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23. (Fortin) - Telefast vs Castro G.R.

73867, February 29, 1988

Facts:

The petitioner is a company engaged in transmitting telegrams. The plaintiffs are the children and
spouse of Consolacion Castro who died in the Philippines. One of the plaintiffs, Sofia sent a telegram
thru Telefast to her father and other siblings in the USA to inform about the death of their mother.
Unfortunately, the deceased had already been interred but not one from the relatives abroad was able
to pay their last respects. Sofia found out upon her return in the US that the telegram was never
received. Hence the suit for damages on the ground of breach of contract. The defendant-petitioner
argues that it should only pay the actual amount paid to it.

The lower court ruled in favor of the plaintiffs and awarded compensatory, moral, exemplary, damages
to each of the plaintiffs with 6% interest p.a. plus attorney’s fees. The Court of Appeals affirmed this
ruling but modified and eliminated the compensatory damages to Sofia and exemplary damages to each
plaintiff, it also reduced the moral damages for each. The petitioner appealed contending that, it can
only be held liable for P 31.92, the fee or charges paid by Sofia C. Crouch for the telegram that was
never sent to the addressee, and that the moral damages should be removed since defendant's
negligent act was not motivated by "fraud, malice or recklessness.

Issue: Whether or not the award of the moral, compensatory and exemplary damages is proper.

RULING: Yes, there was a contract between the petitioner and private respondent Sofia C. Crouch
whereby, for a fee, petitioner undertook to send said private respondent's message overseas by
telegram. Petitioner failed to do this despite performance by said private respondent of her obligation
by paying the required charges. Petitioner was therefore guilty of contravening its and is thus liable for
damages. This liability is not limited to actual or quantified damages. To sustain petitioner's contrary
position in this regard would result in an inequitous situation where petitioner will only be held liable for
the actual cost of a telegram fixed thirty (30) years ago.

Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of
fraud, negligence or delay, and those who in any manner contravene the tenor thereof, are liable for
damages." Art. 2176 also provides that "whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done."

Award of Moral, compensatory and exemplary damages is proper.

The petitioner's act or omission, which amounted to gross negligence, was precisely the cause of the
suffering private respondents had to undergo. Art. 2217 of the Civil Code states: "Moral damages
include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation,
moral damages may be recovered if they are the proximate results of the defendant's wrongful act or
omission."

Then, the award of P16,000.00 as compensatory damages to Sofia C. Crouch representing the expenses
she incurred when she came to the Philippines from the United States to testify before the trial court.
Had petitioner not been remiss in performing its obligation, there would have been no need for this suit
or for Mrs. Crouch's testimony.

The award of exemplary damages by the trial court is likewise justified for each of the private
respondents, as a warning to all telegram companies to observe due diligence in transmitting the
messages of their customers.

81. (Fortin) - Spouses Cacayorin vs Armed Forces and Police Association Mutual benefits G.R. 171298

Facts: Oscar, a member of the Armed Forces and Police Mutual Benefit Association, Inc., sought to
purchase a property owned by the latter, hence he and spouse Thelma, as borrowers, executed a Loan
and Mortgage Agreement with the Rural Bank of San Teodoro, the lender, under the auspices of of PAG-
IBIG or Home Development Mutual Fund’s Home Financing Program. The rural bank then executed a
letter or guaranty to AFPMBAI that the proceeds of the spouses’ approved loan (P77,418.00) shall be
released to the AFPMBAI after the title to the property is transferred in the spouses’ name and
registration of the mortgage agreement between the parties. AFPMBAI, relying on the letter of
guaranty, executed in favour of the spouses a Deed of Absolute Sale; a new title (TCT No. 37017) was
thus issued in the name of the spouses, with the mortgage agreement annotated on it (Entry No. 3364).
The PAG-IBIG loan facility did not push through, however, and the rural bank closed and was placed
under receivership of the PDIC; AFPMBAI managed to secure possession of the title as well as the
spouses’ loan documents. Despite demand from AFPMBAI, the spouses failed to pay the loan.

