Crim Property Digest 1

8/12/2019 Crim Property Digest 1

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Denise Y. Lagulao, LLB-2A

1

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 160758 January 15, 2014

DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner,vs.

GUARIÑA AGRICULTURAL AND REALTY DEVELOPMENT CORPORATION, Respondent.

D E C I S I O N

BERSAMIN, J.:

The foreclosure of a mortgage prior to the mortgagor's default on the principal obligation is premature,

and should be undone for being void and ineffectual. The mortgagee who has been meanwhile givenpossession of the mortgaged property by virtue of a writ of possession issued to it as the purchaser atthe foreclosure sale may be required to restore the possession of the property to the mortgagor and topay reasonable rent for the use of the property during the intervening period.

The Case

In this appeal, Development Bank of the Philippines (DBP) seeks the reversal of the adverse decisionpromulgated on March 26, 2003 in C.A.-G.R. CV No. 59491 ,1 whereby the Court of Appeals (CA) upheldthe judgment rendered on January 6, 199 82 by the Regional Trial Court, Branch 25, in Iloilo City (RTC)annulling the extra-judicial foreclosure of the real estate and chattel mortgages at the instance of DBPbecause the debtor-mortgagor, Guariña Agricultural and Realty Development Corporation (GuariñaCorporation), had not yet defaulted on its obligations in favor of DBP.

Antecedents

In July 1976, Guariña Corporation applied for a loan from DBP to finance the development of its resortcomplex situated in Trapiche, Oton, Iloilo. The loan, in the amount of P3,387,000.00, was approved onAugust 5, 1976 .3Guariña Corporation executed a promissory note that would be due on November 3,1988 .4 On October 5, 1976, Guariña Corporation executed a real estate mortgage over several realproperties in favor of DBP as security for the repayment of the loan. On May 17, 1977, Guariña

Corporation executed a chattel mortgage over the personal properties existing at the resort complexand those yet to be acquired out of the proceeds of the loan, also to secure the performance of theobligation .5 Prior to the release of the loan, DBP required Guariña Corporation to put up a cash equityof P1,470,951.00 for the construction of the buildings and other improvements on the resort complex.

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The loan was released in several instalments, and Guariña Corporation used the proceeds to defray thecost of additional improvements in the resort complex. In all, the amount releasedtotalled P3,003,617.49, from which DBP withheld P148,102.98 as interest .6

Guariña Corporation demanded the release of the balance of the loan, but DBP refused. Instead, DBP

directly paid some suppliers of Guariña Corporation over the latter 's objection. DBP found uponinspection of the resort project, its developments and improvements that Guariña Corporation had notcompleted the construction works .7In a letter dated February 27, 1978 ,8 and a telegram dated June 9,1978 ,9 DBP thus demanded that Guariña Corporation expedite the completion of the project, andwarned that it would initiate foreclosure proceedings should Guariña Corporation not do so .10

Unsatisfied with the non-action and objection of Guariña Corporation, DBP initiated extrajudicialforeclosure proceedings. A notice of foreclosure sale was sent to Guariña Corporation. The notice waseventually published, leading the clients and patrons of Guariña Corporation to think that its businessoperation had slowed down, and that its resort had already closed .11

On January 6, 1979, Guariña Corporation sued DBP in the RTC to demand specific performance of thelatter's obligations under the loan agreement, and to stop the foreclosure of the mortgages (Civil CaseNo. 12707) .12However, DBP moved for the dismissal of the complaint, stating that the mortgagedproperties had already been sold to satisfy the obligation of Guariña Corporation at a public auction heldon January 15, 1979 at the Costa Mario Resort Beach Resort in Oton, Iloilo .13 Due to this, GuariñaCorporation amended the complaint on February 6, 1979 14 to seek the nullification of the foreclosureproceedings and the cancellation of the certificate of sale. DBP filed its answer on December 17,1979 ,15 and trial followed upon the termination of the pre-trial without any agreement being reached bythe parties .16

In the meantime, DBP applied for the issuance of a writ of possession by the RTC. At first, the RTCdenied the application but later granted it upon DBP's motion for reconsideration. Aggrieved, GuariñaCorporation assailed the granting of the application before the CA on certiorari (C.A.-G.R. No. 12670-SPentitled Guariña Agricultural and Realty Development Corporation v. Development Bank of thePhilippines). After the CA dismissed the petition for certiorari, DBP sought the implementation of theorder for the issuance of the writ of possession. Over Guariña Corporation's opposition, the RTC issuedthe writ of possession on June 16, 1982 .17

Judgment of the RTC

On January 6, 1998, the RTC rendered its judgment in Civil Case No. 12707, disposing as follows:

WHEREFORE, premises considered, the court hereby resolves that the extra-judicial sales of themortgaged properties of the plaintiff by the Office of the Provincial Sheriff of Iloilo on January 15, 1979are null and void, so with the consequent issuance of certificates of sale to the defendant of saidproperties, the registration thereof with the Registry of Deeds and the issuance of the transfercertificates of title involving the real property in its name.


















































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It is also resolved that defendant give back to the plaintiff or its representative the actual possession andenjoyment of all the properties foreclosed and possessed by it. To pay the plaintiff the reasonable rentalfor the use of its beach resort during the period starting from the time it (defendant) took over itsoccupation and use up to the time possession is actually restored to the plaintiff.

And, on the part of the plaintiff, to pay the defendant the loan it obtained as soon as it takes possessionand management of the beach resort and resume its business operation.

