Vda de Javellana vs CA, and Mobil (1983)

Vda de Javellana owns contiguous parcels of land suitable for a gas station. She executed
an option to lease in favor of Mobil. Mobil failed to exercise it within a period of 60 days, as
stipulated in the option to lease, so Javellana later on leased it to Shell for a period of 20
years.
Claiming that it exercised its option to lease, Mobil sought to declare the lease agreement
between Javellana and Shell void, and asked that a writ of preliminary injunction be issued
to restrain from implementing the lease and installing a gas station on the property. The
lower court issued a TRO against Javellana and later on ruled that Mobil exercised its option
to lease. The CA reversed and found that Mobil did not exercise its option within the
stipulated period, hence the lease agreement between Shell and Javellana is binding and
that the injunction deprived Javellana of the rentals due her but did not grant her damages
because her counterclaim for damages was dismissed and never raised on appeal.
HELD: Javellana is entitled to an award of damages for the wrongful filing of a
case against her and the wrongful filing of a case against her, and the
improvident issuance of a writ of preliminary mandatory injunction,
notwithstanding her counterclaim for damages was dismissed and she did not
assign such dismissal as an error before the appellate court.
General Rule: Only errors stated in the assignment of errors and properly argued in the
brief will be considered.
Except: errors affecting jurisdiction over the subject matter and plain, as well as clerical
errors.
The error is patent. Under the Rules of Court, the CA is given an option to consider and
pass upon a proven error notwithstanding the fact that it was not specifically assigned and
argued in the brief. An unassigned error closely related to the error properly assigned, or
upon which the determination of the question raised by the error properly assigned is
dependent will be considered by the appellate court, notwithstanding failure to assign it as
error. The SC has the same authority, if it finds that it is necessary to arrive at a just
decision. It would be unfair and unjust to deprive Javellana of the rentals on her
property due to a mere technicality.
Were it not for Mobils case and the issuance of the injunction, Javellana would have
received 912k (including the 120k advance rental). Mobil was ordered to pay 792k
(912k minus the 120k advance) with interest at legal rate from finality of
judgment until fully paid, plus 7k/mo (monthly rental) until possession is
returned to Javellana, and 20k attorneys fees and expenses of litigation.

Atlantic Erectors vs. CA, Herbal Cove Realty (2012)

Herbal Cove Realty entered into a contract with Atlantic whereby the latter agreed to
complete a construction package as part of its subdivision project. Atlantic agreed to finish
the works and deliver the units to Herbal within 180 calendar days from the notice to
proceed. The agreement stipulated liquidated damages of 1/10 of 1% of the contract price
(16.7M) per calendar day of delay until completion but not to exceed 10%. Atlantic
requested for an extension due to belated turnover, bad weather, etc. Herbal granted the
extension but Atlantic still failed to complete the works. Herbal initially asked Atlantic for a
written commitment to finish the construction otherwise the contract would be deemed
terminated, and Herbal would take over with the charges for excess cost plus liquidated
damages.
Upon submission for arbitration, it was decided that delay of Atlantic was overridden by the
unlawful termination of the contract by Herbal for failure to comply with the 15-day notice
thus, Herbal is not entitled to the liquidated damages. The CA affirmed but awarded
liquidated damages.
HELD: HERBAL IS ENTITLED TO THE LIQUIDATED DAMAGES.
Parties to a contract are allowed to stipulate on liquidated damages to be paid in
case of breach. Its double function is to provide for liquidated damages and to
strengthen the coercive force of the obligation by the threat of greater
responsibility in case of breach. As a pre-condition to such award, there must be
proof of the fact of delay in the performance of the obligation.
Under the contract, the liability for damages is not inconsistent with Herbals takeover of
the project or termination of the contract or even the eventual completion of the project.
What is decisive for Herbals entitlement to liquidated damages is the fact of delay in the
completion of the works within the period agreed upon without justifiable reason and after
the owner makes a demand.
No extension was validly agreed upon and in view of the fact that Atlantic failed to
complete the housing units within the stipulated period, Atlantics liability arose, thus the
latter may be held to answer for liquidated damages in its maximum amount which is 10%
of the contract price. The SC found no basis to reduce the liquidated damages for partial
fulfillment since as per the arbitrators findings, accomplishment was only 62.57%.

Lambert vs. Fox (1914)

Lambert and Fox became the two largest stockholders after taking over John R. Edgar & Co
with other creditors of said company. The two executed an agreement not to alienate their
shares for at least one year following the execution of the agreement. It also provided for a
penalty of 1k as liquidated damages upon violation of the agreement. Fox sold his shares to
McCullough, a competitor of Edgar & Co. The trial court ruled in favor of Fox on the ground
that the intention of the parties was to give effect to the agreement only until the company
was financially stable, which stability was already reached even before the expiration of the
one-year period.
HELD: The parties expressly stipulated that the contract should last one year. Whatever the
object was in specifying the year, it was their agreement that the contract should last a
year and it was their judgment that their purposes would not be subserved in any less
time. The penalties provided in contracts of this character are enforced. Parties
competent to contract may make such agreements within the limitations of the
law and public policy as they desire and that the courts will enforce them
according to their terms. Fox was ordered to pay the 1k penalty with interest,
without costs.
The court may intervene to reduce a penalty stipulated in the contract only when the
principal obligation has been partly or irregularly fulfilled and the person demanding the
penalty has received the benefit of such partial or irregular performance.
There is no difference between a penalty and liquidated damages, as far as legal results
are concerned. The party to whom payment is to be made is entitled to recover the sum
stipulated without the necessity of proving damages. One of the primary purposes in fixing
a penalty or liquidating damages is to avoid such necessity.