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Civil Code of the Philippines:

Section 6, Obligations with a


Penal Clause
A Reaction Paper on problem 1 and 2 page 200 of the book,
The Law on Obligations and Contracts by Hector S. De Leon
Group No. 6, May 11, 2016
ECE70/ A11
Yambao, Karen Alyssa M.
#

School of Electrical, Electronics, and Computer Engineering Department, Mapua Institute of Technology
Intramuros, Manila Philippines
ayenyambao24@gmail.com

This document provides an overview on


the topic of Obligations with a Penal Clause. It covers
the topics and articles under section 6 of the book.
Moreover, it explains every situation to make it more
understandable. This paper aims to educate the
students about the existing laws in the Philippines and
make them understand the possible effects or results of
each obligations as well as the rights involve in such
cases.

the penalty, save in case where this right has been


expressly reserved for him. Neither can the creditor
demand the fulfillment of the obligation and the
satisfaction of the penalty at the same time, unless
this right has been clearly granted him. However, if
after the creditor has decided to require the
fulfillment of the obligation, the performance
thereof should become impossible without his fault,
the penalty may be enforced. (1153a)

Keywords penal clause, indemnity, principal


obligation, accessory obligation, legal penal clause,
conventional penal clause, compensatory penal clause,
punitive penal clause, subsidiary penal clause and
cumulative penal clause

Article 1228. Proof of actual damages suffered


by the creditor is not necessary in order that the
penalty may be demanded. (n)

Abstract

I.

INTRODUCTION

This paper gives a reaction regarding the


articles under section 6 of the Laws on the
Obligations and Contracts.
Obligations are liabilities, it comes with
penalties when not fully fulfilled. Penal clause is
made to compensate or to make assurance on the
performance of one persons obligations this is to
create an effective deterrent against breach.
II.

Article 1229. The judge shall equitably reduce


the penalty when the principal obligation has been
partly or irregularly complied with by the debtor.
Even if there has been no performance, the penalty
may also be reduced by the courts if it is iniquitous
or unconscionable. (1154a)
Article 1230. The nullity of the penal clause
does not carry with it that of the principal
obligation. The nullity of the principal obligation
carries with it that of the penal clause. (1155)
III.

ARTICLES

Article 1226. In obligations with a penal clause,


the penalty shall substitute the indemnity for
damages and the payment of interests in case of
non-compliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid if the
obligor refuses to pay the penalty or is guilty of
fraud in the fulfillment of the obligation.
Article 1227. The debtor cannot exempt himself
from the performance of the obligation by paying

PROBLEMS

1.

X promises to deliver to Y a specific


horse. Their contract contains a penal
clause that in case of non-fulfilment, X
shall pay a penalty of P10,000. X wants to
just pay that penalty instead of delivering
the horse. Has Y the right to refuse to
accept the penalty in lieu of the horse?

2.

In the same problem, X was able to show


that Y did not suffer any damage by Xs

violation of his obligation. Can Y still


enforce the penalty?
IV.
1.

2.

ANSWERS TO PROBLEMS

For the first problem, instead of


delivering the horse, X just wants to pay
the penalty of P10, 000 to his seller to
exempt himself from the obligation of
delivering the horse. The obligation has a
penal clause to ensure fulfilment in the
obligation and it is not intended to exempt
the obligor from his obligation. In this
case, Y has the right to refuse to accept
the penalty in lieu of the horse. According
to Article 1227. The debtor cannot exempt
himself from the performance of the
obligation by paying the penalty. This
statement clearly say that the action made
by X is prohibited. Moreover, penalty is a
type of accessory obligation which comes
with the principal obligation, it cannot
stand alone. From the problem, the
principal obligation is to deliver the horse
and the accessory obligation is the penalty
of P10,000 thus, X is not allowed to do
the accessory obligation since it is not the
main obligation and he is using penalty
the wrong way, again penalty is used to
urge the debtor to the performance of the
main obligation and not to free himself
from his main obligation.
For the second problem, it is said that
there is no damages suffered by Y due to

Xs violation and this is proved by X.


Well, according to Article 1228. Proof of
actual damages suffered by the creditor is
not necessary in order that the penalty
may be demanded. In an obligation with a
penal clause all that the creditor has to
prove in order for him to enforce penalty
is to show that the debtor has violated his
obligation. It is not necessary for the
creditor, Y, to show physical evidences for
the damages and losses that he suffered
instead he just needs to prove that the
debtor, X, has violated his obligation.
Whether the creditor has suffered or not
he has the right to enforce the penalty if
debtor X, has been proven to violate his
obligation.
V.

ACKNOWLEDGEMENT

I would like to thank my parents for their


unending support. To the One above who always
gives me hope whenever I feel down and to my
friends who continue to help me understand the
topics and give resources on the related topics.
VI.

REFERENCES

[1] De Leon, Hector S. The law on obligations and


contracts. REX Publishing Inc. pp 190-200, 2014
Revised edition