In July, 2003, the spouses filed a complaint for Consignation of loan payment, recovery of title, and
cancellation of mortgage annotation against AFPMBAI, alleging that they were left in a quandary as to
where they should tender payment and secure cancellation of the mortgage annotation with the closure
of the rural bank. AFPMBAI filed a motion to dismiss for lack of jurisdiction, arguing that it should be the
HLURB, not the RTC who had jurisdiction over the case as it involves a case of a subdivision buyer (the
spouses) praying for specific performance of contractual and legal obligation under PD 957. Since no
prior valid tender of payment was made by the spouses, the complaint is susceptible of dismissal. The
RTC denied the motion to dismiss. It asserted that since the action involves consignation of loan
payments, the RTC has jurisdiction to continue with the case. On petition for certiorari to the CA, the
latter reversed and set aside the RTC judgment, noting that the case involves specific performance of
AFPMBAI’s contractual and statutory obligations as owner/developer of Kalikasan Mutual Homes, which
makes PD 957 applicable and thus places the case within the jurisdiction of the HLURB. It said that since
one of the remedies prayed for is the delivery to petitioners of TCT No. 37017, the case is cognizable
exclusively by the HLURB.

The Issue: Whether or not the HLURB had jurisdiction over the complaint for consignation.

Ruling: The settled principle is that “the allegations of the complaint determine the nature of the action
and consequently the jurisdiction of the courts. This rule applies whether or not the plaintiff is entitled
to recover upon all or some of the claims asserted therein as this is a matter that can be resolved only
after and as a result of the trial.”⁠1
Does the Complaint in Civil Case No. 3812 make out a case for consignation? It alleges that:

6.0 – Not long after however, RBST⁠2 closed shop and defendant Philippine Deposit Insurance
Corporation (PDIC) was appointed as its receiver. The plaintiffs, through a representative, made a verbal
inquiry to the PDIC regarding the payment of their loan but were told that it has no information or
record of the said loan. This made [sic] the plaintiffs in quandary as to where or whom they will pay their
loan, which they intend to pay in full, so as to cancel the annotation of mortgage in their title.

7.0 – It was discovered that the loan papers of the plaintiffs, including the duplicate original of their title,
were in the possession of defendant AFPMBAI. It was unclear though why the said documents including
the title were in the possession of AFPMBAI. These papers should have been in RBST’s possession and
given to PDIC after its closure in the latter’s capacity as receiver.

8.0 – Plaintiffs are now intending to pay in full their real estate loan but could not decide where to pay
the same because of RBST [sic] closure and PDIC’s failure to locate the loan records and title. This court’s
intervention is now needed in order to determine to [sic] where or whom the loan should be paid.

9.0 – Plaintiffs hereby respectfully prays [sic] for this court to allow the deposit of the amount of Php77,
418.00 as full payment of their principal loan, excluding interest, pursuant to the Loan and Mortgage
Agreement on 4 July 1994.⁠3

From the above allegations, it appears that the petitioners’ debt is outstanding; that the Rural Bank’s
receiver, PDIC, informed petitioners that it has no record of their loan even as it took over the affairs of
the Rural Bank, which on record is the petitioners’ creditor as per the July 4, 1994 Loan and Mortgage
Agreement; that one way or another, AFPMBAI came into possession of the loan documents as well as
TCT No. 37017; that petitioners are ready to pay the loan in full; however, under the circumstances, they
do not know which of the two – the Rural Bank or AFPMBAI – should receive full payment of the
purchase price, or to whom tender of payment must validly be made.

Under Article 1256 of the Civil Code,⁠4 the debtor shall be released from responsibility by the
consignation of the thing or sum due, without need of prior tender of payment, when the creditor is
absent or unknown, or when he is incapacitated to receive the payment at the time it is due, or when
two or more persons claim the same right to collect, or when the title to the obligation has been lost.
Applying Article 1256 to the petitioners’ case as shaped by the allegations in their Complaint, the Court
finds that a case for consignation has been made out, as it now appears that there are two entities
which petitioners must deal with in order to fully secure their title to the property: 1) the Rural Bank
(through PDIC), which is the apparent creditor under the July 4, 1994 Loan and Mortgage Agreement;
and 2) AFPMBAI, which is currently in possession of the loan documents and the certificate of title, and
the one making demands upon petitioners to pay. Clearly, the allegations in the Complaint present a
situation where the creditor is unknown, or that two or more entities appear to possess the same right
to collect from petitioners. Whatever transpired between the Rural Bank or PDIC and AFPMBAI in
respect of petitioners’ loan account, if any, such that AFPMBAI came into possession of the loan
documents and TCT No. 37017, it appears that petitioners were not informed thereof, nor made privy
thereto.

Indeed, the instant case presents a unique situation where the buyer, through no fault of his own, was
able to obtain title to real property in his name even before he could pay the purchase price in full.
There appears to be no vitiated consent, nor is there any other impediment to the consummation of
their agreement, just as it appears that it would be to the best interests of all parties to the sale that it
be once and for all completed and terminated. For this reason, Civil Case No. 3812 should at this
juncture be allowed to proceed.

