ANTONIO DIAZ, PETITIONER, VS. DAVAO LIGHT AND POWER CO., INC., MANUEL M. ORIG PROMULGATED: AND ELISEO R. BRAGANZA, JR., RESPONDENTS.

Diaz versus Davao Light and Power

The Case

This is Antonio Diaz versus Davao Light and Power Company, with Manuel Orig and Eliseo Braganza as co-respondents. Diaz sued the power company and its officers for damages, alleging that they maliciously prosecuted him through criminal complaints for theft of electricity and for violation of the anti-electricity-pilferage law, both of which the prosecutors dismissed. The case matters because it fixes the strict standard for malicious prosecution as a ground for damages: the mere filing of a criminal complaint that later fails does not make the complainant liable, and the suit must fail where the element of malice or bad faith is not proved.

Procedural History

Diaz filed his complaint for damages, injunction and attorney's fees before the Regional Trial Court of Davao City. At pre-trial the parties narrowed the issue to whether Diaz was entitled to damages by reason of the filing of the two criminal cases against him, both already dismissed. The trial court segregated the issues and confined itself to the alleged malicious prosecution, since the other causes of action were either moot or pending in other branches. After trial, the Regional Trial Court dismissed the complaint. Diaz appealed to the Court of Appeals, which affirmed the dismissal. Diaz then elevated the case to the Supreme Court by petition for review on certiorari.

Facts

Antonio Diaz was president of Diaz and Company, Incorporated, and vice-president of Diaz Realty, which owned the Doña Segunda Hotel, formerly the Davao Imperial Hotel, in Davao City. Davao Light supplied the building with electricity. In July 1983 the power company sent a notice of disconnection for unpaid electric bills, and when these went unpaid it disconnected the meter and later sued the corporation for collection before the Regional Trial Court of Cebu City.

In 1984 the National Food Authority established a KADIWA store in a leased portion of the building and obtained its own electric service and meter. When the store closed in 1986, its provincial manager wrote the power company that the connection would be left behind and its right transferred to Diaz. Diaz then asked for a new connection in his own name, but the power company refused, citing the closed family corporation and the unpaid account. Diaz filed a petition for mandamus, which was later dismissed upon a compromise agreement in the collection case.

In November 1987 the power company removed its single-phase meter, leaving much of the building without power. That same day Diaz threw stones at the power company's building, breaking four glass windows. He then bought his own meter, had it calibrated, and unilaterally installed it in place of the company's meter. The power company thereupon filed a complaint for theft of electricity, which the City Prosecutor dismissed for lack of the elements of unlawful taking and intent to gain, and the Secretary of Justice affirmed the dismissal. The power company then filed a second criminal complaint, this time for violation of the anti-pilferage law, which was likewise dismissed. Diaz then sued for damages, claiming that these criminal complaints were filed to harass and humiliate him.

Issues

• Whether or not the filing of the criminal complaints for theft of electricity and for violation of the anti-pilferage law constituted malicious prosecution that entitles Diaz to damages.
• Whether or not the dismissal of the criminal complaints by the prosecutors is, by itself, proof of malice on the part of the power company and its officers.

Applicable Provisions

Article 19 of the New Civil Code provides:

Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

This is the provision Diaz invoked, claiming that the respondents acted in bad faith and caused him injustice; the Court measures the respondents' conduct against this standard of justice and good faith.

Ruling

On the first issue, the Court held that there was no malicious prosecution. The power company filed the criminal complaints in the honest belief that Diaz was criminally liable, given that he had unilaterally installed his own meter without the company's consent and authority. A person's right to litigate should not be penalized by holding him liable for damages, and the trial court's finding that the respondents acted in good faith was sustained.

On the second issue, the Court held that the dismissal of the criminal complaints did not by itself establish malice. The prosecutors dismissed the charges because the elements of the offense were not established and because the matter was still in litigation, not because the complainants were shown to have acted in bad faith. Absent proof of malice, the complaint for damages cannot prosper. The Court thus affirmed the dismissal of Diaz's complaint.

Doctrine

To recover damages for malicious prosecution, the plaintiff must prove that the prosecution was instituted with malice or bad faith, and not merely that it ended in dismissal. The dismissal of a criminal complaint for failure to establish the elements of the offense, or because the matter is still in litigation, does not prove malice. A person who exercises the right to litigate in the honest belief that another is criminally liable does not violate Article 19 of the New Civil Code, which requires only that one act with justice, give everyone his due, and observe honesty and good faith. The right to litigate is not to be penalized by an award of damages absent a clear showing of bad faith.

Disposition

The Supreme Court denied Diaz's petition and affirmed the dismissal of his complaint for damages, with costs against him.

Remember This

The single line to memorize: the dismissal of a criminal complaint does not by itself prove malice, and the right to litigate in good faith is not penalized by damages. Examiners use this case on malicious prosecution and on Article 19 of the New Civil Code, to test whether a candidate knows that bad faith, not mere failure of the charge, is the operative element.