19/08/2026
The (SC) has ruled that a sales agent’s promise to issue a Contract to Sell after payment of reservation fee is not an “advertisement” under Presidential Decree No. (PD) 957, or the 𝘚𝘶𝘣𝘥𝘪𝘷𝘪𝘴𝘪𝘰𝘯 𝘢𝘯𝘥 𝘊𝘰𝘯𝘥𝘰𝘮𝘪𝘯𝘪𝘶𝘮 𝘉𝘶𝘺𝘦𝘳𝘴’ 𝘗𝘳𝘰𝘵𝘦𝘤𝘵𝘪𝘷𝘦 𝘋𝘦𝘤𝘳𝘦𝘦, that would form part of developer’s warranties. However, the developer may still be required to refund a buyer if it fails to honor that promise.
In a Decision written by Associate Justice Maria Filomena D. Singh, the SC’s Third Division ordered Empire East Land Holdings, Inc. (Empire East) to refund the payments made by John Edrem Bautista (Bautista) after it failed to issue the promised Contract to Sell.
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.
The SC, agreeing with both the Human Settlements Adjudication Commission (HSAC) and the Court of Appeals which ruled in Bautista’s favor, 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 SC emphasized that buyers remain protected, as developers may still be held liable under their contractual obligations and other applicable laws.
The SC ordered Empire East to refund Bautista the PHP 130,000 with interest of 6% per annum reckoned from the filing of the complaint in 2012, as well as to pay PHP 260,000 in exemplary damages, which courts award to discourage wrongful conduct and warn against similar actions.
Read the full text of the Press Release at https://sc.judiciary.gov.ph/?p=171359.
Read the full text of the Decision at https://sc.judiciary.gov.ph/wp-content/uploads/2026/05/272556-1.pdf.
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