4/14/2021
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balance. The Godinez Spouses agreed to give them more time, provided they pay
US$30,000.00 to the account of Rene Godinez. Thus, on December 1, 2006, or around
three (3) months after the full payment on the property was due, Andrew Norman
transferred US$30,000.00 to the account of Woodra Enterprises, a corporation owned
by the Godinez Spouses.[9]
Despite the extension, the Norman Spouses were still unable to pay the remaining
balance by the end of January 2007. Thus, the parties agreed that the Norman Spouses
would remove their furniture and appliances, so that the Godinez Spouses could use
the units again.[10]
Around three (3) months later, the Norman Spouses learned that the housing unit had
been sold to another buyer.[11] The Norman Spouses requested the return of their
payments from the Godinez Spouses, writing demand letters on October 23, 2007 and
on November 20, 2007. When their demand letters went unheeded, they filed a
complaint against the Godinez Spouses, praying for the return of the US$40,000.00.
[12]
The Regional Trial Court granted the Norman Spouses' prayer for the return of their
partial payments.[13] It found that the spouses had a perfected contract of sale, and
that the partial payments were in the form of earnest money, which formed part of the
purchase price. Upon rescission of the contract of sale due to substantial breach, the
earnest money should have been returned to the Norman Spouses, since the parties
never stipulated its forfeiture in favor of the Godinez Spouses. The trial court also
denied the Norman Spouses' claims for moral and exemplary damages for lack of basis,
but granted the prayer for attorney's fees in the amount of P50,000.00.
WHEREFORE, premises considered, defendants Spouses Rene Luis Godinez
and Shemayne R. Godinez are hereby ORDERED TO RETURN to plaintiffs
Spouses Andrew T. Norman and Janet A. Norman, the amount of
US$40,000.00 (or its peso equivalent) with legal interest thereon from the
date of the filing of the complaint, until the amount is fully paid.
In addition, said defendants are hereby ORDERED TO PAY PLAINTIFFS THE
AMOUNT OF Php50,000.00 and the costs of suit.
Furnish copies of the decision to the parties and their respective counsels.
SO ORDERED.[14] (Emphasis in the original )
The Godinez Spouses appealed to the Court of Appeals, which affirmed[15] the Regional
Trial Court's ruling that the amounts paid by the Norman Spouses should be returned.
However, the Court of Appeals found that the contract was not a contract of sale, but a
contract to sell. Thus, the nonfulfillment of the obligation to pay the full amount of the
purchase price was not a breach of contract but rather an unfulfilled suspensive
condition, which prevented the seller from conveying title to the buyer. Thus, the
Norman Spouses' failure to pay was not a breach that could result in their partial
payments being forfeited as compensatory damages. Instead, it rendered the contract
to sell "ineffective and without further force and effect."[16] Furthermore, their partial
https://elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/66239
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