LIMANCH-O HOTEL AND LEASING CORPORATION AND CONRADO TIU, PETITIONERS, VS. CITY OF OLONGAPO, ATTY. MA. ELLEN AGUILAR, ENGR. RAMON ZAVALLA, ENGR. ANDREW DAYOT, AND ENGR. REYNALDO …

Limanch-O Hotel and Leasing Corporation versus City of Olongapo

The Case

This is a claim for damages grounded on malicious prosecution. The petitioners, Limanch-O Hotel and Leasing Corporation and its owner, president, and general manager Conrado Tiu, sued the City of Olongapo and several of its officials after the City charged Tiu with theft of electricity, a charge that was ultimately dismissed. The case matters because it fixes the exacting standard a litigant must meet before recovering damages from someone who merely filed a criminal complaint that later failed: the complainant must have deliberately initiated the action knowing the charge to be false and groundless, and must have been moved by legal malice, meaning an improper or sinister motive.

Procedural History

The petitioners first sued the City before the Regional Trial Court of Olongapo for injunction with damages, and they won; the trial court enjoined the City from collecting the deficiency amount and from cutting off Tiu's power supply. The City then filed criminal complaints for theft of electrical current, but after preliminary investigation the state prosecutor dismissed them for insufficiency of evidence. On appeal, the Acting Secretary of Justice directed the filing of an information, then reconsidered and ordered its withdrawal; both the Court of Appeals and the Supreme Court affirmed the dismissal of the City's complaints.

The petitioners then filed a separate action for damages against the City. After the petitioners rested their case, the City filed a demurrer to the evidence, which the Regional Trial Court granted, dismissing the complaint. The Court of Appeals affirmed, finding no reversible error and holding that the petitioners failed to prove the elements of malicious prosecution, namely the absence of probable cause and a showing of legal malice. Their motion for reconsideration was denied, so they came before the Supreme Court on a petition for review.

Facts

Sometime in 1993, the City of Olongapo, through its Public Utilities Department, assessed Conrado Tiu his unregistered electricity consumption from November 1988 to February 1993 in the amount of 9,364,276.50 pesos. The City threatened to cut off his electric supply if he did not immediately settle the amount. Tiu filed an action for injunction with damages, which he won, and the trial court enjoined the City from collecting the deficiency and from cutting off his power.

While the City's motion for reconsideration was pending, the City filed criminal complaints against Tiu for theft of electrical current under Presidential Decree 401, and for disengaging and tampering with his electric meter's potential link, resulting in zero-zero power consumption, in violation of City Ordinance 23, series of 1989, and Presidential Decree 401. After preliminary investigation, the state prosecutor dismissed the complaints for insufficiency of evidence. On appeal, the Acting Secretary of Justice directed the filing of an information for theft of electricity, but the Secretary of Justice later reconsidered and ordered the withdrawal of any information that might have been filed. Both the Court of Appeals and the Supreme Court affirmed the dismissal of the City's complaints.

Claiming mental anguish, serious anxiety, besmirched reputation, wounded feelings, moral shock, and social humiliation, and for the corporation, loss of business goodwill, financial reverses, and injured reputation, the petitioners filed an action for damages against the City for filing a malicious and unfounded charge of theft of electricity. The City denied any ill motive, explaining that it acted after an examination of the electric meter installed at Tiu's building and registered in his name showed reverse polarity markings, causing the meter not to register his correct power consumption. Since this brought tremendous losses to the Public Utilities Department and the City, the City argued it should not be faulted for doing its job of going after those who pilfer electricity and tamper with metering devices.

Issues

• Whether or not the Court of Appeals erred in finding that the petitioners failed to present sufficient evidence that the City instituted the criminal complaint for theft of electricity maliciously and without probable cause.
• Whether or not the finding that no probable cause existed to support the charge of theft of electricity establishes the element of absence of probable cause in an action for malicious prosecution.
• Whether or not the City's acts after the filing of the criminal complaint amount to the legal malice required in an action for malicious prosecution.

