Engineering Board Exam Reviewer · ECE · hard

A contractor and owner signed a contract with a liquidated damages clause of ₱100,000 per day of delay for a ₱1,000,000 installation. The contractor was 30 days late. The owner claims ₱3,000,000. What is the most likely legal outcome?

  1. The contractor must pay the full ₱3,000,000
  2. The clause is automatically void and nothing is payable
  3. The owner gets ₱6,000,000
  4. The court may equitably reduce the penalty because it is iniquitous or unconscionable

Answer

D. The court may equitably reduce the penalty because it is iniquitous or unconscionable

Solution

Articles 1229 and 2227: courts may reduce penalties that are iniquitous or unconscionable.

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