Furthermore, defendant is ordered to pay plaintiff's attorney's fee of P50,000.00.

So ORDERED.18

Decision of the CA

On appeal (C.A.-G.R. CV No. 59491), DBP challenged the judgment of the RTC, and insisted that:

I

THE TRIAL COURT ERRED AND COMMITTED REVERSIBLE ERROR IN DECLARING DBP'S FORECLOSURE OFTHE MORTGAGED PROPERTIES AS INVALID AND UNCALLED FOR.

II

THE TRIAL COURT GRIEVOUSLY ERRED IN HOLDING THE GROUNDS INVOKED BY DBP TO JUSTIFYFORECLOSURE AS "NOT SUFFICIENT." ON THE CONTRARY, THE MORTGAGE WAS FORECLOSED BYEXPRESS AUTHORITY OF PARAGRAPH NO. 4 OF THE MORTGAGE CONTRACT AND SECTION 2 OF P.D. 385IN ADDITION TO THE QUESTIONED PAR. NO. 26 PRINTED AT THE BACK OF THE FIRST PAGE OF THEMORTGAGE CONRACT.

III

THE TRIAL COURT ERRED IN HOLDING THE SALES OF THE MORTGAGED PROPERTIES TO DBP AS INVALIDUNDER ARTICLES 2113 AND 2141 OF THE CIVIL CODE.

IV

THE TRIAL COURT GRAVELY ERRED AND COMMITTED [REVERSIBLE] ERROR IN ORDERING DBP TORETURN TO PLAINTIFF THE ACTUAL POSSESSION AND ENJOYMENT OF ALL THE FORECLOSED PROPERTIESAND TO PAY PLAINTIFF REASONABLE RENTAL FOR THE USE OF THE FORECLOSED BEACH RESORT.

V

THE TRIAL COURT ERRED IN AWARDING ATTORNEY'S FEES AGAINST DBP WHICH MERELY EXERCISED ITSRIGHTS UNDER THE MORTGAGE CONTRACT.19

In its decision promulgated on March 26, 2003 ,20 however, the CA sustained the RTC's judgment butdeleted the award of attorney's fees, decreeing:
















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WHEREFORE, in view of the foregoing, the Decision dated January 6, 1998, rendered by the RegionalTrial Court of Iloilo City, Branch 25 in Civil Case No. 12707 for Specific Performance with PreliminaryInjunction is hereby AFFIRMED with MODIFICATION, in that the award for attorney's fees is deleted.

SO ORDERED.21

DBP timely filed a motion for reconsideration, but the CA denied its motion on October 9, 2003.

Hence, this appeal by DBP.

Issues

DBP submits the following issues for consideration, namely:

WHETHER OR NOT THE DECISION OF THE COURT OF APPEALS DATED MARCH 26, 2003 AND ITSRESOLUTION DATED OCTOBER 9, DENYING PETITIONER'S MOTION FOR RECONSIDERATION WEREISSUED IN ACCORDANCE WITH LAW, PREVAILING JURISPRUDENTIAL DECISION AND SUPPORTED BY

EVIDENCE;

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ADHERED TO THE USUAL COURSE OF JUDICIALPROCEEDINGS IN DECIDING C.A.-G.R. CV NO. 59491 AND THEREFORE IN ACCORDANCE WITH THE "LAWOF THE CASE DOCTRINE."22

Ruling

The appeal lacks merit.

1.

Findings of the CA were supported by theevidence as well as by law and jurisprudence

DBP submits that the loan had been granted under its supervised credit financing scheme for thedevelopment of a beach resort, and the releases of the proceeds would be subject to conditions thatincluded the verification of the progress of works in the project to forestall diversion of the loanproceeds; and that under Stipulation No. 26 of the mortgage contract, further loan releases would beterminated and the account would be considered due and demandable in the event of a deviation fromthe purpose of the loan ,23 including the failure to put up the required equity and the diversion of theloan proceeds to other purposes .24 It assails the declaration by the CA that Guariña Corporation had not

yet been in default in its obligations despite violations of the terms of the mortgage contract securingthe promissory note.

Guariña Corporation counters that it did not violate the terms of the promissory note and the mortgagecontracts because DBP had fully collected the interest notwithstanding that the principal obligation didnot yet fall due and become demandable .25

The submissions of DBP lack merit and substance.
























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The agreement between DBP and Guariña Corporation was a loan. Under the law, a loan requires thedelivery of money or any other consumable object by one party to another who acquires ownershipthereof, on the condition that the same amount or quality shall be paid .26 Loan is a reciprocal obligation,as it arises from the same cause where one party is the creditor, and the other the debtor .27 Theobligation of one party in a reciprocal obligation is dependent upon the obligation of the other, and the

performance should ideally be simultaneous. This means that in a loan, the creditor should release thefull loan amount and the debtor repays it when it becomes due and demandable .28

In its assailed decision, the CA found and held thusly:

x x x x

x x x It is undisputed that appellee obtained a loan from appellant, and as security, executed real estateand chattel mortgages. However, it was never established that appellee was already in default.Appellant, in a telegram to the appellee reminded the latter to make good on its construction works,otherwise, it would foreclose the mortgage it executed. It did not mention that appellee was already indefault. The records show that appellant did not make any demand for payment of the promissory note.It appears that the basis of the foreclosure was not a default on the loan but appellee's failure tocomplete the project in accordance with appellant's standards. In fact, appellant refused to release theremaining balance of the approved loan after it found that the improvements introduced by appelleewere below appellant's expectations.

