Robes-Francisco Realty & Dev’t Corp.

vs CFI Rizal and Lolita Millan

G.R. No. L-41093
10/30/1978

Facts:
 Robes-Francisco Corp., sold to Lolita Millan a parcel of land at a subdivision in Caloocan in worth P3,860 payable in
installments. Lolita complied with her obligations and made the final payment on 12/22/1971. She paid a total of
P5,193 which included interests and other expenses.
 Upon compliance, Lolita made repeated demands for the execution of the deed of sale and issuance of TCT over the
land. This was complied by Robes-Francisco. A particular provision states that:
o That the VENDOR further warrants that the transfer certificate of title of the above described parcel of land
shall be transferred in the name of the VENDEE within the period of six (6) months from the date of full
payment and in case the VENDOR fails to issue said transfer certificate of title, it shall bear the obligation to
refund to the VENDEE the total amount already paid for, plus an interest at the rate of 4% per annum."
 Robes-Francisco failed to issue a TCT over said lot which prompted Lolita to file for specific performance with
damages against Robes-Francisco before CFI Rizal. Lolita prayed that: 1) Deed of sale be reformed; 2) The TCT
(should be free from any encumberance) be delivered to her or if impossible, be paid for the equivalent value of the
subject lot (P27,600); 3) Paid damages.
 Robes-Francisco moved to dismiss the case alleging that the deed was voluntarily executed by both parties and the
interest of Lolita was protected by the provision in said contract for payment of interest at 4%/year of the total
amount paid for the delay in the TCT issuance.
 CFI found that the company’s failure to issue the TCT was due to the land’s inclusion in the mortgaged properties to
the GSIS to secure an obligation of P10M and that the title was possessed by the GSIS. It ordered to register the
deed of sale and secure the TCT to Lolita’s name in 10 days, and if not, the company is to pay P5,193 at 4%/year until
fully paid.
 The company claims that the deed of sale stipulates that should it fail to issue the TCT within 6 months from full
payment, it shall refund to Lolita the payment with 4%/year interest hence Lolita is bound by the terms of the
contract. It invoked NCC 1226 which states that in obligations with a penal clause, the penalty shall replace the
damages and payment of interests in case of non-compliance if there is no stipulation to the contrary.

Issue: Whether Lolita is entitled to the refund plus interest – NO

Ruling:
 The said clause does not constitute as a penal clause, and even without it, pursuant to NCC 2209, Lolita is entitled to
recover the amount she paid plus the legal interest which is even more than the 4% provided for. Said clause is in
fact to the company’s advantage as it precludes them to pay damages in favor of Lolita.
 Unfortunately for Lolita, she submitted her case w/o evidence on the actual damages she suffered due to the
company’s non-compliance. Nonetheless, the facts showed that Lolita’s rights were violated when she was unable
to acquire the TCT and entitles her at the very least to nominal damages.
 NCC 2221 holds 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. NCC 2222 states that 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 as indemnification but only for vindication. They are recoverable where some
injury has been done the amount of which the evidence fails to show, the assessment of damages being left to the
discretion of the court according to the circumstances of the case.

Doctrine: A stipulation in a deed of absolute sale that should the vendor fail to issue the transfer certificate of title
within six months from date of full payment, the vendor shall refund to the vendee the total amount cannot be
considered a penal clause in contemplation of Article 1226 of the New Civil Code as to preclude recovery of damages.
For obvious reasons, the clause does not convey any penalty, for even without it, pursuant to Article 2209 of the Civil
Code, the vendee would still recover the amount paid by her with legal rate of interest which is even more than the
4% provided for in the clause.