THE LAW ON OBLIGATIONS AND CONTRACTS

Chapter 3 Section 6: Obligations with a Penal Cause

STUDY GUIDE

Elaine Fiona R. Villafuerte

III. Problems
Explain or state briefly the rule or reason for your answer.
1. X promises to deliver Y a specific horse. Their contract contains a penal cause that in
case of non-fulfillment, 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 the lieu
of the horse?

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?

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?
ANSWERS:
1. Yes, Y has the right to refuse because according to Article 1227, X cannot exempt
something for himself or herself from delivering the horse by paying the penalty, unless
this right was reserved for him or her.

2. In the same problem given. It is a yes because according to Article 1228, Y does not have
to prove that he suffered damages in order to demand the penalty and since X violated the
obligation, Y can enforce the penalty.

3. In the same problem, it is a no because according to Article 1226, X will only be liable
for damages if the stipulations so states, if X refuses to pay the penalty, or when there is
fraud on X’s part. Since there is only negligence and not fraud, Y cannot demand for
damages in addition to the penalty and X is only liable for the penalty.