Essay Flashcards

(a) Identify the controlling doctrine governing penal clauses (pena convencional) in obligations. (b) Apply to the following scenario: Riviera Realty, a landowner, enters into a contract to sell to Lian a 0.60-hectare lot described in TCT No. 5567. The agreement requires delivery of a clean title and its transfer by April 30, 2026, and to be registered in the Registry of Deeds. The contract includes a penal clause: If Riviera fails to deliver the title by the due date, Riviera shall pay Lian ₱280,000 as liquidated damages for each month of delay, capped at ₱2,800,000. Delivery has not occurred as of May 20, 2026. Lian sues for specific performance and for the liquidated damages. What remedies are available to Lian, and how does the penal clause interact with the principal obligation to deliver a clean title?