Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

CRESENCIO C. MILLA, G.R. No. 188726

Petitioner,
Present:

CARPIO, J.,

- versus - Chairperson,
PEREZ,
SERENO,
REYES, and
PERLAS-BERNABE,* JJ.

PEOPLE OF THE PHILIPPINES and Promulgated:

MARKET PURSUITS, INC.
represented by CARLO V. LOPEZ,
January 25, 2012
Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
SERENO, J.:

This is a Petition for Certiorari assailing the 22 April 2009

Decision[1] and 8 July 2009 Resolution[2] of the Court of Appeals, affirming the
Decision of the trial court finding petitioner Cresencio C. Milla (Milla) guilty of
two counts of estafa through falsification of public documents.

Respondent Carlo Lopez (Lopez) was the Financial Officer of private

respondent, Market Pursuits, Inc. (MPI). In March 2003, Milla represented
himself as a real estate developer from Ines Anderson Development
Corporation, which was engaged in selling business properties in Makati, and
offered to sell MPI a property therein located. For this purpose, he
showed Lopez a photocopy of Transfer Certificate of Title (TCT) No. 216445
registered in the name of spouses Farley and Jocelyn Handog (Sps. Handog),
as well as a Special Power of Attorney purportedly executed by the spouses
in favor of Milla.[3] Lopez verified with the Registry of Deeds of Makati and
confirmed that the property was indeed registered under the names of Sps.
Handog. Since Lopez was convinced by Millas authority, MPI purchased the
property for P2 million, issuing Security Bank and Trust Co. (SBTC) Check
No. 154670 in the amount of P1.6 million. After receiving the check, Milla
gave Lopez (1) a notarized Deed of Absolute Sale dated 25 March 2003
executed by Sps. Handog in favor of MPI and (2) an original Owners
Duplicate Copy of TCT No. 216445.[4]

Milla then gave Regino Acosta (Acosta), Lopezs partner, a copy of the
new Certificate of Title to the property, TCT No. 218777, registered in the
name of MPI. Thereafter, it tendered in favor of Milla SBTC Check No.
15467111 in the amount of P400,000 as payment for the balance.[5]

Milla turned over TCT No. 218777 to Acosta, but did not furnish the
latter with the receipts for the transfer taxes and other costs incurred in the
transfer of the property. This failure to turn over the receipts prompted Lopez
to check with the Register of Deeds, where he discovered that (1) the
Certificate of Title given to them by Milla could not be found therein; (2) there
was no transfer of the property from Sps. Handog to MPI; and (3) TCT No.
218777 was registered in the name of a certain Matilde M. Tolentino.[6]

Consequently, Lopez demanded the return of the amount of P2 million

from Milla, who then issued Equitable PCI Check Nos. 188954 and 188955
dated 20 and 23 May 2003, respectively, in the amount of P1 million each.
However, these checks were dishonored for having been drawn against
insufficient funds. When Milla ignored the demand letter sent by Lopez, the
latter, by virtue of the authority vested in him by the MPI Board of Directors,
filed a Complaint against the former on 4 August 2003. On 27 and 29 October
2003, two Informations for Estafa Thru Falsification of Public Documents were
filed against Milla and were raffled to the Regional Trial Court, National
Capital Judicial Region, Makati City, Branch 146 (RTC Br. 146).[7] Milla was
accused of having committed estafa through the falsification of the notarized
Deed of Absolute Sale and TCT No. 218777 purportedly issued by the
Register of Deeds of Makati, viz:

CRIMINAL CASE NO. 034167

 That on or about the 25th day of March 2003, in the City of
Makati, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused, a private individual, did then
and there, wilfully, unlawfully and feloniously falsify a document
denomindated as Deed of Absolute Sale, duly notarized by Atty.
Lope M. Velasco, a Notary Public for and in the City of Makati,
denominated as Doc. No. 297, Page No. 61, Book No. 69,
Series of 2003 in his Notarial Register, hence, a public
document, by causing it to appear that the registered owners of
the property covered by TCT No. 216445 have sold their land to
complainant Market Pursuits, Inc. when in truth and in fact the
said Deed of Absolute Sale was not executed by the owners
thereof and after the document was falsified, accused, with
intent to defraud complainant Market Pursuits, Inc. presented
the falsified Deed of Sale to complainant, herein represented by
Carlo V. Lopez, and complainant believing in the genuineness of
the Deed of Absolute Sale paid accused the amount of
P1,600,000.00 as partial payment for the property, to the
damage and prejudice of complainant in the aforementioned
amount of P1,600,000.00
CONTRARY TO LAW.
CRIMINAL CASE NO. 034168

