26/08/2026
SC Ruling: Developer Must Honor Its Promise to Buyer
The Supreme Court ruled that while a sales agentโs promise to issue a Contract to Sell is not considered an โadvertisementโ under PD 957, a developer may still be held liable for failing to honor that promiseโand may be ordered to refund the buyerโs payments with interest and damages.
The (SC) has ruled that a sales agentโs promise to issue a Contract to Sell after payment of reservation fee is not an โadvertisementโ under Presidential Decree No. (PD) 957, or the ๐๐ถ๐ฃ๐ฅ๐ช๐ท๐ช๐ด๐ช๐ฐ๐ฏ ๐ข๐ฏ๐ฅ ๐๐ฐ๐ฏ๐ฅ๐ฐ๐ฎ๐ช๐ฏ๐ช๐ถ๐ฎ ๐๐ถ๐บ๐ฆ๐ณ๐ดโ ๐๐ณ๐ฐ๐ต๐ฆ๐ค๐ต๐ช๐ท๐ฆ ๐๐ฆ๐ค๐ณ๐ฆ๐ฆ, that would form part of developerโs 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 SCโs 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 Eastโs 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 Bautistaโs favor, held that Bautista was entitled to a refund but clarified that the sales agentโs 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.
Copying of this content is subject to the SC PIOโs Credit Attribution Policy: https://sc.judiciary.gov.ph/credit-attributionon-policy.
