G.R. No. L-45278 - Antazo vs. People

Case Summary (G.R. No. L-45278)

Principal Statutory Provision and Venue

The conviction was for estafa under paragraph 2, Article 316 of the Revised Penal Code. The trial court sat in the Court of First Instance of Rizal, Branch VI, Makati, while the appellate affirmance came from the Court of Appeals.

Factual Background: Contract to Sell, Warranty, and Subsequent Encumbrance

In May 1965, Mariano Medina expressed interest in buying a portion of Antazo’s land. The parties proceeded to the site and agreed on the purchase of Lot No. 2-A-2. On June 18, 1965, Antazo and the Medinas executed a Contract of Purchase and Sale for P4,277.00, payable in installments. Antazo bound himself to sell the property and, upon full payment, to deliver the title “free from all liens and encumbrances.” The contract also expressly stipulated that ownership would remain with Antazo until completion of installment payments.

Despite this arrangement, on August 19, 1965, without Medina’s knowledge or consent, Antazo mortgaged the entire Lot No. 2-A, including Lot No. 2-A-2, to the Binangonan Rural Bank for P3,000.00. That mortgage was discharged only on August 14, 1971.

On July 16, 1966, the Medinas completed payment of the installments for Lot 2-A-2. They demanded the delivery of the title and the execution of the corresponding absolute deed of sale. Accordingly, on August 12, 1966, Antazo executed a deed of absolute sale for Lot 2-A-2, stating in the deed of conveyance that the sold land was “free from all liens and encumbrances.” At that time, however, the mortgage in favor of the Binangonan Rural Bank still existed. Despite repeated demands, Antazo did not deliver a separate title covering Lot 2-A-2.

In 1970, the Medinas investigated the title at the Register of Deeds of Rizal and learned that the property had a subsisting mortgage lien in favor of the Binangonan Rural Bank. They also discovered that there had been an execution levy on the same land arising from a decision of the City Court of Manila in Civil Case No. 134430, entitled “Philippine National Bank vs. Napoleon Antazo,” and that the levy had been inscribed on September 27, 1967.

Criminal Charge and Trial Court Decision

Predicated on these events, Antazo was charged with estafa on May 4, 1971 in the Court of First Instance of Rizal (Branch VI, Makati), docketed as Criminal Case No. 326-M. After trial, the court rendered judgment on August 14, 1971, finding Antazo guilty beyond reasonable doubt as principal of estafa under paragraph 2, Article 316 of the Revised Penal Code.

The trial court sentenced Antazo to suffer an imprisonment of two (2) months and one (1) day of arresto mayor, and to pay a fine of P4,277.00 representing the price paid by Mariano Medina, with subsidiary imprisonment in case of insolvency at the rate of P2.50 a day, but not exceeding one-third of the principal penalty and not more than one year, and to pay costs.

Appellate Review by the Court of Appeals

Antazo appealed to the Court of Appeals. In its October 21, 1976 decision, the Fifth Division affirmed the conviction but modified the subsidiary imprisonment portion due to insolvency. It fixed the daily rate at EIGHT (P8.00) PESOS for every day to be served, but still subject to the limitations that it would not exceed one-third of the principal penalty and would not exceed one year.

The parties agreed that the underlying facts were essentially not disputed. The central controversy was whether Antazo’s conduct amounted to fraud, deceit, or misrepresentation constitutive of criminal estafa.

The Parties’ Contentions

Antazo, in seeking reversal, argued that no estafa had been committed. He asserted that at the time of the execution of the Deed of Absolute Sale on August 12, 1966, Medina had already made full payment under the purchase and sale contract. He acknowledged that he failed to comply with his obligation to deliver title free from liens and encumbrances, but he maintained that his failure to perform a promise did not, by itself, constitute the deceit required for criminal liability. He further argued that the intention to defraud must exist at the time of the deceitful act, citing People vs. Villarin.

He also invoked an argument that the complainant must be presumed to have known of the encumbrances recorded in the Register of Deeds, given the existence and registration of the mortgage in favor of the Binangonan Rural Bank and that the facts were already recorded at the time of the sale. On that premise, he claimed that any inference of deceit was negated.

