Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 185491 July 11, 2012

JULIETA E. BERNARDO, Petitioner,

DECISION

SERENO, J.:

Before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court, assailing the 24
November 2008 Decision of the Court of Appeals (CA). The present controversy stems from the 29 June 2006
and 8 September 2006 Orders of the Regional Trial Court (RTC) granting the withdrawal of the Informations
filed against respondents for violation of Sections 5 (first Information), 17 (second Information), and 20 (third
Information) in relation to Section 39 of Presidential Decree No. 957, otherwise known as "The Subdivision and
Condominium Buyers’ Protective Decree of 1976" (P.D. 957).

FACTS

We reproduce the narration of facts by the CA as follows:

On October 26, 2000, the petitioner Julieta Bernardo (Ms. Bernardo), offered to purchase a
condominium unit described as Unit E with an area of 37 square meters of the Paseo Park view Suites
Tower II project of the developer Megaworld Corporation (Megaworld) located at Sedeño corner Valero
Streets, Salcedo Village, Makati City. The said project was to be constructed on the lots covered by
Transfer Certificates of Title Nos. 160210, 160211 and 160212, which are located at Makati City. The
purchase price of the unit is P2,935,785.00 and Ms. Bernardo paid P19,571.90 as her reservation
deposit, thus, a Request for Reservation and Offer to Purchase] was completed by Ms. Bernardo and
the same was assented to by Megaworld. Subsequently, a Contract to Buy and Sell dated November
22, 2000 was furnished to Ms. Bernardo. The said contract stipulated therein that the condominium
unit would be delivered not later than July 31, 2003 with an additional grace period of six (6) months.
As of October 22, 2003, Ms. Bernardo was able to pay the amount of P901,728.40. On April 15, 2004,
Megaworld sent a letter to Ms. Bernardo regarding the transmittal of the Deed of Absolute Sale for her
to affix her signatures thereto and for her to pay taxes and other fees so that Megaworld could start
with the processing of her bank loan. Attached with the letter is a schedule of expenses needed in the
transfer of the certificate of title in favor of Ms. Bernardo. The taxes and other fees to be paid by Ms.
Bernardo amounted to ₱ 93,318.13. The conflict arose when Megaworld sent a letter dated August 9,
2004 to Ms. Bernardo as a final notice of cancellation or rescission of the Request for Reservation
because of the latter’s alleged failure to make the necessary payments.

Consequently, Ms. Bernardo inquired with the Housing and Land Use Regulatory Board (HLURB) on
the records of the project and she learned that the Certificate of Registration and the License to Sell for
the project Paseo Parkview Tower 2 were only issued by HLURB on June 7, 2001. Hence, Ms.
Bernardo, represented by Romeo Ruiz, filed a complaint on August 12, 2004 before the City
Prosecutor of Makati City against the respondents for violations of Sections 5, 17 and 20 of
Presidential Decree No. 957, otherwise known as "Regulating the Sale of Subdivision Lots and
Condominiums, Providing Penalties for Violations Thereof" and the Revised Implementing Rules and
Regulations of P.D. 957 and Estafa through False Pretenses and Fraudulent Acts before the Office of
the City Prosecutor. Ms. Bernardo alleged that, since the Reservation Agreement (or Request for
Reservation) was executed between her and Megaworld on October 26, 2000, the respondents should
have caused the annotation of the same within 180 [days] therefrom or until April 24, 2001, that no
annotation on the certificates of title was done when she verified the same, that Megaworld was never
able to deliver the condominium unit on the stipulated deadline, which was on December 2003 and
that, by such acts and omissions, Megaworld and the project owner, Sedeño Manor, violated the
provisions of P.D. 957 to her prejudice.

In a Joint Counter-Affidavit filed by some of the respondents herein, they averred that Megaworld
applied for a Certificate of Registration and License to Sell for the project as early as July 1, 1998, that
subsequently, a License to Sell was issued by the HLURB but only for the Paseo Parkview Suites
Phase 1 due to the modifications in the Paseo Parkview Suites Tower 2, that there was no intent on
the part of Megaworld to defraud Ms. Bernardo because, when the latter requested for reservation, it
has applied for the registration of the project and to have license to sell the units on the said project,
that when HLURB issued the corresponding certificate and license for the Phase 1, it is understood
that Megaworld is a dealer of good refute [sic] and is financially stable, that the subsequent issuance of
the certificate of registration and license to sell on June 7, 2001 for the Tower 2 proved that Megaworld
had good standing in pursuing the project, that subsequent certifications for the Tower 2 were issued
before its completion, that Ms. Bernardo was not in good faith in filing the complaint against the
respondents as she had defaulted in the payment of her obligations and also failed to settle the
balance of P2,016,145.71 with interest and penalty charges amounting to P181,453.11 and that no
damage was incurred by Ms. Bernardo since the Contract to Buy and Sell was never executed.

In a Resolution dated December 29, 2004, the City Prosecutor dismissed the complaint of Ms.
Bernardo. Consequently, she filed a petition for review with the Secretary of Justice. Her petition was
granted by the Secretary of Justice, hence, it ordered the filing of the corresponding Informations for
violations of Sections 5, 17 and 20 of P.D. No. 957. The said Informations were filed in RTC, Branch
62 in Makati City. Due to the voluntary inhibition of the presiding judge of the said court, the case was
re-assigned to RTC, Branch 150.