Moreover, petitioners’ position is buttressed by AFPMBAI’s own admission in its Comment⁠5 that it made
oral and written demands upon the former, which naturally aggravated their confusion as to who was
their rightful creditor to whom payment should be made – the Rural Bank or AFPMBAI. Its subsequent
filing of the Motion to Dismiss runs counter to its demands to pay. If it wanted to be paid with alacrity,
then it should not have moved to dismiss Civil Case No. 3812, which was brought precisely by the
petitioners in order to be able to finally settle their obligation in full.

Finally, the lack of prior tender of payment by the petitioners is not fatal to their consignation case. They
filed the case for the exact reason that they were at a loss as to which between the two – the Rural Bank
or AFPMBAI – was entitled to such a tender of payment. Besides, as earlier stated, Article 1256
authorizes consignation alone, without need of prior tender of payment, where the ground for
consignation is that the creditor is unknown, or does not appear at the place of payment; or is
incapacitated to receive the payment at the time it is due; or when, without just cause, he refuses to
give a receipt; or when two or more persons claim the same right to collect; or when the title of the
obligation has been lost.

139. (Fortin) - Gallardo vs Honorable Intermediate Appellate Court G.R. L-67742

FACTS: Petitioners were nephew and niece of the late Pedro Villanueva and first cousin of the private
respondent Marta Villanueva vda. de Agana, the latter being the daughter of Pedro Villanueva. The
subject matter of this controversy involves a parcel of land situated in Cavinti, Laguna consisting of
81,300 square meters, more or less, initially covered by an original Certificate of Title No. 2262, issued
on April 2, 1924 owned and registered in the name of the late Pedro Villanueva. On August 10, 1937,
petitioner claimed that the aforestated land was sold to them in a private document, an unnotarized
deed of sale written in Tagalog that was allegedly signed by the late Pedro Villanueva conveying and
transferring the property in question in favor of the petitioners. Subsequently, the Original Certificate of
Title was cancelled and a new certificate of title was issued in the name of the petitioners covered by
Transfer Certificate of Title No. RT- 6293 (No. 23350) on January 4, 1944. On November 17, 1976,
defendant Marta Villanueva together with Pedro Villanueva, Jr., and Restituto R.Villanueva executed
and filed an Affidavit of Adverse Claim with the Office of the Register of Deeds of Laguna. When
petitioners learned of this Affidavit of Adverse Claim, attempt was made to settle said controversy
amicably, but they failed. So, petitioners instituted court suit against the private respondent and her
husband, Dr. Marcelo S. Agana, Sr. by filing a complaint for Quieting of Title and Damages with the Court
of First Instance of Laguna on February 3, 1977.

The Court of First Instance of Laguna rendered its decision declaring the deed of sale of August 10, 1937,
as well as the reconstituted transfer certificate of title of petitioners, void ab initio.

Thus, petitioners filed notice of appeal to the Intermediate Appellate Court. However, the Intermediate
Appellate Court, on May 22, 1984, affirmed in toto the decision of the trial court. Hence, this petition.

ISSUE: Whether or not there was a valid reconstitution of Transfer Certificate of TitleNo. RT-6293 (No.
23350) issued in the names of petitioners.

HELD: No. Section 127 of Act 496 which requires, among other things, that the conveyance be executed
"before the judge of a court of record or clerk of a court of record or a notary public or a justice of the
peace, who shall certify such acknowledgment substantially in form next hereinafter stated” was
violated.

The action of the Register of Deeds of Laguna in allowing the registration of the private deed of sale was
unauthorized and did not lend a bit of validity to the defective private document of sale. With reference
to the special law, Section 127 of the Land Registration Act, Act 496 “Deeds of Conveyance, affecting
lands, whether registered under this act or unregistered shall be sufficient in law when made
substantially in accordance with the following forms, and shall be as effective to convey, encumber or
bind the lands as though made in accordance with more prolix forms heretofore in use.”

It is therefore evident that Exhibit "E" in the case at bar is definitely not register able under the Land
Registration Act. Also, the contention that ownership over registered property may be acquired by
prescription or adverse possession is absolutely without merit. No title to registered land in derogation
of that of the registered owner shall be acquired by prescription or adverse possession. Prescription is
unavailing not only against the registered owner j also against his hereditary successors.