The People, as represented through the Solicitor General’s stance adopted by the appellate court’s reasoning, countered that the case involved two stages in the transaction. It argued that while the initial contract could be viewed as a contract to sell with ownership remaining with the vendor until full payment, the deceit materialized at the second stage when Antazo executed the deed of sale containing an express warranty that the property was free from liens and encumbrances, despite the existence of the mortgage and the subsequent levy.

Court of Appeals’ Resolution

The Court of Appeals affirmed the trial court. It held itself in accord with the trial court’s observation that, given Antazo’s experience as a lawyer and former municipal judge, it was likely he inserted the phrase about freedom from liens and encumbrances to convince the complainant of the supposed non-existence of liability on the property.

Antazo’s attempt to rely on a prior appellate ruling, People vs. Pedrasa, was rejected because the Court of Appeals found substantial differences between that case and the case before it. It noted, in particular, that in Pedrasa the appellant had already ceased to be the owner at the time of sale and the mortgage on the same land was not valid, whereas the circumstances in Antazo’s case differed.

Supreme Court’s Legal Reasoning on Deceit and False Representation

The Supreme Court found Antazo’s contentions untenable and upheld the finding of criminal deceit. It treated the transaction as consisting of two stages. The first stage was the June 18, 1965 contract of purchase and sale, which the Court described as a contract to sell because the parties expressly agreed that ownership remained with Antazo until full payment. The Supreme Court, however, emphasized that even at this first stage, there existed an inherent commitment that Antazo would transfer valid and clear title upon fulfillment of the stipulated conditions.

The second stage arose when Antazo, on August 19, 1965, mortgaged the property to the Binangonan Rural Bank, presumably intending to redeem before completion of installment payments. When Medina completed payment on July 16, 1966, and demanded the execution of an absolute deed of sale and delivery of title, Antazo prepared and executed the Deed of Absolute Sale on August 12, 1966, including an express warranty that the property was “free from all liens and encumbrances,” even though the land was still mortgaged. The Court further noted the later existence of a levy on execution on account of Civil Case No. 134430, with the inscription made on September 27, 1967.

The Court rejected the claim that no money or consideration was paid at the time of the deed of absolute sale. It reasoned that the deed was executed because full payment had already been made previously by Medina, and therefore the deed of conveyance was a consequence of the earlier payment and demand for the corresponding sale documents.

The Supreme Court held that deceit was exercised at this second stage through the false warranty in the deed of absolute sale. It described fraud in this context as acts or spoken or written words intended to mislead another into believing a fact that is not true. It concluded that the express warranty that the lot was unencumbered constituted the false representation forming an essential element of estafa under People vs. Galsim.

Damages and Lack of Good Faith

The Supreme Court also rejected Antazo’s argument that

Case Syllabus (G.R. No. L-45278)

The case originated from a petition for certiorari assailing the Court of Appeals decision dated October 21, 1976, which affirmed the petitioner’s conviction for estafa rendered by the Court of First Instance of Rizal in Criminal Case No. 3-26-M.
The petitioner, Napoleon Antazo, sought the setting aside of the judgments of the courts below and prayed for an acquittal by the Supreme Court.
The Court dismissed the petition for lack of merit, leaving the conviction intact as modified by the Court of Appeals.

Parties and Procedural Posture

The petitioner was Napoleon Antazo, a lawyer and a retired municipal judge, who stood accused and was convicted of estafa.
The respondents were People of the Philippines and the Hon. Court of Appeals.
The trial court convicted the petitioner as principal for estafa under paragraph 2, Article 316, Revised Penal Code.
The Court of Appeals affirmed the conviction and modified only the subsidiary imprisonment in case of failure to pay the fine due to insolvency.
The Supreme Court reviewed the petitioner’s allegations through the petition for certiorari, focusing on whether the acts found by the lower courts amounted to fraud or deceit constitutive of estafa.

