G.R. No. 255750 - People vs. Argayan y Ognayon

In August 2006, spouses Rene Luis Godinez and Shemayne Godinez (petitioners) agreed to sell the leasehold rights over a housing unit at 8-A and 8-B Grouper Street, East Kalayaan, Subic Bay Freeport Zone, to spouses Andrew T. Norman and Janet A. Norman (respondents) for US$175,000.00.
On August 23, 2006, respondents paid US$10,000.00 as partial payment. The remaining balance was to be paid within 30 working days.

Respondents moved furniture and appliances into the houses and assigned a house helper as caretaker soon after partial payment.
Respondents failed to pay the balance on time and requested an extension, which petitioners granted on condition of payment of US$30,000.00 to Woodra Enterprises, a corporation owned by petitioners.
On December 1, 2006, respondents paid US$30,000.00 more, totaling US$40,000.00.

Respondents remained unable to pay the remaining balance by late January 2007, leading to an agreement to vacate the premises so petitioners could retake possession.
Respondents later discovered the property was sold to another buyer and demanded the return of their payments via demand letters on October 23, 2007, and November 20, 2007, which were ignored.

Respondents filed a complaint for refund of the US$40,000.00 partial payments.
The Regional Trial Court (RTC) ruled in favor of respondents, ordering petitioners to return the payments with legal interest and pay attorney’s fees (Php50,000.00). The RTC found a perfected contract of sale existed, and lacking stipulation on forfeiture, earnest money must be returned upon rescission.

The CA affirmed the return of payments but ruled the contract was a contract to sell, not a sale, thus non-payment was an unfulfilled suspensive condition canceling the contract.
The CA cited *Olivarez Realty Corporation v. Castillo*, holding that partial payments are generally refundable unless the buyer was given “full possession.”
The CA found respondents did not have full possession, as they could only use a room for storage and petitioners retained keys; hence partial payments must be reimbursed since no forfeiture was stipulated.

Petitioners filed a Rule 65 petition before the Supreme Court, arguing the CA misapplied *Olivarez* and that they were entitled to retain partial payments as rentals since respondents had possession.
The Supreme Court initially dismissed the petition as an improper remedy but reinstated it upon motion for reconsideration to afford substantial justice.
Respondents filed comments asserting the petition was a substitute for a lost appeal and that petitioners misconstrued *Olivarez*.
Petitioners filed a reply maintaining that partial payments should be retained as reasonable rentals despite respondents’ limited occupation.

Whether the petition for certiorari was the proper remedy or if the procedural rules on appeal should be relaxed to afford substantial justice.

Whether partial payments made on a contract to sell may be forfeited by the seller absent a stipulation to that effect.
Whether the possession by respondents during the contract period justifies retention of partial payments by petitioners as reasonable rentals.
Whether respondents are entitled to attorney’s fees and damages aside from the refund of partial payments.