question archive X promised to construct a house for Y

X promised to construct a house for Y

Subject:LawPrice:1.87 Bought7

X promised to construct a house for Y. The contract carried a penal clause that in case of non-compliance, X would have to pay a penalty of P100,000.00. X did not construct the house and, as a consequence, Y suffered damages in the amount of P40,000.00. Which among the following is correct?

    1. X is liable to Y the amount of P40,000.00.
    2. X is liable to Y the amount of P140,000.00.
    3. X is liable to Y the amount of P100,000.00.
    4. X is liable to Y the amount of P140,000.00 plus any interest that will accrue.

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Answer:

C. X is liable to Y the amount of P100,000.00.