I.

Definitions

Define or give the meaning of the following:

1. Obligation with a penal clause;
2. Penal clause;
3. Joint penal clause;

II. Discussions

1. What are the purposes of incorporating a penal clause to an

obligation?
2. In an obligation with a penal clause, may the creditor still recover
damages and interests in addition to the stipulated penalty?
3. In what cases may the debtor validly object to the enforcement of the
stipulated penalty?
4. In what cases may the debtor validly object to the enforcement of the
stipulated penalty?

III. Problems

Explain or state briefly the rule or reason for your answer.

1. X promises to deliver to Y a specific horses. Their contract contains a

penal clause that in case of non-fulfillment, X shall pay a penalty of
Php10,000. 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
horses?

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?