That on or about the 3rd day of April 2003, in the City of Makati,
Philippines and within the jurisdiction of this Honorable Court,
the above-named accused, a private individual, did then and
there wilfully, unlawfully and feloniously falsify a document
denominated as Transfer Certificate of Title No. 218777
purportedly issued by the Register of Deeds of Makati City,
hence, a public document, by causing it to appear that the lot
covered by TCT No. 218777 was already registered in the name
of complainant Market Pursuits, Inc., herein represented by
Carlo V. Lopez, when in truth and in fact, as said accused well
knew that the Register of Deeds of Makati did not issue TCT No.
218777 in the name of Market Pursuits Inc., and after the
document was falsified, accused with
intent to defraud complainant and complainant believing in the
genuineness of Transfer Certificate of Title No. 218777 paid
accused the amount of P400,000.00, to the damage and
 prejudice of complainant in the aforementioned amount of
P4000,000.00 (sic).
CONTRARY TO LAW.[8]

After the prosecution rested its case, Milla filed, with leave of court, his
Demurrer to Evidence.[9] In its Order dated 26 January 2006, RTC Br. 146
denied the demurrer and ordered him to present evidence, but he failed to do
so despite having been granted ample opportunity.[10] Though the court
considered his right to present evidence to have been consequently waived, it
nevertheless allowed him to file a memorandum.[11]

In its Joint Decision dated 28 November 2006,[12] RTC Br. 146 found
Milla guilty beyond reasonable doubt of two counts of estafa through
falsification of public documents, thus:

WHEREFORE, judgment is rendered finding the accused

Cresencio Milla guilty beyond reasonable doubt of two (2)
counts of estafa through falsification of public documents.
Applying the indeterminate sentence law and considering that
the amount involved is more than P22,000,00 this Court should
apply the provision that an additional one (1) year should be
imposed for every ten thousand (P10,000.00) pesos in excess of
P22,000.00, thus, this Court is constrained to impose the
Indeterminate (sic) penalty of four (4) years, two (2) months one
(1) day of prision correccional as minimum to twenty (20) years
of reclusion temporal as maximum for each count.

Accused is adjudged to be civilly liable to the private

complainant and is ordered pay (sic) complainant the total
amount of TWO MILLION (P2,000,000.00) PESOS with legal
rate of interest from the filing of the Information until the same is
fully paid and to pay the costs. He is further ordered to pay
attorneys fees equivalent to ten (10%) of the total amount due
as and for attorneys fees. A lien on the monetary award is
constituted in favor of the government, the private complainant
not having paid the required docket fee prior to the filing of the
Information.

SO ORDERED.[13]
 On appeal, the Court of Appeals, in the assailed Decision dated 22
April 2009, affirmed the findings of the trial court. [14] In its assailed Resolution
dated 8 July 2009, it also denied Millas subsequent Motion for
Reconsideration.[15]

In the instant Petition, Milla alleges that the Decision and the
Resolution of the Court of Appeals were not in accordance with law and
jurisprudence. He raises the following issues:

I. Whether the case should be reopened on the ground of

negligence of counsel;

II. Whether the principle of novation is applicable;

III. Whether the principle of simple loan is applicable;

IV. Whether the Secretarys Certificate presented by the

prosecution is admissible in evidence;

V. Whether the supposed inconsistent statements of

prosecution witnesses cast a doubt on the guilt of petitioner.[16]

In its Comment, MPI argues that (1) Milla was not deprived of due process on
the ground of gross negligence of counsel; (2) under the Revised Penal Code,
novation is not one of the grounds for the extinction of criminal liability
for estafa; and (3) factual findings of the trial court, when affirmed by the Court
of Appeals, are final and conclusive.[17]

On the other hand, in its Comment, the Office of the Solicitor General
contends that (1) Milla was accorded due process of law; (2) the elements of
the crime charged against him were established during trial; (3) novation is
not a ground for extinction of criminal liability for estafa; (4) the money
received by Milla from Lopez was not in the nature of a simple loan or cash
advance; and (5) Lopez was duly authorized by MPI to institute the action.[18]

In his Consolidated Reply, Milla reiterates that the negligence of his former
counsel warrants a reopening of the case, wherein he can present evidence
to prove that his transaction with MPI was in the nature of a simple loan.[19]

In the disposition of this case, the following issues must be resolved:

I. Whether the negligence of counsel deprived Milla of due

process of law

II. Whether the principle of novation can exculpate Milla from

criminal liability
 III. Whether the factual findings of the trial court, as affirmed by
the appellate court, should be reviewed on appeal

We resolve to deny the Petition.

Milla was not deprived of due

process.