Key Factual Background

The petitioner owned a parcel of land known as Lot No. 2 of Psd-9594, situated at Barrio Calumpang, Binangonan, Rizal, covered by TCT No. 147525.
In May 1965, Mariano Medina expressed interest to purchase a portion of the lot, specifically Lot No. 2-A-2 with an area of 295 square meters.
On June 18, 1965, the petitioner and the spouses Medina executed a Contract of Purchase and Sale for PHP 4,277.00, to be paid in installments.
The contract required the petitioner to sell Lot 2-A-2 and to deliver the title “free from all liens and encumbrances” upon full payment.
The contract expressly provided that, before completion of installment payments, ownership would remain with the petitioner, effectively making the agreement one where title transfer depended on full payment.
On August 19, 1965, without Medina’s knowledge or consent, the petitioner mortgaged the entire Lot No. 2-A to the Binangonan Rural Bank for PHP 3,000.00, thereby including Lot 2-A-2 within the mortgaged property.
The mortgage was discharged only on August 14, 1971.
On July 16, 1966, the Medina spouses completed installment payments for Lot 2-A-2 and demanded delivery of the title and execution of an absolute deed of sale.
Despite the existing mortgage, the petitioner executed an absolute deed of sale on August 12, 1966, stating that the land sold was “free from all liens and encumbrances.”
After several demands, the petitioner failed to deliver a separate title covering Lot 2-A-2.
In 1970, the Medina spouses investigated the title at the Register of Deeds of Rizal and discovered the mortgage lien in favor of the Binangonan Rural Bank and a separate levy on execution by virtue of a decision in Civil Case No. 134430, “Philippine National Bank vs. Napoleon Antazo,” which had been inscribed on September 27, 1967.
On February 2, 1970, the Medina spouses, through counsel, sent a letter demanding a clear title; the petitioner did not reply.
On May 4, 1971, the petitioner was charged with estafa in the Court of First Instance of Rizal, Branch VI, Makati, docketed as Criminal Case No. 326-M.
The trial court convicted the petitioner on August 14, 1971, sentencing him to imprisonment and fine, with subsidiary imprisonment in case of insolvency.
The Court of Appeals affirmed the conviction on October 21, 1976, modifying only the rate and computation of subsidiary imprisonment due to insolvency.

Contract Stipulations and Property Status

The Contract of Purchase and Sale on June 18, 1965 described the sale of Lot 2-A-2 and imposed on the petitioner the obligation to transfer title free from all liens and encumbrances upon full payment.
The contract stipulated that before full installment payments were completed, ownership would remain with the petitioner.
The petitioner executed the absolute deed of sale on August 12, 1966 after the last installment was paid on July 16, 1966.
At the time of the deed of sale, the property was still encumbered by the mortgage to the Binangonan Rural Bank.
The Court recognized that additional adverse effects later appeared through a levy on execution connected to Civil Case No. 134430, inscribed on September 27, 1967.

Charges and Theory of Deceit

The criminal case prosecuted the petitioner for estafa under paragraph 2, Article 316, Revised Penal Code.
The deceit relied upon by the courts below centered on the petitioner’s false warranty in the deed of absolute sale that the property was free from all liens and encumbrances.
The Court treated the false representation in the deed as an act meant to mislead Medina into believing that the purchased property was unencumbered at the time of conveyance.

Issues Raised on Certiorari

The petitioner’s principal contention was that estafa had not been committed because no fraud or deceit existed at the time of the deed’s execution.
The petitioner argued that by the time the absolute deed of sale was executed, Medina had already made full payment under the purchase contract, and thus no improper consideration was involved.
The petitioner maintained that his failure to deliver title free from encumbrances did not amount to criminal deceit because it was, in his view, merely a breach of promise to perform, not a representation constitutive of deceit.
The petitioner invoked the requirement that the intention to defraud must be present coetaneous with the alleged deceitful act.
The Court of Appeals had rejected the petitioner’s attempt to invoke People vs. Pedrasa, distinguishing it from the case at bar, and the Supreme Court sustained that approach by analyzing the transact