ROBES-FRANCISCO REALTY & DEVELOPMENT CORPORATION vs.

Lollita Millan

On the said case the private respondent, Lolita Millan bought a parcel of land from the petitioner which is Robes-
Francisco Realty unfortunately they failed to deliver the transfer certificate of title to the private respondent eventhough
Lolita complied with the obligation and paid all the instalments including the interest and expenses for the said title. This
compels lollita to file a complaint for specific performance and damages against the petitioner before the RTC.

The corporation filed its answer praying for the dismissal of the said complaint alleging that the deed of sale was
voluntarily executed and the interest of Lollita was protected by a provision in the contract which grants her an interest
rate of 4% per annum of the total amount paid in case of delay in the issuance of the title beyond 6 months or a
complete refund of the plus an interest rate of 4% per annum.

The trial court found out that the land sold to the private respondent was a mortgage to the GSIS to secure a loan, so the
court ruled in favour of lollita, rendering the petitioner guilty of delay amounting to non-performance of the obligation
by virtues Article 170 of the Civil Code expressly 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.,
and ordered the petitioner to secure the title to her name and in case if it is not possible sentenced to pay plaintiff a sum
of money with an additional P20, 000 for nominal damages.

Petitioner contends the decision, claiming that the private respondent is bound by the stipulations of the deed of sale,
hence she cannot recover more than what is agreed upon. So the court presumed that the petitioner is invoking Article
1226 of the Civil Code which provides that in obligations with a penal clause the penalty shall substitute the indemnity
for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary.

Issues:

WON the penal clause claimed by the petitioner should govern?

WON the awarding of nominal damage to the private respondent fair or proper?

Held:

On the first issue, the court decided that the argument has no merit. It does consider the provision on the
contract a penal clause because even without it, the private respondent would still be entitled to legal interest which is
more than what is stipulated in the contract. It clearly shows that the stipulation is made to protect the interest of the
company not the client.

While on the 2nd issue, the court ruled that even though the private respondent failed to present evidence of the
damages she suffered because of the non-performance of the obligation, her right to acquire the title was violated by
the petitioner and this entitles her for nominal damages by virtue of article 2221 and 2222 which recognized the right of
the aggrieved party to be indemnified by means of nominal damages in case of a violation of right.

But in this case the court considers the 20,000 pesos award to be excessive and cannot be considered as a
nature of exemplary damages, knowing that the petitioner did not act in bad faith. To conclude, the court awarded
P10,000.00 as nominal damages which it considered fair and just since there is a lapse of almost 3 years before the
deed of absolute sale was executed in her favour and failure of the petitioner to transfer the Transfer Certificate of Title.