Date of Publication: 9 September 2026
Eric T. Dykimching | Karla Ysabel L. Galang
In the case of Empire East Land Holdings, Inc. v. Bautista, G.R. No. 272556 (03 February 2026), the Supreme Court clarified that a developer’s liability for a sales agent’s representation does not necessarily arise under Section 19 of P.D. No. 957 but may instead be based on a contractual undertaking enforceable under the Civil Code.
In the said case, Bautista paid Empire East Land Holdings, Inc. (“Empire East”) an aggregate amount of PhP130,000.00 for a residential unit after a sales agent represented that a Contract to Sell would thereafter be issued. However, Empire East did not issue the Contract to Sell. After the sales agent ceased responding to the Bautista’s inquiries, Bautista sought the return of the amounts paid.
A sales agent’s individual representation is not an “advertisement” under P.D. No. 957
Section 19 states that advertisements made through newspapers, radio, television, leaflets, circulars, and other similar forms must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive.
The Supreme Court held that sales agent’s representations (i.e., that the Contract to Sell would be released upon the payment of reservation fee) do not constitute advertisement under Section 19 of P.D. No. 957. The general phrase “any other form of advertisement” must be understood in light of the specific forms of communication identified in the provision. It refers to similar forms of mass communication directed to the general public, rather than a representation made privately to a single individual.
Accordingly, a representation made by a sales agent directly and exclusively to an individual buyer does not fall within the statutory meaning of “advertisement” under Section 19.
The Reservation Agreement gave rise to reciprocal obligations
However, the absence of “advertisement” does not remove the liability of a developer towards the buyer.
The Supreme Court ruled that the reservation arrangement gave rise to reciprocal obligations where Bautista was required to make the agreed payment and Empire East was obligated to issue the Contract to Sell.
Since Empire East failed to perform its obligation despite receiving payments from Bautista, the Supreme Court held that Bautista was entitled to rescind the agreement under Article 1191 of the Civil Code. As a consequence of rescission, the parties must return what they had received from each other which resulted to the order of the Supreme Court to return the Bautista’s payment amounting to PhP130,000.00.
Implications for real estate developers
Empire East Land Holdings, Inc. v. Bautista illustrates that while P.D. No. 957’s prohibition on misleading advertisements do not necessarily apply to representations made privately by sales agent, developers remain subject to the rules under the Civil Code on contractual obligations and remedies. A developer cannot escape contractual liability by claiming that statements were mere representations made by its sales agent. In cases of reciprocal undertakings, the developer may still be bound by and held liable for its non-performance of its contractual obligations.