Carlos Telosa obtained a loan from the Rural Bank of Lucena Inc.

and as a security thereof, mortgaged a parcel of land located at Bo. Amugeria, Malunay, Quezon with an area of 50,000 square meters. Several months thereafter, the Rural Bank of Lucena became a distressed bank and so the Monetary Board decided to liquidate said bank. The Monetary Board ordered the Superintendent of Banks Carlota P. Valenzuela to convert the assets of the Lucena bank to money. Among the accounts of the Lucena bank inventoried was the account of Carlos Telosa in the principal amount of P5,000.00, and so he was sent a demand letter. Because Carlos Telosa knew that his obligation to the rural bank was only P300.00 not P5,000.00, he executed an affidavit protesting the demand. Carlos Telosa paid the amount of P400.00. and claimed a remaining balance of P 11.25 which was paid by Dolores Telosa. Meanwhile,Carlos Telosa died Claiming that the payments made did not fully satisfy the whole amount due, Napoleon R. Cruz, then authorized deputy of the Central Bank assigned at the Lucena bank, petitioned the Deputy Provincial Sheriff of Quezon to extra-judicially foreclose the mortgage and sell the collateral at public auction. A complaint was then filed by the widow and children (now private respondents) of Carlos Telosa, against the Rural Bank of Lucena Inc. praying for a judgment declaring the contract of mortgage executed by Carlos Telosa in favor of the Rural Bank of Lucena, Inc. null and void with a prayer for the issuance of writ of preliminary injunction to stop the sheriff of Quezon from proceeding with the extra-judicial foreclosure. The plaintiffs (now private respondents) contended that the amount of the loan obtained by Carlos Telosa was only P300.00 and that the same had already been fully paid. Meanwhile, as there was no restraining order issued, the foreclosure sale took place with the Rural Bank of Lucena, Inc., as the lone and highest bidder in the auction sale. The plaintiffs filed their amended complaint, this time against Carlota P. Valenzuela in her capacity as Superintendent of Banks and authorized representative of the Central Bank in the liquidation of the Rural Bank of Lucena, The plaintiffs prayed in their amended complaint that the extrajudicial foreclosure sale be annulled. Defendant (now petitioner) moved to dismiss the amended complaint on two (2) grounds: (1) that the trial court has no jurisdiction over the subject matter of the action as the Rural Bank of Lucena, Inc., is in the process of liquidation in the Court of First Instance of Manila and (2) that the plaintiffs have no cause of action against the defendant. The motion to dismiss was denied. Thereafter, defendant filed her answer After trial, the court a quo rendered its decision in favor of the plaintiffs. The above decision was appealed to the Court of Appeals and said court affirmed the decision of the lower court in toto.

ISSUE: W/N the trial court has jurisdiction over the subject matter of the action as the Rural Bank of Lucena, Inc., is in the process of liquidation in the Court of First Instance of Manila HELD: YES. This Court ruled in the case of Hernandez vs. Rural Bank of Lucena, Inc. that if there is a judicial liquidation of an insolvent bank, all claims against the bank should be filed in the liquidation proceeding. However, taking into consideration the circumstances of the case and in

the interest of justice, we are constrained to deviate from this procedure. To order the private respondents to refile and relitigate their case before the liquidation court would be an exercise in futility. It would mean another several years of trial and additional expenses to private respondents who are admittedly living in poverty. Incidentally, the property in question is the only property of private respondents.We are convinced as were the trial court and the appellate court that the amount of loan actually obtained by the deceased Telosa was only P300.00 and not the P5,000.00 Needless to state in this regard this particular transaction was one of the fraudulent and anomalous transactions involving the officers of the Rural Bank of Lucena, Inc. The latter took advantage of the very limited education of Carlos Telosa. Finally, even Our ruling in the cited Hernandez versus Rural Bank case admits of exception. It says "as far as lawful and practicable all claims against the insolvent bank should be filed in the liquidation proceeding." This case should be one of them.

St. Louis Realty caused to be published with the permission of Arcadio S. Arcadio (but without permission of Doctor Aramil) in the issue of the Sunday Times of December 15, 1968 an advertisement with the heading "WHERE THE HEART IS". Below that heading was the photograph of the residence of Doctor Aramil and theArcadio family and below the photograph was a write-up. The same advertisement appeared in the Sunday Times dated January 5, 1969. Doctor Aramil a neuropsychiatrist and a member of the faculty of the U. E. Ramon Magsaysay Memorial Hospital, noticed the mistake. On that same date, he wrote St. Louis Realty a letter of protest. The letter was received by Ernesto Magtoto, an officer of St. Louis Realty in charge of advertising. He stopped publication of the advertisement, offered his apologies to Doctor Aramil. However, no rectification or apology was published. Thereafter, Aramil's counsel demanded from St. Louis Realty actual, moral and exemplary damages of P110,000. In its answer, St. Louis Realty claimed that there was an honest mistake and that if Aramil so desired, rectification would be published in the Manila Time. It published in the issue of the Manila Times of March 18, 1969 a new advertisement with the Arcadio family and their real house but it did not publish any apology to Doctor Aramil and an explanation of the error. On March 29, Aramil filed his complaint for damages. St. Louis Realty then published in the issue of the Manila Times of April 15, 1969 the "NOTICE OF RECTIFICATION" in a space 4 by 3 inches: Judge Jose M. Leuterio observed that St. Louis Realty should have immediately published a rectification and apology. He found that as a result of St. Louis Realty's mistake, Doctor Aramil suffered mental anguish and his income was reduced by about P1,000 to P1,500 a month. Moreover, there was violation of Aramil's right to privacy

The trial court awarded Aramil P8,000 as actual damages, P20,000 as moral damages and P2,000 as attorney's fees. St. Louis Realty appealed to the Court of Appeals. The Appellate Court affirmed that judgment reasoning that St. Louis Realty committed an actionable quasi-delict under articles 21 and 26 of the Civil Code because the questioned advertisements pictured a beautiful house which did not belong to Arcadio but to Doctor Aramil who, naturally, was annoyed by that contretemps. ISSUE: W/N the case is covered by article 26 which provides that "every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons HELD: YES. Article 2219 allows moral damages for acts and actions mentioned in Article 26. As lengthily explained by Justice Gatmaitan, the acts and omissions of the firm fan under Article 26. St. Louis Realty's employee was grossly negligent in mixing up the Aramil and Arcadio residences in a widely circulated publication like the Sunday Times. To suit its purpose, it never made any written apology and explanation of the mix-up. It just contented itself with a cavalier "rectification ". Persons, who know the residence of Doctor Aramil, were confused by the distorted, lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed. He suffered diminution of income and mental anguish.