The loan agreement between the parties is a reciprocal obligation. Appellant in the instant case bounditself to grant appellee the loan amount of P3,387,000.00 condition on appellee's payment of theamount when it falls due. Furthermore, the loan was evidenced by the promissory note which wassecured by real estate mortgage over several properties and additional chattel mortgage. Reciprocal

obligations are those which arise from the same cause, and in which each party is a debtor and acreditor of the other, such that the obligation of one is dependent upon the obligation of the other(Areola vs. Court of Appeals, 236 SCRA 643). They are to be performed simultaneously such that theperformance of one is conditioned upon the simultaneous fulfilment of the other (Jaime Ong vs. Courtof Appeals, 310 SCRA 1). The promise of appellee to pay the loan upon due date as well as to executesufficient security for said loan by way of mortgage gave rise to a reciprocal obligation on the part ofappellant to release the entire approved loan amount. Thus, appellees are entitled to receive the totalloan amount as agreed upon and not an incomplete amount.

The appellant did not release the total amount of the approved loan. Appellant therefore could not have

made a demand for payment of the loan since it had yet to fulfil its own obligation. Moreover, the factthat appellee was not yet in default rendered the foreclosure proceedings premature and improper.

The properties which stood as security for the loan were foreclosed without any demand having beenmade on the principal obligation. For an obligation to become due, there must generally be a demand.Default generally begins from the moment the creditor demands the performance of the obligation.Without such demand, judicial or extrajudicial, the effects of default will not arise (Namarco vs.
















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Federation of United Namarco Distributors, Inc., 49 SCRA 238; Borje vs. CFI of Misamis Occidental, 88SCRA 576).

x x x x

Appellant also admitted in its brief that it indeed failed to release the full amount of the approved loan.As a consequence, the real estate mortgage of appellee becomes unenforceable, as it cannot be entirelyforeclosed to satisfy appellee's total debt to appellant (Central Bank of the Philippines vs. Court ofAppeals, 139 SCRA 46).

Since the foreclosure proceedings were premature and unenforceable, it only follows that appellee isstill entitled to possession of the foreclosed properties. However, appellant took possession of the sameby virtue of a writ of possession issued in its favor during the pendency of the case. Thus, the trial courtcorrectly ruled when it ordered appellant to return actual possession of the subject properties toappellee or its representative and to pay appellee reasonable rents.

However, the award for attorney's fees is deleted. As a rule, the award of attorney's fees is theexception rather than the rule and counsel's fees are not to be awarded every time a party wins a suit.Attorney's fees cannot be recovered as part of damages because of the policy that no premium shouldbe placed on the right to litigate (Pimentel vs. Court of Appeals, et al., 307 SCRA 38) .29

x x x x

We uphold the CA.

To start with, considering that the CA thereby affirmed the factual findings of the RTC, the Court isbound to uphold such findings, for it is axiomatic that the trial court's factual findings as affirmed by the

CA are binding on appeal due to the Court not being a trier of facts.

Secondly, by its failure to release the proceeds of the loan in their entirety, DBP had no right yet to exacton Guariña Corporation the latter's compliance with its own obligation under the loan. Indeed, if a partyin a reciprocal contract like a loan does not perform its obligation, the other party cannot be obliged toperform what is expected of it while the other's obligation remains unfulfilled .30 In other words, thelatter party does not incur delay .31

Still, DBP called upon Guariña Corporation to make good on the construction works pursuant to theacceleration clause written in the mortgage contract (i.e., Stipulation No. 26) ,32 or else it would foreclosethe mortgages.

DBP's actuations were legally unfounded. It is true that loans are often secured by a mortgageconstituted on real or personal property to protect the creditor's interest in case of the default of thedebtor. By its nature, however, a mortgage remains an accessory contract dependent on the principalobligation ,33 such that enforcement of the mortgage contract will depend on whether or not there hasbeen a violation of the principal obligation. While a creditor and a debtor could regulate the order inwhich they should comply with their reciprocal obligations, it is presupposed that in a loan the lender
























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should perform its obligation - the release of the full loan amount - before it could demand that theborrower repay the loaned amount. In other words, Guariña Corporation would not incur in delaybefore DBP fully performed its reciprocal obligation .34

Considering that it had yet to release the entire proceeds of the loan, DBP could not yet make an

effective demand for payment upon Guariña Corporation to perform its obligation under the loan.According to Development Bank of the Philippines v. Licuanan ,35 it would only be when a demand to payhad been made and was subsequently refused that a borrower could be considered in default, and thelender could obtain the right to collect the debt or to foreclose the mortgage. 1âwphi1 Hence, GuariñaCorporation would not be in default without the demand.

Assuming that DBP could already exact from the latter its compliance with the loan agreement, theletter dated February 27, 1978 that DBP sent would still not be regarded as a demand to render GuariñaCorporation in default under the principal contract because DBP was only thereby requesting the latter"to put up the deficiency in the value of improvements. "36

Under the circumstances, DBP's foreclosure of the mortgage and the sale of the mortgaged properties atits instance were premature, and, therefore, void and ineffectual .37

Being a banking institution, DBP owed it to Guariña Corporation to exercise the highest degree ofdiligence, as well as to observe the high standards of integrity and performance in all its transactionsbecause its business was imbued with public interest .38 The high standards were also necessary toensure public confidence in the banking system, for, according to Philippine National Bank v. Pike :39 "Thestability of banks largely depends on the confidence of the people in the honesty and efficiency ofbanks." Thus, DBP had to act with great care in applying the stipulations of its agreement with GuariñaCorporation, lest it erodes such public confidence. Yet, DBP failed in its duty to exercise the highest

degree of diligence by prematurely foreclosing the mortgages and unwarrantedly causing theforeclosure sale of the mortgaged properties despite Guariña Corporation not being yet in default. DBPwrongly relied on Stipulation No. 26 as its basis to accelerate the obligation of Guariña Corporation, forthe stipulation was relevant to an Omnibus Agricultural Loan, to Guariña Corporation's loan which wasintended for a project other than agricultural in nature.

