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The Supreme Court building in Manila in this photo taken oon February 5, 2025. Jonathan Cellona, ABS-CBN News

Article (news)

SC: Developer must refund buyer’s payments if promises are broken 

Adrian Ayalin

ABS-CBN News

MANILA —The Supreme Court ordered real estate developer Empire East Land Holdings, Inc. to refund P130,000 in payments a buyer made and pay P260,000 in exemplary damages.In the decision of the 3rd Division promulgated on February 3, the court denied the petition for review on certiorari filed by Empire East and affirmed the decisions of the Human Settlements Adjudication Commission and the Court of Appeals.The court said the buyer and the developer entered into a reciprocal obligation through the reservation agreement between them.“Specifically, XXX had the obligation to pay the reservation fee, while Empire East, in return, was obliged to issue a Contract to Sell,” the court said in the decision penned by Associate Justice Maria Filomena Singh.In 2010, the buyer paid a reservation fee of P20,000 and additional payments amounting to P110,000. Despite the payments made, Empire East failed to release a Contract to Sell. For its part, Empire East argued that the failure on its part to execute a Contract to Sell is not a ground for reimbursement. The company also said it was not bound by representations of its sales agent until the representation is reduced into writing and confirmed by a duly authorized officer. <div> </div><div>RESCISSION</div>The SC, however, noted that under Article 1191 of the Civil Code, rescission is a remedy implied in all reciprocal obligations.The court further explained that under Article 1385, rescission creates the obligation to return the things which were the objects of the contract. “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,” the court said.The decisions of the lower courts did not include exemplary damages, but the Supreme Court stressed that it is proper to award the buyer, especially in cases when a party has acted in a “wanton, fraudulent, reckless, oppressive or malevolent manner.The high court emphasized that damages are imposed to deter socially undesirable conduct and to reshape behavior by acting as negative incentives.“In this case, Empire East allowed the dispute to languish through a protracted appeals process, causing the case to remain in the court system for nearly 16 years, despite [the buyer&#x27;s] claim involving only the amount of P130,000,” the court said.

The Supreme Court ordered real estate developer Empire East Land Holdings, Inc. to refund the P130,000 total payments made by a buyer and pay P260,000 in exemplary damages.

The Supreme Court ordered real estate developer Empire East Land Holdings, Inc. to refund the P130,000 total payments made by a buyer and pay P260,000 in exemplary damages.

Supreme Court: Land developer must refund buyer if promises are broken

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Supreme Court: Land developer must refund buyer if promises are broken

Adrian Ayalin,

ABS-CBN News

Published August 19, 2026 03:39 PM PHT

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Supreme Court

Empire East Land Holdings

Real estate

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