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Facts:

The case arose from the parcel of land that was purchased by Lolita Millan, the private respondent of this case,
from petitioner Realty- Francisco Realty and Development Corporation. On the said case, petitioner failed to deliver the
Transfer Certificate of title to the private respondent, despite the fact that the private respondent complied with the
obligations and paid the stipulations including the interests and expenses for the said title. This prompted the private
respondent to file a complaint for specific performance and damages against the petitioner for the the reformation of
the deed of absolute sale, the delivery of the certificate of title to from any lien or encumbrance; or, should this be not
possible, to pay plaintiff the value of the lot which should not be less than P27, 600 which is the current land value and
ordering the petitioner to pay for damages, corrective and actual in the sum of P15 000.00.

The corporation in its answer prayed for the dismissal of the case alleging that the deed of absolute sale was
voluntarily executed between the parties and the interest of the plaintiff was amply protected by the provision in said
contract for payment of interest at 4% per annum of the total amount paid, for the delay in the issuance of the title
beyond 6 months or a complete refund of the total amount paid by the vendee plus an interest rate of 4% per annum.

The trial court found out that the land sold to the private respondent was included to the properties mortgage to the
GSIS to secure a loan. The trial court rendered judgement that the petitioner guilty of delay, amounting to non-
performance of the obligation and ordered the petitioner to secure the title in the name of the private respondent and
in case it is not possible, the petitioner is sentence to pay P5,193.63 with interest of 4% per annum from June 22, 1972
until fully paid. Also the trial court sentenced the petitioner to pay the defendant P20, 000 for nominal damages plus
atty.’s fee of P5,000.

Petitioner contends the decision claiming that the private respondent is bound by the stipulations of the deed of sale,
hence cannot recover more than what is agreed upon. With this contention it is 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 proper?

Held:

On the first issue, the court decided that the foregoing argument of petitioner is totally devoid of merit because
even without the said clause the private respondent would still be entitled to recover the amount paid by her with legal
rate of interest which is even more than the 4% provided for in the clause. Moreover, the court states that the clause is
so worded as to work to the advantage of petitioner corporation.

While on the 2nd issue, the court ruled that even though the private respondent failed to present evidence of the
damages suffered by her upon the non-performance of the obligation by the petitioner. Nonetheless, the facts clearly
shows that the private respondent’s right to acquire the title of the land she bought was violated by the petitonerand
this entitles her for nominal damages.
According to the pertinent provisions of our Civil Code follow:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by
the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.

Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in article
1157, or in every case where any property right has been invaded.

Nominal damages are not intended for indemnification of loss suffered but simply for the vindication or recognition of a
right violated or invaded.

The cited 2 cases regarding nominal damages

First is de medina, et. Al vs. Cresencia, et.al which is an action or damages arising from a vehicular accident, it stated that
the P10,000.00 award for nominal damages was eliminated principally because the aggrieved party had already been
awarded P6,000.00 as compensatory damages, P30,000.00 as moral damages and P10,000.00 as exemplary damages,
and "nominal damages cannot coexist with compensatory damages,". While on Northwest Airlines, Inc. v. Nicolas L.
Cuenca The Court there found special reasons for considering P20,000.00 as "nominal". Cuenca who was the holder of a
first class ticket from Manila to Tokyo was rudely compelled by an agent of petitioner Airlines to move to the tourist
class notwithstanding its knowledge that Cuenca as Commissioner of Public Highways of the Republic of the Philippines
was travelling in his official capacity as a delegate of the country to a conference in Tokyo."

In the present case the court considers the 20,000 pesos award to be excessive, knowing that the petitioner did not act
fraudulently or in bad faith. For that reason We cannot agree with respondent Millan that the P20,000.00 award may be
considered in the nature of exemplary damages because exemplary damages are only awarded when the guilty party
acted on bad faith. Additionally, private respondent did not submit below any evidence to prove that she suffered actual
or compensatory damages.

To conclude, We hold that the sum of Ten Thousand Pesos (P10,000.00) by way of nominal damages is fair and just since
there is a lapse of almost 3 years since her last payment before the deed of absolute sale was executed in her favour
and worse petitioner still failed to convey the corresponding transfer certificate of title to Millan who accordingly was
compelled to file the instant complaint against the petitioner.