Milla argues that the negligence of his former counsel, Atty. Manuel V.
Mendoza (Atty. Mendoza), deprived him of due process. Specifically, he
states that after the prosecution had rested its case, Atty. Mendoza filed a
Demurrer to Evidence, and that the former was never advised by the latter of
the demurrer. Thus, Milla was purportedly surprised to discover that RTC Br.
146 had already rendered judgment finding him guilty, and that it had issued a
warrant for his arrest. Atty. Mendoza filed an Omnibus Motion for Leave to
File Motion for New Trial, which Milla claims to have been denied by the trial
court for being an inappropriate remedy, thus, demonstrating his counsels
negligence. These contentions cannot be given any merit.

The general rule is that the mistake of a counsel binds the client, and it is only
in instances wherein the negligence is so gross or palpable that courts must
step in to grant relief to the aggrieved client.[20] In this case, Milla was able to
file a Demurrer to Evidence, and upon the trial courts denial thereof, was
allowed to present evidence.[21] Because of his failure to do so, RTC Br. 146
was justified in considering that he had waived his right thereto. Nevertheless,
the trial court still allowed him to submit a memorandum in the interest of
justice. Further, contrary to his assertion that RTC Br. 146 denied the Motion
to Recall Warrant of Arrest thereafter filed by his former counsel, a reading of
the 2 August 2007 Order of RTC Br. 146 reveals that it partially denied the
Omnibus Motion for New Trial and Recall of Warrant of Arrest, but granted the
Motion for Leave of Court to Avail of Remedies under the Rules of Court,
allowing him to file an appeal and lifting his warrant of arrest.[22]

It can be gleaned from the foregoing circumstances that Milla was given
opportunities to defend his case and was granted concomitant reliefs. Thus, it
cannot be said that the mistake and negligence of his former counsel were so
gross and palpable to have deprived him of due process.

The principle of novation cannot

be applied to the case at bar.

Milla contends that his issuance of Equitable PCI Check Nos. 188954 and
188955 before the institution of the criminal complaint against him novated his
obligation to MPI, thereby enabling him to avoid any incipient criminal liability
and converting his obligation into a purely civil one. This argument does not
persuade.

The principles of novation cannot apply to the present case as to extinguish

his criminal liability. Milla cites People v. Nery[23] to support his

contention that his issuance of the Equitable PCI checks prior to the filing of
the criminal complaint averted his incipient criminal liability. However, it must
be clarified that mere payment of an obligation before the institution of a
criminal complaint does not, on its own, constitute novation that may prevent
criminal liability. This Courts ruling in Nery in fact warned:

It may be observed in this regard that novation is not one

of the means recognized by the Penal Code whereby criminal
liability can be extinguished; hence, the role of novation may
only be to either prevent the rise of criminal liability or to cast
doubt on the true nature of the original petition, whether or not it
was such that its breach would not give rise to penal
responsibility, as when money loaned is made to appear as a
deposit, or other similar disguise is resorted to (cf. Abeto vs.
People, 90 Phil. 581; Villareal, 27 Phil. 481).

Even in Civil Law the acceptance of partial payments,

without further change in the original relation between the
complainant and the accused, can not produce novation.
For the latter to exist, there must be proof of intent to
extinguish the original relationship, and such intent can not
be inferred from the mere acceptance of payments on
account of what is totally due. Much less can it be said that
the acceptance of partial satisfaction can effect the nullification
of a criminal liability that is fully matured, and already in the
process of enforcement. Thus, this Court has ruled that the
offended partys acceptance of a promissory note for all or
part of the amount misapplied does not obliterate the
criminal offense(Camus vs. Court of Appeals, 48 Off. Gaz.
3898).[24] (Emphasis supplied.)

Further, in Quinto v. People,[25] this Court exhaustively explained the concept

of novation in relation to incipient criminal liability, viz:
 Novation is never presumed, and the animus novandi,
whether totally or partially, must appear by express agreement
of the parties, or by their acts that are too clear and unequivocal
to be mistaken.

The extinguishment of the old obligation by the new one

is a necessary element of novation which may be effected either
expressly or impliedly. The term expressly means that the
contracting parties incontrovertibly disclose that their object in
executing the new contract is to extinguish the old one. Upon
the other hand, no specific form is required for an implied
novation, and all that is prescribed by law would be an
incompatibility between the two contracts. While there is really
no hard and fast rule to determine what might constitute to
be a sufficient change that can bring about novation, the
touchstone for contrariety, however, would be an
irreconcilable incompatibility between the old and the new
obligations.

There are two ways which could indicate, in fine, the

presence of novation and thereby produce the effect of
extinguishing an obligation by another which substitutes the
same. The first is when novation has been explicitly stated and
declared in unequivocal terms. The second is when the old and
the new obligations are incompatible on every point. The test of
incompatibility is whether or not the two obligations can
stand together, each one having its independent existence.
If they cannot, they are incompatible and the latter
obligation novates the first. Corollarily, changes that breed
incompatibility must be essential in nature and not merely
accidental. The incompatibility must take place in any of the
essential elements of the obligation, such as its object,
cause or principal conditions thereof; otherwise, the
change would be merely modificatory in nature and
insufficient to extinguish the original obligation.

