Title
Milla vs. People
Case
G.R. No. 188726
Decision Date
Jan 25, 2012
Milla convicted of estafa through falsification of public documents after selling fake property, issuing dishonored checks; SC upheld lower courts' rulings.
estafa
falsification of public documents
real estate developer

Case Summary (G.R. No. 188726)

Facts Giving Rise to the Charges

In March 2003, Milla introduced himself to MPI as a real estate developer engaged in selling business properties in Makati and offered to sell a property to the company. To induce MPI’s purchase, he showed Lopez a photocopy of Transfer Certificate of Title (TCT) No. 216445 registered in the names of spouses Farley and Jocelyn Handog (Sps. Handog), together with a Special Power of Attorney allegedly executed by the spouses in Milla’s favor. Lopez checked with the Registry of Deeds of Makati and confirmed that the property was registered under the names of Sps. Handog. Convinced that Milla had authority, MPI purchased the property for P2 million and issued Security Bank and Trust Co. (SBTC) Check No. 154670 for P1.6 million.

After MPI gave the check, Milla delivered to Lopez (one) a notarized Deed of Absolute Sale dated 25 March 2003 purportedly executed by Sps. Handog in favor of MPI, and (two) an original Owner’s Duplicate Copy of TCT No. 216445. Milla then provided Lopez’s partner, Regino Acosta (Acosta), a copy of the new certificate of title, TCT No. 218777, now registered in MPI’s name. MPI later tendered a further SBTC Check No. 154671 for P400,000 as payment of the balance, and Milla turned over TCT No. 218777 to Acosta. However, Milla did not supply Acosta with receipts for transfer taxes and other costs.

Lopez later made inquiries with the Register of Deeds and discovered that: the certificate of title supposedly delivered to MPI could not be found in the registry; there was no transfer from Sps. Handog to MPI; and TCT No. 218777 was registered instead in the name of Matilde M. Tolentino. MPI then demanded restitution from Milla. Milla responded by issuing Equitable PCI Check Nos. 188954 and 188955, each dated 20 and 23 May 2003 and each for P1 million, but the checks were dishonored due to insufficient funds. When Milla ignored Lopez’s demand letter, MPI proceeded with a criminal complaint.

Filing of the Informations and the Accusatory Allegations

On 4 August 2003, MPI, through Lopez acting under authority of MPI’s Board of Directors, filed a complaint against Milla. On 27 and 29 October 2003, two Informations for Estafa Thru Falsification of Public Documents were filed and raffled to RTC Br. 146. Milla was charged in Criminal Case No. 034167 with falsification through the notarized Deed of Absolute Sale. The information alleged that Milla caused it to appear that Sps. Handog sold the covered property to MPI, although the deed was not executed by the purported owners. It further alleged that, after the falsification, Milla presented the falsified deed to Lopez and induced MPI to pay P1,600,000 as partial payment.

In Criminal Case No. 034168, Milla was charged with falsification through TCT No. 218777. The information alleged that Milla caused it to appear that the lot covered by TCT No. 218777 was already registered in MPI’s name, although Milla allegedly knew that the Register of Deeds did not issue TCT No. 218777 in MPI’s name. It likewise alleged that, after the falsification, Milla induced MPI to pay P400,000 based on the falsified title.

Trial Proceedings, Demurrer to Evidence, and RTC Judgment

After the prosecution rested its case, Milla filed a Demurrer to Evidence. On 26 January 2006, RTC Br. 146 denied the demurrer and ordered Milla to present evidence, but Milla failed to do so despite being granted ample opportunity. The RTC treated Milla’s right to present evidence as waived but nonetheless allowed him to file a memorandum.

In its Joint Decision dated 28 November 2006, RTC Br. 146 found Milla guilty beyond reasonable doubt of two counts of estafa through falsification of public documents. The RTC imposed for each count an indeterminate sentence of four (4) years, two (2) months, one (1) day of prision correccional as minimum to twenty (20) years of reclusion temporal as maximum, based on the statutory guidance it applied to the amount involved. It ordered Milla to pay MPI civilly the total amount of P2,000,000, with legal interest from the filing of the information until full payment, and to pay attorney’s fees equivalent to ten percent (10%) of the total amount due. A lien on the monetary award was likewise constituted in favor of the government, noting that the private complainant allegedly had not paid the required docket fee prior to filing.

