Goldenrod v. Court of Appeals

Summary

Goldenrod, Inc. paid P1 million earnest money to purchase real property from Pio Barretto companies but failed to settle the required P24.5 million bank obligation by the deadline despite requesting extensions. The sellers subsequently sold the property to a third party and refused to return the earnest money. The Supreme Court ruled that earnest money forms part of the purchase price under Article 1482 of the Civil Code and must be returned upon rescission unless there is express stipulation for forfeiture. Since the sellers did not object to Goldenrod's rescission notice and sold to another buyer, they were obligated under Article 1385 to return the earnest money with interest. The Court emphasized preventing unjust enrichment where sellers retain both the earnest money and proceeds from the subsequent sale.