23/08/2026
SUPREME COURT: LAND DEVELOPER MUST REFUND BUYER IF PROMISES ARE BROKEN
The Supreme Court held that offers made by sales agents of property developers are not considered advertisements under the law, but a buyer remains entitled to a refund if the seller fails to honor agreements after the initial round of payments.
In a 13-page decision penned by Associate Justice Maria Filomena Singh, the SC's Third Division upheld the 2023 ruling of the Court of Appeals (CA) and 2022 findings of the Human Settlements Adjudication Commission (HSAC) that directed Empire East Holdings Inc. to refund the initial payments totaling P130,000 made by the buyer, John Edrem Bautista.
In 2010 Bautista paid Empire East for a residential unit PHP 130,000, consisting of a PHP 20,000 reservation fee and PHP 110,000 in additional payments.
He claimed he made the payments because Empire East’s sales agent promised to issue a Contract to Sell once he paid the reservation fee. When more than a year passed without the contract being issued, Bautista stopped making payments and demanded a refund.
For its part, Empire East argued that the failure on its part to execute a Contract to Sell is not a ground for reimbursement. The company also said it was not bound by representations of its sales agent until the representation is reduced into writing and confirmed by a duly authorized officer.
But even after the buyer paid the P130,000 after a year, Empire East did not issue the contract to sell.
In ruling in favor of the property buyer, the SC agreed with both the Human Settlements Adjudication Commission (HSAC) and the Court of Appeals as it held that Bautista was entitled to a refund but clarified that the sales agent’s promise did not fall under Section 19 of PD 957.
The SC clarified that Section 19, which mandates truthful and non-misleading advertisements and sales materials, applies only to materials intended for the general public, such as those in those in newspapers, radio, TV, or similar mass communication channels. It does not cover promises made by a sales agent to individual buyers.
“The Civil Code has provisions regarding agency, obligations, and contracts which can be invoked by a buyer who may be aggrieved when a developer fails to comply with the promises of its sales agent,” it said.
“Thus, when parties enter into a reciprocal obligation, and one of the parties fails to comply, the other party is entitled to rescind the obligation and ask for the return of whatever he has paid under the same,” it added.
The Supreme Court also lamented that the property developer allowed the dispute to linger for nearly 16 years.Aside from the refund, the high tribunal also awarded the buyer with exemplary damages totaling P260,000, which is double the amount to be refunded by Empire East.
All monetary awards were set with an interest of six percent per annum until the amount is fully paid.
“While this sum is not insignificant to an ordinary Filipino, it is undeniable that a real estate corporation such as Empire East possessed the means and capacity to promptly satisfy the claim. Its refusal to do so is rendered even more unjustified by the fact that the validity of (buyer’s) claim was consistently affirmed by the HSAC Adjudicator, the HSAC, and the CA,”