The changes alluded to by petitioner consists only in

the manner of payment. There was really no substitution of
debtors since private complainant merely acquiesced to the
payment but did not give her consent to enter into a new
contract. The appellate court observed:
xxx xxx xxx
 The acceptance by complainant of
partial payment tendered by the buyer, Leonor
Camacho, does not evince the intention of the
complainant to have their agreement novated.
It was simply necessitated by the fact that, at
that time, Camacho had substantial accounts
payable to complainant, and because of the
fact that appellant made herself scarce to
complainant. (TSN, April 15, 1981, 31-32) Thus,
to obviate the situation where complainant
would end up with nothing, she was forced to
receive the tender of Camacho. Moreover, it is to
be noted that the aforesaid payment was for the
purchase, not of the jewelry subject of this case,
but of some other jewelry subject of a previous
transaction. (Ibid. June 8, 1981, 10-11)

xxx xxx xxx

Art. 315 of the Revised Penal Code defines estafa and

penalizes any person who shall defraud another by
misappropriating or converting, to the prejudice of another,
money, goods, or any other personal property received by the
offender in trust or on commission, or for administration, or
under any other obligation involving the duty to make delivery of
or to return the same, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received
such money, goods, or other property. It is axiomatic that the
gravamen of the offense is the appropriation or conversion of
money or property received to the prejudice of the owner. The
terms convert and misappropriate have been held to connote an
act of using or disposing of anothers property as if it were ones
own or devoting it to a purpose or use different from that agreed
upon. The phrase, to misappropriate to ones own use has been
said to include not only conversion to ones personal advantage,
but also every attempt to dispose of the property of another
without right. Verily, the sale of the pieces of jewelry on
installments (sic) in contravention of the explicit terms of the
authority granted to her in Exhibit A (supra) is deemed to be one
of conversion. Thus, neither the theory of delay in the fulfillment
of commission nor that of novation posed by petitioner, can
avoid the incipient criminal liability. In People vs. Nery, this Court
held:
 xxx xxx xxx

The criminal liability for estafa already committed is

then not affected by the subsequent novation of contract,
for it is a public offense which must be prosecuted and
punished by the State in its own conation. (Emphasis
supplied.)[26]

In the case at bar, the acceptance by MPI of the Equitable PCI checks
tendered by Milla could not have novated the original transaction, as the
checks were only intended to secure the return of the P2 million the former
had already given him. Even then, these checks bounced and were thus
unable to satisfy his liability. Moreover, the estafa involved here was not for
simple misappropriation or conversion, but was committed through Millas
falsification of public documents, the liability for which cannot be extinguished
by mere novation.

The Court of Appeals was correct

in affirming the trial courts finding
of guilt.

Finally, Milla assails the factual findings of the trial court. Suffice it to say that
factual findings of the trial court, especially when affirmed by the appellate
court, are binding on and accorded great respect by this Court.[27]

There was no reversible error on the part of the Court of Appeals when it
affirmed the finding of the trial court that Milla was guilty beyond reasonable
doubt of the offense of estafathrough falsification of public documents. The
prosecution was able to prove the existence of all the elements of the crime
charged. The relevant provisions of the Revised Penal Code read:

Art. 172. Falsification by private individual and use of

falsified documents. The penalty of prision correccional in its
medium and maximum periods and a fine of not more than 5,000
shall be imposed upon:

1. Any private individual who shall commit any

of the falsification enumerated in the next preceding article in any
public or official document or letter of exchange or any other kind
of commercial document
 xxx xxx xxx

Art. 315. Swindling (estafa). Any person who shall defraud

another by any of the means mentioned hereinbelow shall be
punished by:

xxx xxx xxx

2. By means of any of the following false pretenses or

fraudulent acts executed prior to or simultaneously with the
commission of the fraud:

(a) By using a fictitious name, or falsely pretending to

possess power, influence, qualifications, property, credit, agency,
business or imaginary transactions; or by means of other similar
deceits.

xxx xxx xxx

It was proven during trial that Milla misrepresented himself to have the authority
to sell the subject property, and it was precisely this misrepresentation that
prompted MPI to purchase it. Because of its reliance on his authority and on the
falsified Deed of Absolute Sale and TCT No. 218777, MPI parted with its
money in the amount of P2 million, which has not been returned until now
despite Millas allegation of novation. Clearly, he is guilty beyond reasonable
doubt of estafa through falsification of public documents.

WHEREFORE, we resolve to DENY the Petition. The assailed

Decision and Resolution of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.