THE Supreme Court (SC) has ordered property developer Empire East Land Holdings, Inc. to refund P130,000 to a buyer after it failed to issue a promised contract to sell, but ruled that the sales agent’s promise was not an advertisement covered by the real estate buyer protection law.
“Consequently, not every representation made by a developer’s sales agent, such as the one made by Empire East’s agent regarding the issuance of a contract to sell, is covered under Section 19,” the SC Third Division said in a decision written by Associate Justice Maria Filomena D. Singh.
The court said Section 19 of Presidential Decree (PD) No. 957 or the Subdivision and Condominium Buyers’ Protective Decree applies to advertisements and sales materials intended for the public, rather than promises made by a sales agent to an individual buyer.
John Edrem Bautista paid a P20,000 reservation fee for a residential unit in September 2010 and later paid another P110,000. Empire East did not issue the contract to sell after more than a year, prompting Mr. Bautista to stop payments and seek a refund.
The Human Settlements Adjudication Commission and the Court of Appeals ordered Empire East to return the P130,000 under Section 19 of PD 957. The SC upheld the refund on a different legal basis.
The court found that Mr. Bautista and Empire East had entered into a reciprocal agreement under which he would pay the reservation fee and the company would issue the contract to sell.
“Since it is undisputed that Empire East, despite the lapse of over a year, and despite Bautista’s payment of the reservation fee, failed to issue a contract to sell, then the reservation agreement between the parties may be rescinded,” the tribunal said.
The SC also ordered Empire East to pay P260,000 in exemplary damages, noting that the dispute over the P130,000 claim had remained in the courts for nearly 16 years.
“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,” the court said.
The P130,000 refund will earn 6% annual interest from the filing of the complaint on Aug. 2, 2012. The total monetary award will earn 6% annual interest from the finality of the decision until fully paid. — Mark Joseph M. Sanchez