Dear Atty. Joji,

While inquiring about purchasing a condominium unit, the developer's sales representative told me that after paying the required reservation fee, the developer would issue the necessary contract covering my purchase. Relying on this representation, I paid the reservation fee and made additional payments. Despite my repeated requests, however, the developer failed to provide the promised contract. I eventually decided not to continue with the purchase. Can I demand a refund of the amounts I already paid?

July

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Dear July,

Presidential Decree No. 957, otherwise known as the Subdivision and Condominium Buyers' Protective Decree, affords protection to buyers of subdivision lots and condominium units against fraudulent and unscrupulous practices of developers and sellers.

In the recent case of Empire East Land Holdings Inc. and John Edrem R. Bautista, the Supreme Court addressed a similar situation where a prospective buyer paid a reservation fee and subsequent amounts after being informed that a Contract to Sell would be issued. The Court ruled that the developer was required to refund the buyer's payments because it failed to honor its undertaking. The Supreme Court explained: “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. However, this is not to say that buyers are not protected in cases where sales agents of developers make representations as regards certain aspects of the sale transaction and thereafter fail to follow through. Xxx 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.”

Developers dealing with the public are expected to comply with the undertakings forming part of their transactions with buyers. When a buyer parts with money in reliance upon an undertaking connected with the purchase, the developer cannot necessarily retain those payments despite its own failure to perform its corresponding obligation. However, a buyer's right to a refund will still depend upon the particular facts of the transaction, including the documents signed, the nature of the developer's undertaking, the reason the transaction was discontinued, and the applicable provisions of P.D. No. 957 and other laws.

Hope this helps.

Atty. Joji Alonso