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All Jurisprudence based

0 tracked cards Civil Law and Land Titles and Deeds

Lumina Realty, Inc. contracts to sell to Carina a 0.78-hectare lot described in TCT No. 912345. The sale contract requires delivery of a clean title and its transfer by April 30, 2026, to be registered in the Registry of Deeds. A penal clause provides that if Lumina fails to deliver the title by the due date, Lumina shall pay Carina ₱360,000 as liquidated damages for each month of delay, capped at 16 months. Delivery has not occurred as of June 1, 2026. Carina sues for specific performance and for the liquidated damages. What remedies are available to Carina, and how does the penal clause interact with the principal obligation to deliver a clean title?

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Carina may rescind the sale and seek actual damages, with the penal clause void as a penalty and not enforceable against Lumina. Specific performance by delivering a clean title and transferring ownership, together with payment of accrued liquidated damages under the penal clause up to the cap; the penal clause is an accessory obligation that operates alongside the principal obligation. Carina must choose between specific performance or the liquidated damages; cannot recover both. The penal clause is void as a penalty; the buyer can only recover actual damages and the seller is not bound to deliver the title.

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