A.Y.

2021-2022

JOSHUA P. SALCE BSABM

CASE DIGEST 10

G.R. No. 126812. November 24, 1998

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

Facts:
Pio Barretto and Sons, Inc. (BARRETTO & SONS) owned forty-three (43) parcels of
registered land with a total area of 18,500 square meters located at Carlos Palanca St.,
Quiapo, Manila, which were mortgaged with the United Coconut Planters Bank (UCPB).
In 1988, the obligation... of the corporation with UCPB remained unpaid making
foreclosure of the mortgage imminent.

Goldenrod, Inc. (GOLDENROD), offered to buy the property from BARRETTO & SONS.
On 25 May 1988, through its president Sonya G. Mathay, petitioner wrote respondent
Anthony Que, President of respondent BARRETTO & SONS.

When the term of existence of BARRETTO & SONS expired, all its assets and liabilities
including the property located in Quiapo were transferred to respondent Pio Barretto
Realty Development, Inc. (BARRETTO REALTY). Petitioner's offer to buy the property
resulted in its... agreement with respondent BARRETTO REALTY that petitioner would
pay the following amounts: (a) P24.5 million representing the outstanding obligations of
BARRETTO REALTY with UCPB on 30 June 1988, the deadline set by the bank for
payment; and, (b) P20 million which was the... balance of the purchase price of the
property to be paid in installments within a 3-year period with interest at 18% per annum.
Petitioner did not pay UCPB the P24.5 million loan obligation of BARRETTO REALTY
on the deadline set for payment; instead, it asked for an extension of one (1) month or
up to 31 July 1988 to settle the obligation, which the bank granted. On 31 July 1988,
petitioner requested another extension of sixty (60) days to pay the loan. This time the
bank demurred.

In the meantime, BARRETTO REALTY was able to cause the reconsolidation of the
forty-three (43) titles covering the property subject of the purchase into two (2) titles
covering Lots 1 and 2, which were issued on 4 August 1988. The reconsolidation of the
titles was made pursuant... to the request of petitioner in its letter to private respondents
on 25 May 1988. Respondent BARRETTO REALTY allegedly incurred expenses for the
reconsolidation amounting to P250,000.00.
 A.Y. 2022-2023

On 25 August 1988 petitioner sought reconsideration of the denial by the bank of its
request for extension of sixty (60) days by asking for a shorter period of thirty (30) days.
This was again denied by UCPB.

On 30 August 1988 Alicia P. Logarta, President of Logarta Realty and Development

Corporation (LOGARTA REALTY), which acted as agent and broker of petitioner, wrote
private respondent Anthony Que informing him on behalf of petitioner that it could not go
through with the purchase... of the property due to circumstances beyond its fault, i.e.,
the denial by UCPB of its request for extension of time to pay the obligation. In the same
letter, Logarta also demanded the refund of the earnest money of P1 million which
petitioner gave to respondent BARRETTO.

Issue:
WON the respondents should return the advance payment of P1M by the petitioner.

Held:

Yes. Barretto Realty should return the amount of P1M to the petitioner with the legal
interest from the date that the notice of extrajudicial rescission until its payment is
fulfilled. The decision banks on Barretto and Sons’ violation of Articles 22 and 23 of the
Civil Code when they refused to return the advance payment of the petitioner when the
sale was not consummated. This is also in accordance with the Article 1482 of the Civil
Code which stated that the earnest money given for the contract of sale shall be
considered as part of the price and as proof of the perfection of the contract. There was
no agreement between parties to forfeit the payment when the buyer fails to pay the
remaining balance. The extrajudicial rescission of the agreement made by the petitioner
had no response from the respondent meant that the latter admits its veracity and validity
of the petitioner’s claim.