PRICE ON FORCED SALES DISTINGUISHED FROM PRICE ON ORDINARY

SALES

GOLDENROD, INC., petitioner,
vs.
COURT OF APPEALS, PIO BARRETO & SONS, INC., PIO BARRETO REALTY
DEVELOPMENT, INC. and ANTHONY QUE, respondents.

G.R. No. 126812 November 24, 1998

BELLOSILLO, J.:

Doctrine:
In ordinary sales, by reasons of equity, a transaction may be invalidated on the ground of
inadequacyof price. In forced sales, as when a sale is made at a public auction, the owner
has the right to redeem.When there is a right to redeem, inadequacy of price is
immaterial because judgment debtor canbetter acquire the property or also sell his right
to redeem and thus recover the loss he claims to havesuffered by reason of the price
obtained from the auction sale.

FACTS:
Barreto realty owns 43 parcels of land in Quiapo Manila, which they mortgaged in
UCPB. Respondent sold the property to Goldenrod who in turn paidP1M earnest money
and promise to pay Barreto’s debt to UCPB. Respondent caused 2 land titles to the
property.Petitioner was not able to pay UCPB and the latter did not agree for and
extension. Hence, petitioner rescinded the contact and demanded the return of the
earnest money. Respondent did not oppose the recession but did not gave the earnest
money. They even sold the first lot to Asiaworld Trade Center and the other lot to UCPB
for payment of their mortgage.

ISSUE:
WON respondent should return the earnest money of the petitioner.

HELD:
Earnest money is a part of payment of a sale. Rescission creates the obligation to return
the things which were the object of the contract together with their fruits and interest.
Since the respondent did not oppose the extra-judicial rescission, they should return the
earnest money of the petitioner. It would be most inequitable if respondentBarretto
Realty would be allowed to retain petitioner’s payment of P1,000,000.00 and at the same
time appropriate the proceeds of the second sale made to another.