left behind” and transferred to Diaz; Diaz later sought a new connection in his name, which DLPC denied pending settlement of unpaid bills by Diaz and/or Diaz and Co., Inc.

Factual Background — Meter Disputes, Self‑Installation and Early Litigation

Disputes over entitlement to the NFA meter escalated. DLPC refused Diaz’s request for a separate connection and continued collection against Diaz and Co., Inc. Diaz filed a mandamus petition (Civil Case No. 18,288) to compel DLPC to install service; preliminary injunctions were sought and denied. DLPC removed its single‑phase meter on November 20, 1987, which caused power loss in parts of the building. Diaz then physically damaged DLPC property and procured and installed his own meter (No. 86673509), calibrated it, and restored power. Subsequent civil claims and counterclaims followed, including an RTC order requiring removal of Diaz’s meter (later set aside by the Court of Appeals in CA‑G.R. SP No. 14909), and a compromise in the collection case reducing DLPC’s claim and stipulating DLPC would install service upon receipt of payment.

Procedural History — Criminal Complaints and Administrative Actions

DLPC filed a complaint for theft of electricity (Inv. Sheet No. 593, July 1988) and later a complaint for violation of P.D. No. 401 as amended (I.S. No. 92‑4590) against Diaz. The City Prosecutor recommended dismissal of the theft charge for lack of elements and because the matter was pending in civil courts; DLPC’s motions for reconsideration and appeal to the Secretary of Justice were denied. DLPC also faced criminal and administrative complaints filed against its officers (estafa/falsification and related allegations), which underwent separate prosecutorial and court proceedings.

Procedural History — Civil Suits for Damages and Malicious Prosecution

DLPC filed civil libel/abuse‑of‑rights suits against Diaz in Cebu (Civil Case No. CEB‑11843), obtaining a large judgment at trial, which was appealed. Diaz filed Civil Case No. 21,655‑92 in Davao alleging DLPC’s criminal prosecutions and related acts were malicious and sought damages, injunctive relief, and other remedies. The RTC issued a temporary restraining order but later dismissed Diaz’s complaint, concluding DLPC acted in good faith in pressing criminal charges and that any injury Diaz sustained was damnum absque injuria. The Court of Appeals affirmed; Diaz’s petition to the Supreme Court raises issues of bad faith, breach of the compromise, and entitlement to damages.

Issues Presented on Review

The Supreme Court identified and addressed three principal issues: (1) whether the compromise agreement in the collection case barred DLPC from instituting further actions involving Meters No. 84738 or 86673509; (2) whether DLPC acted in bad faith (maliciously) in instituting the criminal complaints against Diaz; and (3) whether Diaz is entitled to damages for malicious prosecution or abuse of rights.

Analysis — Effect of the Compromise Agreement

The Court analyzed the nature and scope of the compromise under Article 2028 of the Civil Code: a compromise is a contract of reciprocal concessions intended to avoid or end litigation and to bar future disputes between the contracting parties as to the matters compromised. It emphasized, however, that compromise between private parties does not extinguish criminal liability because crimes are offenses against the State; criminal liability is not a subject of compromise under the Revised Penal Code or the applicable penal regimes. The Court examined the compromise’s terms and found no provision that expressly or implicitly prevented DLPC from filing further criminal or administrative actions concerning the meters. Consequently, the compromise did not bar DLPC from instituting the criminal complaints at issue.

Analysis — Elements of Malicious Prosecution and Burden of Proof

The Court reiterated the elements of malicious prosecution: (1) the fact of prosecution and a favorable termination for the accused (typically acquittal or dismissal in his favor); (2) prosecution commenced without probable cause; and (3) prosecution actuated by malice or improper motive. The Court stressed that both lack of probable cause and malice must be established to sustain a malicious prosecution claim; good faith and probable cause negate malice. The right to litigate must not be chilled by imposing liability where a reasonable prosecutor or complainant had probable cause for initiating proceedings.

