A developer‘s delay, a buyer‘s due

A developer‘s delay, a buyer‘s due | Daily Tribune

The buyer paid a P20,000 reservation fee in 2010, and later an additional P110,000, after the developer’s sales agent assured him that a Contract to Sell would be executed. More than a year passed with no contract in sight, and the agent eventually stopped responding altogether.

The buyer then ceased paying his amortizations and filed a complaint for refund. The developer argued that it was not bound by its agent’s statements because the reservation agreement signed by the buyer expressly provided that only representations made in writing and confirmed by an authorized officer would bind the company.

Both the Human Settlements Adjudication Commission and the Court of Appeals (CA) found the developer liable under Section 19 of PD 957, which makes developers answerable for the sales propaganda of their agents.

The Supreme Court agreed that the buyer was entitled to a refund, but disagreed on the legal basis.

Applying the principle of “ejusdem generis,” the Court held that the forms of communication listed in Section 19 — media, newspaper, radio, television, leaflets and circulars — share a common trait: They are forms of mass communication directed to the public. A one-on-one promise made to a particular buyer simply does not belong to that class.

The buyer, however, was not without a remedy.

Article 1191 of the Civil Code provides that in reciprocal obligations, such as the developer’s obligation to deliver a Contract to Sell upon the buyer’s payment of the reservation fee, the non-compliance of one party entitles the other to rescission. Thus, the developer was required to return the reservation fee paid by the buyer.

The Court also awarded the buyer P260,000 in exemplary damages, noting that the dispute over a modest P130,000 claim had dragged on for nearly 16 years despite consistent rulings in his favor. Exemplary damages are imposed to deter conduct that is wanton, fraudulent, reckless, or oppressive.

As the Court observed, the developer, as a real estate corporation, certainly possessed the means and capacity to promptly satisfy the buyer’s claim. Its refusal to do so was unjustified.

The ruling reminds us that the law provides multiple remedies to an injured party. Where one remedy is inapplicable, as Section 19 of PD 957 was in this case, the Civil Code’s provisions on reciprocal obligations, rescission, and damages may stand ready to fill the gap.

The lesson for developers and their sales agents is equally clear: fairness in dealing with buyers is not merely good business. It is a legal obligation — and ultimately the standard to which the courts will hold them.

For buyers, the decision carries an equally reassuring message. A legal remedy may sometimes be found not where one first looks, but the law does not readily leave an aggrieved party without recourse.