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    Oblicon Study Guide (11) Oblicon Study Guide

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    rosalinda ibale
    This document is a study guide that discusses obligations with a penal clause under Philippine law. It defines an obligation with a penal clause as one containing an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal obligation. The purposes of a penal clause are to deter breach and substitute a penalty for damages. The creditor can typically only recover the penalty, though damages may also be recovered if stipulated by the parties or in cases of fraud.

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    Oblicon Study Guide (11) Oblicon Study Guide

    Uploaded by

    rosalinda ibale
    54 views3 pages
    This document is a study guide that discusses obligations with a penal clause under Philippine law. It defines an obligation with a penal clause as one containing an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal obligation. The purposes of a penal clause are to deter breach and substitute a penalty for damages. The creditor can typically only recover the penalty, though damages may also be recovered if stipulated by the parties or in cases of fraud.

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    oblicon-study-guide-11

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    This document is a study guide that discusses obligations with a penal clause under Philippine law. It defines an obligation with a penal clause as one containing an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal obligation. The purposes of a penal clause are to deter breach and substitute a penalty for damages. The creditor can typically only recover the penalty, though damages may also be recovered if stipulated by the parties or in cases of fraud.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    54 views3 pages

    Oblicon Study Guide (11) Oblicon Study Guide

    Uploaded by

    rosalinda ibale
    This document is a study guide that discusses obligations with a penal clause under Philippine law. It defines an obligation with a penal clause as one containing an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal obligation. The purposes of a penal clause are to deter breach and substitute a penalty for damages. The creditor can typically only recover the penalty, though damages may also be recovered if stipulated by the parties or in cases of fraud.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    lOMoARcPSD|8314630

    Oblicon Study Guide (11)

    Bachelor of Science in Accountancy (Polytechnic University of the Philippines)

    StuDocu is not sponsored or endorsed by any college or university


    Downloaded by Rosalinda Ibale ([email protected])
    lOMoARcPSD|8314630

    STUDY GUIDE 8
    Obligations with a Penal Clause
    I. Definitions
    Define or give the meaning of the following:
    1. Obligation with a penal clause;
     Obligation with a penal clause is one which contains an accessory undertaking to pay a
    previously stipulated indemnity in case of breach of the principal prestation, intended
    primarily to induce its fulfillment. (Article 1226).

    2. Penal clause;
     Penal clause is an accessory undertaking attached to an obligation to assume greater
    liability in case of breach. (Article 1226).

    3. Joint penal clause.


     Joint penal clause or can also be called as cumulative penal clause is when both the
    principal obligation and the penal clause can be enforced. (Article 1226).

    II. Discussions
    1. What are the purposes of incorporating a penal clause to an obligation?
    According to Article 1226, the purposes of incorporating a penal clause to an
    obligation are to insure their performance by creating an effective deterrent against
    breach, making the consequences of such breach as onerous as it may be possible and to
    substitute a penalty for the indemnity for damages and the payment of interests in case of
    non-compliance; or to punish the debtor for the on-fulfillment or violation of his
    obligation.

    2. In an obligation with a penal clause, may the creditor still recover damages and interests
    in addition to the stipulated penalty?
    According to Article 1226, the creditor may still recover damages and interests in
    addition to the stipulated penalty when so stipulated by the parties, or when the obligor
    refuses to pay the penalty, in which case the creditor may recover legal interest thereon

    Downloaded by Rosalinda Ibale ([email protected])


    lOMoARcPSD|8314630

    or when the obligor is guilty of fraud in the fulfillment of the obligation, in which case
    the creditor may recover damages caused by such fraud.

    3. In what cases may the debtor validly object to the enforcement of the stipulated penalty?
    According to Article 1227, the debtor can object the enforcement of the stipulated
    penalty when there is a performance already from the debtor or when the creditor has
    decided to require fulfillment of the obligation.

    III. Problems
    Explain or state briefly the rule or reason for your answer.
    1. X promises to deliver to Y a specific horse. Their contract contains a penal clause that
    in case of non-fulfillment, X shall pay a penalty of P10,000. X wants to just pay the
    penalty instead of delivering the horse. Has Y the right to refuse to accept the penalty
    in lieu of the horse?
    Yes, according to Article 1227, the debtor which is X cannot exempt himself from
    the performance of the obligation by just paying the penalty. Therefore, Y has right to
    refuse the penalty in lieu of the horse. Since the penalty is just an accessory obligation
    attached to the principal obligation, X is not allowed to do the accessory obligation
    without doing the principal obligation which is to deliver the horse. The debtor can
    only exempt himself from the non-fulfillment of the obligation only when the creditor
    expressly given him the right to do so.

    2. In the same problem, X was able to show that Y did not suffer any damage by X’s
    violation of his obligation. Can Y still enforce the penalty?
    Yes, according to Article 1228, proof of actual damages suffered by the creditor is
    not necessary in order that the penalty may be demanded. All the creditor has to prove
    is that the debtor violated his obligations. Whether the creditor suffered an injury or
    not, he has the right to enforce penalty if the debtor proven to violate his obligation.

    3. In the same problem, suppose X was guilty of negligence in the fulfillment of his
    obligation. Is X liable for damages in addition to the penalty?
    No, since according to Article 1226, X can only recover damages when it was
    stipulated by the parties, when the obligor refuses to pay the penalty, and when the
    obligor is guilty of fraud. In this case, X was only guilty of negligence and not fraud.
    X cannot be held liable for damages in addition to the penalty.

    Downloaded by Rosalinda Ibale ([email protected])

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