Even so, Guariña Corporation did not elevate the actionability of DBP's negligence to the CA, and did notalso appeal the CA's deletion of the award of attorney's fees allowed by the RTC. 1âwphi1 With thedecision of the CA consequently becoming final and immutable as to Guariña Corporation, we will notdelve any further on DBP's actionable actuations.

2.The doctrine of law of the casedid not apply herein

DBP insists that the decision of the CA in C.A.-G.R. No. 12670-SP already constituted the law of the case.Hence, the CA could not decide the appeal in C.A.-G.R. CV No. 59491 differently.




























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Guariña Corporation counters that the ruling in C.A.-G.R. No. 12670-SP did not constitute the law of thecase because C.A.-G.R. No. 12670-SP concerned the issue of possession by DBP as the winning bidder inthe foreclosure sale, and had no bearing whatsoever to the legal issues presented in C.A.-G.R. CV No.59491.

Law of the case has been defined as the opinion delivered on a former appeal, and means, morespecifically, that whatever is once irrevocably established as the controlling legal rule of decisionbetween the same parties in the same case continues to be the law of the case, whether correct ongeneral principles or not, so long as the facts on which such decision was predicated continue to be thefacts of the case before the court .40

The concept of law of the case is well explained in Mangold v. Bacon ,41 an American case, thusly:

The general rule, nakedly and boldly put, is that legal conclusions announced on a first appeal, whetheron the general law or the law as applied to the concrete facts, not only prescribe the duty and limit thepower of the trial court to strict obedience and conformity thereto, but they become and remain thelaw of the case in all other steps below or above on subsequent appeal. The rule is grounded onconvenience, experience, and reason. Without the rule there would be no end to criticism, reagitation,reexamination, and reformulation. In short, there would be endless litigation. It would be intolerable ifparties litigants were allowed to speculate on changes in the personnel of a court, or on the chance ofour rewriting propositions once gravely ruled on solemn argument and handed down as the law of agiven case. An itch to reopen questions foreclosed on a first appeal would result in the foolishness of theinquisitive youth who pulled up his corn to see how it grew. Courts are allowed, if they so choose, to actlike ordinary sensible persons. The administration of justice is a practical affair. The rule is a practicaland a good one of frequent and beneficial use.

The doctrine of law of the case simply means, therefore, that when an appellate court has once declaredthe law in a case, its declaration continues to be the law of that case even on a subsequent appeal,notwithstanding that the rule thus laid down may have been reversed in other cases .42 For practicalconsiderations, indeed, once the appellate court has issued a pronouncement on a point that waspresented to it with full opportunity to be heard having been accorded to the parties, thepronouncement should be regarded as the law of the case and should not be reopened on remand ofthe case to determine other issues of the case, like damages .43 But the law of the case, as the nameimplies, concerns only legal questions or issues thereby adjudicated in the former appeal.

The foregoing understanding of the concept of the law of the case exposes DBP's insistence to be

unwarranted.

To start with, the ex parte proceeding on DBP's application for the issuance of the writ of possessionwas entirely independent from the judicial demand for specific performance herein. In fact, C.A.-G.R.No. 12670-SP, being the interlocutory appeal concerning the issuance of the writ of possession while themain case was pending, was not at all intertwined with any legal issue properly raised and litigated inC.A.-G.R. CV No. 59491, which was the appeal to determine whether or not DBP's foreclosure was validand effectual. And, secondly, the ruling in C.A.-G.R. No. 12670-SP did not settle any question of law




















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involved herein because this case for specific performance was not a continuation of C.A.-G.R. No.12670-SP (which was limited to the propriety of the issuance of the writ of possession in favor of DBP),and vice versa.

3.

Guarifia Corporation is legally entitled to therestoration of the possession of the resort complexand payment of reasonable rentals by DBP

Having found and pronounced that the extrajudicial foreclosure by DBP was premature, and that theensuing foreclosure sale was void and ineffectual, the Court affirms the order for the restoration ofpossession to Guarifia Corporation and the payment of reasonable rentals for the use of the resort. TheCA properly held that the premature and invalid foreclosure had unjustly dispossessed GuarifiaCorporation of its properties. Consequently, the restoration of possession and the payment ofreasonable rentals were in accordance with Article 561 of the Civil Code, which expressly states that onewho recovers, according to law, possession unjustly lost shall be deemed for all purposes which mayredound to his benefit to have enjoyed it without interruption.

WHEREFORE, the Court AFFIRMS the decision promulgated on March 26, 2003; and ORDERS thepetitioner to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO Chief Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

BIENVENIDO L. REYES Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the aboveDecision had been reached in consultation before the case was assigned to the writer of the opinion ofthe Court's Division.