Analysis — Application to the Criminal Complaints Against Diaz

Applying these principles to the facts, the Court observed that DLPC’s complaints involved different statutory provisions with different elements (theft under the Revised Penal Code vs. offenses under P.D. No. 401 as amended by B.P. Blg. 876). The Court noted that the factual circumstances — particularly Diaz’s unilateral installation of a meter after DLPC removed its meter and prior warnings and disputes over accounts and ownership of connection rights — provided a reasonable basis for DLPC to institute criminal complaints. The Court further

Case Syllabus (G.R. No. 160959)

Court and Citation

Reported at 549 Phil. 271, Third Division; G.R. No. 160959; decision promulgated April 04, 2007.
Decision authored by Justice Callejo, Sr.; concurring opinions by Justices Ynares‑Santiago (Chairperson), Austria‑Martinez, Chico‑Nazario, and Nachura are recorded in the rollo.

Nature of the Proceeding and Relief Sought

Petition for Review on Certiorari by Antonio G. Diaz from the Decision of the Court of Appeals in CA‑G.R. CV No. 68709, which affirmed the Regional Trial Court (RTC), Davao City, Branch 11, in Civil Case No. 21,655‑92.
The petition assails dismissal of Diaz’s civil suit for damages and injunctive relief arising out of criminal complaints and related actions instituted by Davao Light and Power Co., Inc. (DLPC) and its officers.

Parties and Capacities

Antonio G. Diaz (petitioner): President of Diaz and Co., Inc.; vice‑president of Diaz Realty Inc.; lessee/occupant and claimant of rights over portions of the DoAa Segunda Hotel (formerly Davao Imperial Hotel), C.M. Recto Avenue, Davao City.
Davao Light and Power Co., Inc. (DLPC) (respondent): Public utility franchised to provide light, heat and power in Davao City and municipalities of Panabo, Santo Tomas, and Carmen in Davao del Norte.
Manuel M. Orig (respondent): Resident manager / vice‑president for Administration of DLPC.
Eliseo R. Braganza, Jr. (respondent): In‑house lawyer of DLPC.

Property, Accounts and Meter Identifiers

Imperial Hotel Building (DoAa Segunda Building) located along C.M. Recto Avenue, Davao City — premises at issue.
DLPC Account No. 087‑10669 with Meter No. 36510 supplied electricity to the DoAa Segunda Building prior to disconnection.
NFA/KADIWA connection (later involved) established under DLPC Account No. 091‑12643 with Meter No. 84738 (connected March 15, 1984).
Antonio Diaz later procured and installed Meter No. 86673509 after DLPC removed Meter No. 84738.
The parties’ pleadings, the proceedings and later submissions sometimes reference Meter No. 84736/84738 in varying contexts.

Chronology of Key Factual Events — Notices, Disconnection, and Initial Collection Action

July 25, 1983: DLPC sent Notice of Disconnection to Diaz and Co., Inc. stating unpaid electric consumption as of June 13, 1983 amounted to P190,111.02 and warning of service discontinuance if unpaid.
July 29, 1983: DLPC disconnected Meter No. 36510 for nonpayment.
DLPC thereafter filed a complaint for collection before the RTC, Cebu City, docketed Civil Case No. CEB‑1049 (collection of unpaid electric consumption).

NFA/KADIWA Lease, Transfer and New Connection

1984: National Food Authority (NFA) established a KADIWA store on the ground floor of the Imperial Hotel Building and leased a portion from Diaz and Co., Inc.
March 15, 1984: DLPC connected NFA/KADIWA’s leased area to its grid under Account No. 091‑12643 and installed Meter No. 84738 to measure NFA/KADIWA consumption.
August 1986: NFA/KADIWA vacated; KADIWA Provincial Manager Roberta R. Melendres, by letter dated August 11, 1986, informed DLPC that the connection would be left behind and that the right to the connection would be transferred to Diaz; she also informed DLPC that Diaz refunded the P1,020 deposit to NFA/KADIWA.

