Case Digest (G.R. No. 126812)
Facts:
Goldenrod, Inc. v. Court of Appeals, G.R. No. 126812, November 24, 1998, Supreme Court First Division, Bellosillo, J., writing for the Court. Goldenrod, Inc. (petitioner) offered to buy forty-three parcels in Quiapo owned by Pio Barretto and Sons, Inc., later transferred to Pio Barretto Realty Development, Inc. (collectively, private respondents). Petitioner delivered P1,000,000.00 as earnest money by a letter dated 25 May 1988 stating the amount “shall form part of the purchase price” and asking that the lots be reconsolidated to the mother titles.At the time the property was mortgaged to United Coconut Planters Bank (UCPB) and subject to an outstanding obligation. The agreed transaction contemplated that petitioner would (a) pay P24.5 million to settle BARRETTO REALTY’s obligation with UCPB by the bank’s deadline and (b) pay a P20 million balance in instalments over three years. Petitioner failed to pay UCPB by the bank’s deadline and sought extensions; UCPB granted one extension to 31 July 1988 but denied a further 60-day extension.
Petitioner, through its agent/broker Logarta Realty, notified private respondent Anthony Que on 30 August 1988 that it could not proceed because UCPB refused further extension and demanded return of the P1,000,000 earnest money. The titles had been reconsolidated on 4 August 1988 at petitioner’s request. Private respondents proceeded to sell Lot 2 to Asiaworld on 31 August 1988 and transferred Lot 1 to UCPB by dacion on 13 October 1988; UCPB later sold Lot 1 to Asiaworld.
Petitioner sued in the Regional Trial Court (RTC) of Manila for recovery of the P1,000,000 and damages, alleging the earnest money was part of the purchase price and should be returned when the sale was not consummated. The RTC, in a decision rendered 15 March 1991, ordered private respondents to return P1,000,000 with legal interest from 9 February 1989, plus additional amounts, finding no written stipulation forfeiting the earnest money and holding retention would violate Arts. 22 and 23 of the Civil Code against unjust enrichment.
The Court of Appeals reversed the RTC and dismissed the complaint. Petitioner ele...(Subscriber-Only)
Issues:
- In the absence of an express stipulation, may a seller forfeit earnest money and keep it to answer for damages when the prospective buyer fails to complete the purchase?
- Did petitioner validly rescind the contract extrajudicially and thereby become entitled to the return of the earnest mone...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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