MARIA LOURDES P.A. SERENO Chief Justice






11

23 Id. at 25.

24 Id. at 28-29.

25 Id. at 127-137.

26 Article 1953, in relation to Article 1933, Civil Code.

27 IV Tolentino, The Civil Code of the Philippines, p. 175 (1999).

28 Subic Bay Metropolitan Authority v. Court of Appeals, G.R. No. 192885, July 4, 2012 675 SCRA 758,766.

29 Supra note 1, at 41-43.

30 Cortes v. Court of Appeals, G.R. No. 126083, July 12, 2006, 494 SCRA 570, 576.

31 Article 1169, Civil Code; IV Tolentino, op. cit., at 109.

32 Records, Volume 2, at 646-a.

Stipulation No. 26 reads:

26. That the Mortgagee reserves the right to reduce or stop releases/advances if after inspection andverification the accomplishment of the financed project does not justify giving the full amount, or if theconditions of the project do not show improvement commensurate with the amount alreadyadvanced/released. In such an event or in the event of abandonment of the project, alladvances/releases made shall automatically become due and demandable and the Mortgagee shall takesuch legal steps as are necessary to protect its interest.

33 Rigor v. Consolidated Orix Leasing and Financing Corporation, 387 SCRA 437, 444.

34 Selegna Management and Development Corporation v. United Coconut Planters Bank, G.R. No.165662, May 3, 2006, 489 SCRA 125, 138.

35 G.R. No.150097, February 26, 2007, 516 SCRA 644.

36 Supra note 8.

37 Development Bank of the Philippines v. Licuanan, supra, note 35, at 654.

38 Comsavings Bank (now GSIS Family Savings Bank) v. Capistrano, G.R. 170942, August 28, 2013; citingPhilippine National Bank v. Chea Chee Chong, G.R. Nos. 170865 and 170892, April 25, 2012, 671 SCRA49, 62-63; Solidbank Corporation v. Arrieta, G.R. No. 152720, February 17, 2005, 451 SCRA 711, 720; andPhilippine Commercial International Bank v. Court of Appeals, G.R. Nos. 121413, 121479 and 128604,January 29, 2001, 350 SCRA 446, 472.

39 G.R. No. 157845, September 20, 2005, 470 SCRA 328, 347.

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40 Kilosbayan, Incorporated v. Morato, G.R. No. 118910, July 17, 1995, 246 SCRA 540, 559, citing Peoplev. Pinuila, 103 Phil. 992, 999 (1958).

41 237 Mo. 496, cited and quoted in Zarate v. Director of Lands, 39 Phil. 747, 750 (1919).

42 Zarate v. Director of Lands, 39 Phil. 747, 750 (1919).

43 Bachrach Motor Co.v. Esteva, 67 Phil 16 (1938).
















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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 189833 February 5, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,vs.

JAVIER MORILLA Y AVELLANO, Accused-Appellant.

R E S O L U T I O N

PEREZ, J.:

Before us is an appeal filed by accused-appellant Javier Morilla y Avellano (Morilla) from the Decision 1 of

the Court of Appeals which affirmed his conviction and that of his co-accused Ronnie Mitra y Tena(Mayor Mitra) by the trial court, sentencing them 2 to suffer the penalty of life imprisonment and to paya fine of P10,000,000.00 each.

The Regional Trial Court Judgment

On 15 October 2001, Morilla, Mayor Mitra, Willie Yang y Yao (Yang) and Ruel Dequilla y Regodan(Dequilla) were charged in a criminal information as follows:

That on or about October 13, 2001, in Barangay Kiloloran, Municipality of Real, Province of Quezon,Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, one of them

an incumbent mayor of the Municipality of Panukulan, Quezon Province, who all belong to anorganized/syndicate crime group as they all help one another, for purposes of gain in the transport ofillegal drugs, and in fact, conspiring and confederating together and mutually aiding and abetting oneanother, did then and there wilfully, unlawfully, and feloniously transport by means of two (2) motorvehicles, namely a Starex van bearing plate number RWT-888 with commemorative plate to read"Mayor" and a municipal ambulance of Panukulan, Quezon Province, methamphetamine hydrochloride,a regulated drug which is commonly known as shabu, and with an approximate weight of five hundredthree point sixty eight (503.68) kilos, without authority whatsoever .3

After trial, the Regional Trial Court of Quezon Cit y4 on 1 August 2007 convicted Morilla and his co-

accused Mayor Mitra, then incumbent Mayor of Panukulan, Quezon, of illegal transpor t5 of

methamphetamine hydrochloride, commonly known as shabu, with an approximate weight of fivehundred three point sixty eight (503.68) kilos. However, it absolved Dequilla and Yang due to theprosecution’s failure to present sufficient evidence to convict them of the offense charged. The

dispositive of the decision reads:

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WHEREFORE, premises considered, judgment is hereby rendered finding accused Ronnie Mitra y Tenaand Javier Morilla y Avellana GUILTY beyond reasonable doubt of the offense charged. Accordingly, bothaccused are hereby sentenced to suffer the penalty of life imprisonment and to pay a fineof P10,000,000.00 each. Accused Willie Yang y Yao and Ruel Dequilla y Regodan are hereby ACQUITTEDfor failure of the prosecution to prove their guilt beyond reasonable doubt and are ordered immediately

released from custody unless held for some other lawful cause.