Diaz’s Applications and DLPC’s Reaction

September 2, 1986: Diaz wrote Manuel Orig requesting a new electrical connection for the building in his name, separate from the NFA‑assigned connection.
September 15, 1986: DLPC denied Diaz’s request, expressing suspicion that the lease in Diaz’s favor could be simulated since Diaz and Co., Inc. was a closed family corporation; DLPC stated it would grant the request if Diaz or Diaz and Co., Inc. paid what was due.
September 17, 1986: Diaz and Co., Inc. sent DLPC a letter declaring that it had assumed NFA/KADIWA’s electrical bills under Account No. 091‑12643 and requested monthly bills be sent to it; DLPC replied it was unaware Diaz and Co., Inc. refunded the P1,020 deposit.

Mandamus Action and Early Injunctive Efforts (Sp. Civil Case No. 18,288)

September 26, 1986: Diaz filed a petition for mandamus before RTC, Davao City (Civil Case No. 18,288), alleging DLPC’s refusal to provide electric service despite DLPC being a certificate of public convenience holder; prayed for writ of mandamus, damages (P50,000), attorney’s fees (P20,000) and other reliefs.
September 23, 1986: The portion vacated by NFA was leased to Matias Mendiola, who applied for a three‑phase meter connection due to higher electrical needs; DLPC approved Mendiola’s application and executed a service contract on December 19, 1986.
January 7, 1987: Diaz filed application for preliminary injunction to enjoin DLPC from disconnecting Meter No. 84738 (Account No. 091‑12643). Inter‑Office Memo (Jan. 7, 1987) instructed building security to prevent disturbance of Meter No. 84738 and to “resist force by force.”
Because security prevented DLPC personnel from replacing the single‑phase meter with a three‑phase meter, DLPC’s linemen installed the three‑phase meter without removing the single‑phase meter.

RTC Rulings in Sp. Civil Case No. 18,288 and Aftermath

March 12, 1987: RTC denied Diaz’s motion for issuance of a writ of preliminary injunction; motion for reconsideration denied by Order dated August 20, 1987.
November 20, 1987: DLPC removed its single‑phase meter, rendering almost half the building without power. That day Diaz threw stones at the DLPC building breaking four glass windows.
Diaz procured Meter No. 86673509, had it calibrated by the Board of Energy, and unilaterally replaced Meter No. 84738; electricity was restored.
November 24, 1987: Diaz filed Complaint for Damages with Prayer for Preliminary Prohibitory and Mandatory Injunction and Restraining Order before RTC, Davao City, docketed Civil Case No. 18,855‑87, alleging DLPC arbitrarily removed Meter No. 84738 in violation of franchise and Article 19, New Civil Code, and threatened removal of Meter No. 86673509.
DLPC counter‑applied for preliminary mandatory injunction to compel removal of meter Diaz installed without consent.
March 30, 1988: RTC denied Diaz’s application for injunction and granted DLPC’s counter‑application, ordering immediate removal of Meter No. 86673509 and disconnection of electrical wiring Diaz connected to upper floors; Diaz’s motion for reconsideration denied.
June 13, 1988 (text mentions 1998 but context shows 1988): Sheriff with DLPC personnel removed Meter No. 86673509.

Court of Appeals Review and Supreme Court Resolution in G.R. No. 85445

Diaz petitioned CA via CA‑G.R. SP No. 14909; October 19, 1988 CA Decision granted Diaz’s petition setting aside RTC orders, ordering respondents to maintain status quo ante or connect DLPC’s own meter to premises, conditioned upon payment of electric bills and without prejudice to collection case.
DLPC elevated CA decision to the Supreme Court via G.R. No. 85445.
December 19, 1988: Parties in Civil Case No. CEB‑1049 executed a Compromise Agreement: DLPC reduced its total claims to P385,000, waived any claim in