Applicable Provisions

The decision does not quote any statutory provision verbatim. It applies the settled elements of an action for damages based on malicious prosecution, which the Court states as follows:

To entitle petitioners Tiu and Limanch-O Hotel to damages for malicious prosecution, they needed to prove the following elements: (1) that the respondent City had caused their prosecution; (2) that the criminal action ended in their acquittal; (3) that, in bringing the action, the City had no probable cause; and (4) that it was impelled by legal malice, an improper or a sinister motive.

These four elements are the test the Court applies, and the failure to prove the third and fourth elements defeats the claim.

Ruling

On the first issue, the Court held that the petitioners failed to prove the last two elements of malicious prosecution. The burden in such suits is being able to prove the complainant's deliberate initiation of a criminal action knowing the charge to be false and groundless. Here, the City did not concoct the charge out of thin air; it filed the case based on the result of an investigation at Tiu's premises which indicated tampering of the electric meter. The petitioners never claimed the inspection was a farce, and the City acted within its right to bring the result of that investigation to the authorities for evaluation and resolution.

On the second issue, the Court held that it is not enough to say that, since the Supreme Court sustained the Secretary of Justice's finding that no probable cause for electricity theft existed, a case for malicious prosecution already exists against the complainant. When the Supreme Court reviewed the resolution of the Secretary of Justice, it merely determined if he gravely abused his discretion; that finding does not amount to a judicial determination that the evidence established probable cause. The test is whether sufficient facts exist showing that, in bringing the criminal action, the complainant acted without probable cause, which the Court defines as follows:

Probable cause is the existence of such facts and circumstances as would excite the belief in a reasonable mind that the person charged and prosecuted in a criminal case is probably guilty of the crime or wrongdoing.

Here, the fact that the filing of the complaint was prompted by the result of an investigation shows the City had reasonable ground to believe a crime had probably been committed. Additionally, the fact that the Department of Justice at first found basis for filing the charge indicates that the existence of probable cause is not clearly settled, only that its final determination had to succumb to the sound discretion of the Secretary of Justice under his power to review, revise, or overturn the findings of his subordinates.

On the third issue, the Court held that no evidence was shown of bad blood between the City and the petitioners prior to the filing of the criminal charge, which circumstance, if present, could justify a malicious motive. Resort to judicial processes, by itself, is not evidence of ill will which would automatically make the complainant liable for malicious prosecution; otherwise, peaceful recourse to the courts would be greatly discouraged and the exercise of one's right to litigate would become meaningless and empty. Even if the City branded the petitioners as thieves, asked the people not to patronize their business, and had been overly zealous in pursuing the criminal complaint, these are not the legal malice contemplated in suits for malicious prosecution, as the determining factor is evil motive in bringing the action, not the acts exhibited by the complainant after the case had been filed.

Doctrine

To recover damages for malicious prosecution, the plaintiff must prove four elements: that the defendant caused the prosecution; that the criminal action ended in acquittal; that in bringing the action the defendant had no probable cause; and that the defendant was impelled by legal malice, an improper or sinister motive. Probable cause means the existence of such facts and circumstances as would excite the belief in a reasonable mind that the person charged is probably guilty of the crime or wrongdoing. A prior finding of absence of probable cause in a review of the prosecutor's resolution does not, by itself, establish the element of want of probable cause in a malicious prosecution suit, because such review only tests grave abuse of discretion. Resort to judicial processes is not evidence of ill will, and acts exhibited after the case had been filed do not supply the legal malice required; the determining factor is evil motive in bringing the action.

Disposition

The Court denied the petition and affirmed the Decision and Resolution of the Court of Appeals. The City of Olongapo won.

Remember This

The line worth memorizing is that resort to judicial processes, by itself, is not evidence of ill will, and legal malice in malicious prosecution means evil motive in bringing the action, not acts done after the case had been filed. Examiners like to use this case to test the four elements of malicious prosecution and the distinction between a finding of no probable cause on review and the want of probable cause required for damages.