The methamphetamine hydrochloride ordered retained by the Court as representative sample which isstill in the custody of the PNP Crime Laboratory is ordered turned over to the Philippine DrugEnforcement Agency for proper disposition .6

The trial court found valid the search conducted by police officers on the vehicles driven by Mayor Mitraand Morilla, one with control number 888 and the other an ambulance with plate number SFK-372, asthe police officers have already acquired prior knowledge that the said vehicles were suspected to beused for transportation of dangerous drugs. During the checkpoint in Real, Quezon, the informationturned out to be accurate and indeed, the two accused had in their motor vehicles more than fivehundred kilos of methamphetamine hydrochloride .7

The trial court dismissed the arguments of Mayor Mitra that he was without any knowledge of thecontents of the sacks and that he was merely requested to transport them to Manila on board his Starexvan. He explained that he only accommodated the request of a certain Ben Tan because the latterbought his fishing boat. It likewise dismissed the defense of ambulance driver Morilla of lack ofknowledge of the illegality of the contents. Morilla insisted that he thought that he was just transportingwooden tiles and electronic spare parts together with Dequilla. The other passenger of the ambulance,Yang, in his defense, did not bother to inquire about the contents of the vehicle as he was merely anaccommodated passenger of the ambulance.

The court rejected the defenses presented by Morilla and Mayor Mitra as they were caught in flagrantedelicto of transporting dangerous drugs in two vehicles driven by each of them. Absent any convincingcircumstance to corroborate their explanations, the validity of their apprehension was sustained .8

The ruling of conspiracy between Mayor Mitra and Morilla was based on the testimonies of the fouraccused themselves. It was found by the trial court that the two vehicles, the Starex van driven byMayor Mitra and the ambulance van driven by Morilla, left Infanta, Quezon en route to Manila. TheStarex van which was ahead of the ambulance was able to pass the checkpoint set up by the policeofficers. However, the ambulance driven by Morilla was stopped by police officers. Through the untinted

window, one of the police officers noticed several sacks inside the van. Upon inquiry of the contents,Morilla replied that the sacks contained narra wooden tiles.

Unconvinced, the police officers requested Morilla to open the rear door of the car for furtherinspection. When it was opened, the operatives noticed that white crystalline granules were scatteredon the floor, prompting them to request Morilla to open the sacks. At this moment, Morilla told thepolice officers that he was with Mayor Mitra in an attempt to persuade them to let him pass .9 Hisrequest was rejected by the police officers and upon inspection, the contents of the sacks turned out to




















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be sacks of methamphetamine hydrochloride .10 This discovery prompted the operatives to chase theStarex van of Mayor Mitra. The police officers were able to overtake the van and Mayor Mitra was askedto stop. They then inquired if the mayor knew Morilla. On plain view, the operatives noticed that his vanwas also loaded with sacks like the ones found in the ambulance. Thus, Mayor Mitra was also requestedto open the door of the vehicle for inspection. At this instance, Mayor Mitra offered to settle the matter

but the same was rejected. Upon examination, the contents of the sacks were likewise found to containsacks of methamphetamine hydrochloride .11

The two other accused in this case, Dequilla and Yang, were acquitted by the trial court for failure on thepart of the prosecution to establish their guilt beyond reasonable doubt. The court r uled that Dequilla’sand Yang’s mere presence inside the vehicle as passengers was inadequate to prove that they were also

conspirators of Mayor Mitra and Morilla .12

The Court of Appeals Decision

On 13 July 2009, the appellate court affirmed the ruling of the trial court. It upheld the finding ofconspiracy between Mayor Mitra and Morilla in their common intent to transport several sackscontaining methamphetamine hydrochloride on board their respective vehicles. The singularity of theirintent to illegally transport methamphetamine hydrochloride was readily shown when Morilla agreed todrive the ambulance van from Infanta, Quezon to Manila together with Mayor Mitra, who drove thelead vehicle, the Starex van .13

The appellate court likewise dismissed the argument of lack of knowledge of the illegal contents of thesacks. The claim that the sacks were loaded with wooden tiles was implausible due to the obviousdisparity of texture and volume .14

Court’s Ruling We affirm the ruling but modify the penalty imposed.

In his supplemental brief, Morilla raised the issues: (1) whether he may be convicted for conspiracy tocommit the offense charged sans allegation of conspiracy in the Information, and (2) whether theprosecution was able to prove his culpability as alleged in the Information .15

We dismiss his arguments.

Morilla primarily cites the provision on Sec. 1(b), Rule 115 of the Rules on Criminal Procedur e 16 tosubstantiate his argument that he should have been informed first of the nature and cause of theaccusation against him. He pointed out that the Information itself failed to state the word conspiracybut instead, the statement "the above-named accused, one of them an incumbent mayor of theMunicipality of Panukulan, Quezon Province, who all belong to an organized/syndicated crime group asthey all help one another, did then and there wilfully, unlawfully and feloniously transport x x x." Heargued that conspiracy was only inferred from the words used in the Information .17




































16

Even assuming that his assertion is correct, the issue of defect in the information, at this point, isdeemed to have been waived due to Morilla’s failure to assert it as a ground in a motion to quash beforeentering his plea .18

Further, it must be noted that accused Morilla participated and presented his defenses to contradict the

allegation of conspiracy before the trial and appellate courts. His failure or neglect to assert a rightwithin a reasonable time warrants a presumption that the party entitled to assert it either hasabandoned it or declined to assert it .19

The finding of conspiracy by both courts is correct.

A conspiracy exists when two or more persons come to an agreement concerning the commission of afelony and decide to commit it .20 To determine conspiracy, there must be a common design to commit afelony .21

Morilla argues that the mere act of driving the ambulance on the date he was apprehended is not

sufficient to prove that he was part of a syndicated group involved in the illegal transportation ofdangerous drugs.

This argument is misplaced.