Aggrieved, the respondents moved for the reconsideration of the filing of the Informations against
them. This time, the Secretary of Justice ruled in their favor and granted their motion in a Resolution
dated November 17, 2005. Hence, pursuant to the Resolution, the Secretary of Justice ordered the
City Prosecutor to move for the withdrawal of the Informations filed before the trial court. Acting on the
motion of the City Prosecutor, the public respondent court issued the assailed Order dated June 29,
2006. The pertinent portion of the said order is quoted as follows:

"As correctly ruled by the Secretary of Justice, it is overly simplistic to consider respondents as having
violated Section 5 of P.D. 957 requiring licenses to be secured for each phase of the project. Under
Title I of P.D. 957 a condominium project shall mean the entire parcel of real property divided or to be
divided primarily for residential purposes into condominium units including all structures thereon.
Clearly, the requirement of securing a license for each phase refers to a subdivision project not a
condominium project. There is therefore doubt as to whether or not Section 5 of P.D. 957 can be a
basis for prosecuting the respondents.

"Respondents cannot also be indicted for violation of Section 17 of P.D. 957 for failure to register the
Contract to Buy and Sell with the Registry of Deeds of Makati City because they did not have in their
possession said document. Their inability to register the same was justified.

"Section 20 of P.D. 957 should not also [be] applied mechanically against the respondents. Under the
Contract to Buy and Sell, Megaworld is mandated to complete the project by July 23, 2003 with a
grace period of six (6) months barring delays due to manmade or natural causes. Upon its completion,
Megaworld shall notify the complainant of such fact, which shall constitute constructive delivery of
subject condominium unit. Under the facts obtaining, respondents had no obligation to notify the
complainant of the completion and availability of the unit for occupancy due to complainant’s failure to
 pay in full the purchase price of the unit. In fact, Megaworld prepared a notice to cancel/rescind and
forfeit the Contract to Buy and Sell due to complainant’s default. Following this theory, the non-
completion of Phase II of the condominium project cannot be made the basis of criminal prosecution
under the aforecited section of P.D. 957."

Consequently, Ms. Bernardo filed a motion for reconsideration but the same was denied by the trial
court in [an Order] dated September 8, 2006. (Citations omitted)

On 24 November 2008, the CA issued its questioned Decision upholding the 29 June 2006 and 8 September
2006 Orders of the RTC. The appellate court ruled4 that the RTC did not commit grave abuse of discretion when
it allowed the withdrawal of the Informations filed against respondents for their alleged violation of P.D. 957.
According to the CA, the trial court made an assessment and evaluation of the merits of the Motion to Withdraw
the Informations independent from those of the respective findings of the Secretary of Justice and the City
Prosecutor.

The CA, however, set aside the finding of the trial court with regard to the applicability of Section 5 of P. D. 957.
According to the appellate court, the provision governs both subdivision and condominium projects. It then
made a distinction between a contract to sell and a contract of sale. The CA explained that what P.D. 957
prohibits is the act of selling condominium units, not the act of approving the request of a client to reserve a unit
for future sale, without license. It thereafter pointed out that the Request for Reservation and Offer to Purchase
(Reservation Agreement) only acknowledged petitioner’s interest to buy the unit and her payment of the
reservation deposit, which did not constitute a contract of sale. Consequently, the appellate court concluded
that, since a violation of the provisions under P.D. 957 requires the execution of a contract of sale, the RTC’s
grant of the withdrawal of Informations was done in accordance with law and did not constitute grave abuse of
discretion.

ISSUE

We summarize the legal arguments raised before this Court in one main issue – whether or not there is
probable cause to indict respondents for allegedly violating Sections 5, 17, and 20 of P.D. 957.

The undersigned Prosecutor accuses ANDREW L. TAN @ CHONG BUAN, KATHERINE TAN, GERARDO
GARCIA, CIRILO L. MANLANGIT, GEORGE T. YANG, THOMAS J. BARRACK, JR.,

ENRIQUE SANTOS L. SY, ROBERT J. ZULKOSHI [sic], ROBERTO S. GUEVARRA, ANTONIO T. TAN,
ROSE A. CAMBALIZA, LOURDES G. CLEMENTE, NOLI HERNANDEZ, FRANCIS

CANUTO, CIELO CUSTODIO, GUNTER RAMETSTEINER, CHARLES Y. UY, RAQUEL BONCAN and
RICHMOND TAN of the crime of Violation of Section 5 of P.D. 957, committed as follows:

That on or about the 22nd day of November, 2000, in the City of Makati, Philippines and within the jurisdiction
of this Honorable Court, the above-named accused, being then the responsible officers of Megaworld
Corporation and Sedeño Manor, Inc. and in charge of the business of said corporation sold to
complainant JULIETA E. BERNARDO a condominium unit described as 23E Tower II for the amount of Three
Million Ninety Thousand and Three Hundred Pesos (P3,090,300.00), that while complainant was paying the
monthly amortization due on the said condominium, accused conspiring and confederating together and
mutually helping and aiding one another, did then and there willfully, unlawfully and feloniously failed to
secure a

Certification of Registration and License to Sell from the Housing and Land Use Regulatory Board
(HLURB), in violation of the aforecited law. (Emphasis supplied)