GOLDENROD V CA G.R. NO.

126812
Facts:
Barretto owned parcels of land which were mortgaged to UCPB. Barretto failed to pay; the
properties were foreclosed. Goldenrod made an offer to Barretto that it would buy the properties
and pay off the remaining balance of Barrettos loan with UCPB. It paid Barretto 1 million pesos
as part of the purchase price. The remaining balance would be paid once Barretto had
consolidated the titles. On the date that Goldenrod was supposed to pay, Goldenrod asked for an
extension. UCPB agreed. When the extension date arrived, Goldenrod asked for another
extension. UCPB refused. Barretto successfully consolidated the titles. Goldenrod informed
Barretto that it would not be able to push through with their agreement. It asked Barretto to
return the 1 million pesos. Barretto did not give in to Goldenrods rescission. Instead, it sold the
property that was part of their agreement to Asiaworld.
Issue:
Should Goldenrod be paid back the 1 million pesos?
Held:
Yes. Rescission creates the obligation to return the things which were the object of the contract
together with the fruits and interest. Barretto is obliged to pay Goldenrod back because 1)
Goldenrod decided to rescind the sale; 2) the transaction was called off and; 3) the property was
sold to a third person. By virtue of the extrajudicial rescission of the contract to sell by
Goldenrod, without opposition from Barretto, who in turn sold it to a third person, Barretto had
the obligation to return the 1 million pesos plus legal interest from the date it received the notice
of rescission.