In conspiracy, it need not be shown that the parties actually came together and agreed in express termsto enter into and pursue a common design. The assent of the minds may be and, from the secrecy of thecrime, usually inferred from proof of facts and circumstances which, taken together, indicate that theyare parts of some complete whole .22 In this case, the totality of the factual circumstances leads to aconclusion that Morilla conspired with Mayor Mitra in a common desire to transport the dangerousdrugs. Both vehicles loaded with several sacks of dangerous drugs, were on convoy from Quezon toManila. Mayor Mitra was able to drive through the checkpoint set up by the police operatives. When itwas Morilla’s turn to pass through the checkpoint, he was requested to open the rear door for aroutinary check. Noticing white granules scattered on the floor, the police officers requested Morilla toopen the sacks. If indeed he was not involved in conspiracy with Mayor Mitra, he would not have toldthe police officers that he was with the mayor.

His insistence that he was without any knowledge of the contents of the sacks and he just obeyed theinstruction of his immediate superior Mayor Mitra in driving the said vehicle likewise bears no merit.

Here, Morilla and Mayor Mitra were caught in flagrante delicto in the act of transporting the dangerous

drugs on board their vehicles. "Transport" as used under the Dangerous Drugs Act means "to carry orconvey from one place to another. "23 It was well established during trial that Morilla was driving theambulance following the lead of Mayor Mitra, who was driving a Starex van going to Manila. The veryact of transporting methamphetamine hydrochloride is malum prohibitum since it is punished as anoffense under a special law. The fact of transportation of the sacks containing dangerous drugs need notbe accompanied by proof of criminal intent, motive or knowledge .24
































17

In a similar case of People v. Libnao ,25 this Court upheld the conviction for illegal transportation ofmarijuana of Libnao and Nunga, who were caught carrying a bag full of marijuana leaves when theywere flagged down on board a passing tricycle at a checkpoint.

However, we modify the penalty imposed by the trial court as affirmed by the Court of Appeals.

Originally, under Section 15 of Republic Act No. 6425 ,26 the penalty for illegal transportation ofmethamphetamine hydrochloride was imprisonment ranging from six years and one day to twelve yearsand a fine ranging from six thousand to twelve thousand pesos. Pursuant to Presidential Decree No.1683 ,27 the penalty was amended to life imprisonment to death and a fine ranging from twenty to thirtythousand pesos. The penalty was further amended in Republic Act No. 7659 ,28 where the penalty waschanged to reclusion perpetua to death and a fine ranging from five hundred thousand pesos to tenmillion pesos.

From the foregoing, we sustain the imposed penalty of fine of P10,000,00.00 to be paid by each of theaccused but amend the penalty to reclusion perpetua following the provisions of Republic Act No. 7659and the principle of retroactive application of lighter penalty. Reclusion perpetua entails imprisonmentfor at least thirty (30) years after which the convict becomes eligible for pardon. It also carries with itaccessory penalties, namely: perpetual special disqualification, etc. Life imprisonment, on the otherhand, does not appear to have any definite extent or duration and carries no accessory penalties .29

The full particulars are in Ho Wai Pang v. People ,30 thus:

As to the penalties imposed by the trial court and as affirmed by the appellate court, we find the same inaccord with law and jurisprudence. It should be recalled that at the time of the commission of the crimeon September 6, 1991, Section 15 of R.A. No. 6425 was already amended by Presidential Decree No.

1683. The decree provided that for violation of said Section 15, the penalty of life imprisonment todeath and a fine ranging from P20,000.00 to P30,000.00 shall be imposed. Subsequently, however, R.A.No. 7659 further introduced new amendments to Section 15, Article III and Section 20, Article IV of R.A.No. 6425, as amended. Under the new amendments, the penalty prescribed in Section 15 was changedfrom "life imprisonment to death and a fine ranging fromP20,000.00 to P30,000.00" to "reclusionperpetua to death and a fine ranging from P500,000.00 to P10 million." On the other hand, Section 17 ofR.A. No. 7659 amended Section 20, Article IV of R.A. No. 6425 in that the new penalty provided by theamendatory law shall be applied depending on the quantity of the dangerous drugs involved.

The trial court, in this case, imposed on petitioner the penalty of reclusion perpetua under R.A. No. 7659rather than life imprisonment ratiocinating that R.A. No. 7659 could be given retroactive application, itbeing more favorable to the petitioner in view of its having a less stricter punishment. 1âwphi1

We agree. In People v. Doroja, we held:

"In People v. Martin Simon (G.R. No. 93028, 29 July 1994) this Court ruled (a) that the amendatory law,being more lenient and favorable to the accused than the original provisions of the Dangerous DrugsAct, should be accorded retroactive application, x x x."




























18

And, since "reclusion perpetua is a lighter penalty than life imprisonment, and considering the rule thatcriminal statutes with a favorable effect to the accused, have, as to him, a retroactive effect," thepenalty imposed by the trial court upon petitioner is proper. Consequently, the Court sustains thepenalty of imprisonment, which is reclusion perpetua, as well as the amount of fine imposed by the trialcourt upon petitioner, the same being more favorable to him .31

WHEREFORE, premises considered, the petition is DENIED and the assailed 13 July 2009 Decision of theCourt of Appeals in CA-G.R. CR-H.C. 02967 is AFFIRMED WITH MODIFICATION with respect to thepenalty to be imposed as Reclusion Perpetua instead of Life Imprisonment and payment of fineof P10,000,000.00 by each of the accused.

SO ORDERED.