Appellate Review by the Court of Appeals

On appeal, the Court of Appeals affirmed. In its Decision dated 22 April 2009, it upheld the RTC’s findings of guilt. In its Resolution dated 8 July 2009, it denied Milla’s subsequent motion for reconsideration.

Issues Raised in the Petition

In his Petition for Certiorari, Milla alleged that the Court of Appeals’ rulings were contrary to law and jurisprudence. He raised several issues, including whether the case should be reopened due to alleged negligence of counsel; whether novation applied to exculpate him from criminal liability; whether the transaction could be treated as a simple loan; whether a Secretary’s Certificate presented by the prosecution was admissible in evidence; and whether alleged inconsistencies in prosecution witnesses created reasonable doubt.

MPI countered that Milla was not deprived of due process on the basis of gross negligence of counsel; that novation is not a ground for extinction of criminal liability for estafa under the Revised Penal Code; and that factual findings of the trial court, affirmed by the Court of Appeals, were final and binding. The Office of the Solicitor General similarly contended that Milla was afforded due process; that all elements of the charged crimes were proven at trial; that novation did not lie to extinguish criminal liability; that the money received was not in the nature of a simple loan or cash advance; and that Lopez was properly authorized to file the action.

The Court’s Treatment of Due Process and Alleged Negligence of Counsel

The Court held that Milla was not deprived of due process. It acknowledged Milla’s claim that his former counsel, Atty. Manuel V. Mendoza, filed a demurrer to evidence after the prosecution rested and that Milla was not advised of the demurrer’s status, allegedly causing him to be surprised by the RTC’s judgment and the issuance of a warrant for arrest. The Court also considered Milla’s position that his counsel’s subsequent remedy, an omnibus motion for leave to file a motion for new trial, was denied as an inappropriate remedy, thereby demonstrating negligence.

Applying the general principle that the mistake of counsel binds the client, the Court ruled that relief is warranted only in instances of negligence so gross or palpable that the court must intervene. It found that Milla was able to file a demurrer, that the RTC denied it, and that when the RTC ordered him to present evidence, Milla failed to comply despite being granted opportunity. The Court further noted that the RTC still allowed him to submit a memorandum in the interest of justice. It also rejected Milla’s claim that the RTC denied his motion to recall the warrant outright; rather, the Court examined the RTC order and found that the RTC partly denied the omnibus motion for new trial and recall of warrant, but granted leave to avail of remedies under the Rules of Court, allowing Milla to appeal and lifting the warrant of arrest. From these circumstances, the Court concluded that Milla had opportunities to defend and had been granted corresponding reliefs. The Court therefore found no basis to characterize counsel’s alleged error as so gross and palpable as to amount to a denial of due process.

The Court’s Rejection of Novation as an Exculpatory Theory

The Court likewise rejected Milla’s reliance on novation. Milla argued that before the criminal complaint was filed, he issued Equitable PCI Check Nos. 188954 and 188955, and that this act novated MPI’s obligation, converting the transaction into a purely civil matter and averting any incipient criminal liability.

The Court held that novation cannot extinguish criminal liability in this case. It clarified that mere payment of an obligation before the institution of a criminal complaint does not, by itself, constitute novation that prevents criminal liability. It relied on the rationale in People v. Nery, explaining that novation is not one of the means recognized by the Penal Code for extinguishing criminal liability, and that partial payments accepted without further change in the original relation do not necessarily show the animus novandi required for novation. The Court also invoked Quinto v. People, reiterating that novation is never presumed and that the animus novandi must appear by express agreement or by acts so clear and unequivocal that they are unmistakable. It emphasized that the extinguishment of the old obligation by a new one is essential, and that incompatibility between old and new obligations is the touchstone for determining whether novation exists.

Applying these standards, the Court found that the alleged novation consisted only of changes in the manner of payment. It reasoned that there was no substitution of debtors, and that the complainant merely acquiesced to payments without consenting to enter a new contract. In this connection, the Court also explained that to the extent the changes were merely modificatory and not essential to the object, cause, or principal conditions of the obligation, they were insufficient to extinguish the original obligation.

The Court further stressed that the charged estafa here was not merely misappropriation or conversion under a theory vulnerable to a novation argument. The offense was committed through Milla’s falsification of public documents, and the Court held that liability for such falsification cannot be extinguished by mere novation. It also made clear that estafa is a public offense prosecuted and punished by the State in its own capacity. Thus, even if the offended party later accepted checks or partial retur

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