JOSE PORTUGAL PEREZ Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate JusticeChairperson

ARTURO D. BRION Associate Justice

MARIANO C. DEL CASTILLO Associate Justice

ESTELA M. PERLAS-BERNABE Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Resolution had been reached in consultation before the casewas assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO Associate JusticeSecond Division Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, Icertify that the conclusions in the above Resolution had been reached in consultation before the casewas assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO Chief Justice








19

Footnotes

1 Penned by Associate Justice Mariflor P. Punzalan Castillo with Associate Justices Rosmari D. Carandangand Ramon M. Bato, Jr., concurring. Rollo, pp. 2-24.

2 From the Records of the case, no appeal was timely made by the other accused, Mayor Mitra.

3 Records, Vol. I, p. 2.

4 In a Letter dated 23 October 2001, Chief State Prosecutor Jovencito R. Zuño of the Department ofJustice requested then Chief Justice Hilario G. Davide, through Court Administrator (now AssociateJustice of this Court) Presbitero J. Velasco, Jr. for a transfer of venue of the case from Real, Quezon toany Regional Trial Court in Metro Manila, preferably in Quezon City, due to the large quantity of theconfiscated drugs and difficulty on the part of the Government to prosecute the case in Quezon fromMetro Manila. (Records, pp. 49-50). The said request was granted by this Court in a Resolution dated 6March 2002. (Id. at 97).

5 Republic Act No. 6425 or The Dangerous Drugs Act of 1972. − Art. III, Section 15. Sale, Administration,Dispension, Delivery, Transportation and Distribution of Regulated Drugs. The penalty of imprisonmentranging from six years and one day to twelve years and a fine ranging from six thousand to twelvethousand pesos shall be imposed upon any person who, unless authorized by law, shall sell, dispense,deliver, transport or distribute any regulated drug. In case of a practitioner, the maximum of the penaltyherein prescribed and the additional penalty of the revocation of his license to practice his professionshall be imposed.

6 CA rollo, pp. 66-67.

7 Id. at 57.

8 Id. at 61-62.

9 Id. at 63-65.

10 Id. at 46-47.

11 Id. at 44-45.

12 Id. at 65.

13 Rollo, pp. 21-22.

14 Id. at 22-23.

15 Supplemental Brief. Id. at 52-53.

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20

16 Rule 115, Section 1(b). − To be informed of the nature and cause of the accusation against him.

17 Supplemental Brief. Rollo, pp. 53-54.

18 Revised Rules of Criminal Procedure, Rule 117, Section 9 stating that:

Failure to move to quash or to allege any ground therefor. — The failure of the accused to assert anyground of a motion to quash before he pleads to the complaint or information, either because he didnot file a motion to quash or failed to allege the same in said motion, shall be deemed a waiver of anyobjections except those based on the grounds provided for in paragraphs (a), (b), (g), and (i) of section 3of this Rule.

19 Figueroa v. People, 580 Phil. 58, 73-74 (2008).

20 Revised Penal Code, Article 8.

21 Ho Wai Pang v. People, G.R. No. 176229, 19 October 2011, 659 SCRA 624, 637 citing People v.

Miranda, G.R. No. 92369, 10 August 1994, 235 SCRA 202, 214.

22 Id. citing People v. Ponce, 395 Phil. 563, 572 (2000); People v. Mateo, Jr., 258-A Phil. 886, 904 (1989).

23 People v. Baludda, 376 Phil. 614, 626 (1999).

24 People v. Del Mundo, 418 Phil. 740, 754-755 (2001).

25 443 Phil. 506 (2003).

26 Supra note 5.

27 Presidential Decree No. 1683. − Amending Certa in Sections of Republic Act No. 6425, As Amended,Otherwise Known as the Dangerous Drugs Act of 1972 and for Other Purposes.

SECTION 5. Section 15 of the same Act is hereby amended to read as follows:

Section 15. Sale, Administration, Dispensation, Delivery, Transportation and Distribution of RegulatedDrugs. — The penalty of life imprisonment to death and a fine ranging from twenty to thirty thousandpesos shall be imposed upon any persons who, unless authorized by law, shall sell, dispense, deliver,transport or distribute any regulated drug. If the victim of the offense is a minor, or should a regulateddrug involved in any offense under this Section be the proximate cause of the death of a victim thereof,the maximum penalty herein provided shall be imposed.

28 An Act To Impose The Death Penalty On Certain Heinous Crimes, Amending For That Purpose TheRevised Penal Laws, As Amended, Other Special Penal Laws, And For Other Purposes.

Section 14. Sections 14, 14-A, and 15 of Article III of Republic Act No. 6425, as amended, known as theDangerous Drugs Act of 1972, are hereby amended to read as follows:

x x x x











































21

Section 15. Sale, Administration, Dispensation, Delivery, Transportation and Distribution of RegulatedDrugs. - The penalty of reclusion perpetua to death and a fine ranging from five hundred thousand pesosto ten million pesos shall be imposed upon any person who, unless authorized by law, shall sell,dispense, deliver, transport or distribute any regulated drug.

Notwithstanding the provisions of Section 20 of this Act to the contrary, if the victim of the offense is aminor, or should a regulated drug involved in any offense under this Section be the proximate cause ofthe death of a victim thereof, the maximum penalty herein provided shall be imposed.

29 Supreme Court Administrative Circular No. 6-A-92, 21 June 1993 Re: The Correct Application of thePenalties of Reclusion Perpetua and Life Imprisonment; Potenciano v. Reynoso, 449 Phil. 396, 409(2003).

30 Supra note 21.

31 Id. at 640-641.










Documents

Crim Property Digest 1