Law on Obligations

Chapter 3 – Different Kinds of Obligations

(Articles 1179-1230)
Primary classification under the Civil Code
1. Pure Obligation 7. Solidary obligation
2. Conditional obligation 8. Divisible obligation
3. Obligation with a period 9. Indivisible obligation
4. Alternative obligation 10. Obligation with a penal clause
5. Facultative obligation
6. Joint obligation
(1) PURE OBLIGATION
• A pure obligation is one which is not subject to any condition and no
specific date is mentioned for its fulfillment and is immediately
demandable.
• A pure obligation is one without a term or condition and is demandable at
once.
• Example: I promise to give you P5,000.00. This is immediately
demandable since there is no term that must expire or a condition that
must happen for the obligation to be demandable.
(2) CONDITIONAL OBLIGATION
• A conditional obligation is one whose consequences are subject in one way
or another to the fulfillment of a condition.
• A conditional obligation is one whose demandability or extinguishment
depends upon the happening of a condition.
• Examples:
• “I will give you my car if you pass the CPA Examination.” The condition here is
suspensive. You may not demand the delivery of my car until you pass the CPA
Examination.
• “I will let you use my car until you pass the CPA Examination.” The condition here is
return it to me when you pass the CPA Examination.
Condition
• Future and uncertain event, upon the happening of which, the effectivity
or extinguishment of an obligation (or right) subject to it depends.
• An uncertain event which wields an influence on a legal relationship.
Classifications of Condition
• As to effect
• Suspensive – This is a condition the happening of which gives rise to the obligation.
This is also called condition antecedent or condition precedent. The demandability of
the obligation is suspended until the happening of the condition.
• Example: A obliged himself to transfer his particular parcel of land to B if B passes the CPA
Licensure Exams.

• Resolutory – This is a condition the happening of which extinguishes the obligation.

This is also called condition subsequent. The obligation is demandable at once but it
shall be extinguished upon the happening of the condition.
• Example: A obliged himself to pay B until B graduates from college.
Classifications of Condition
• As to cause or origin
• Potestative - A condition that depends upon the will of one of the contracting parties.
• Potestative on the part of the debtor
• If suspensive - The obligation is void. (Art. 1182) Even if the condition is
fulfilled, the obligation is not demandable. However, if the obligation is pre-
existing and does not depend for its existence upon the debtor’s fulfillment of
the potestative condition, only the condition is void but the obligation is valid.
• If resolutory - The obligation is valid.
• Potestative on the part off the creditor – The obligation is valid whether the
condition is suspensive or resolutory.
• Casual - A condition that depends upon chance or upon the will of a third person.
• Mixed – A condition that depends partly upon the will of one of the parties and partly
upon chance or upon the will of a third person.
Classifications of Condition
• As to possibility
• Possible – One that is capable of fulfillment in its nature and by law.

• Impossible – One that is not capable of fulfillment in its nature or due to operation of
law. In this case, the obligation and the condition are void. (Art. 1183)
• Physically impossible conditions
• Legally impossible conditions

• If the condition is not to do an impossible thing, it shall be deemed as not having

been agreed upon. (Art. 1183)
Classifications of Condition
• As to mode
• Positive – This is a condition that some event happen at a determinate time. Here,
the obligation is extinguished as soon as the time expires or it has become
indubitable that the event will not take place. (Art. 1184)

• Negative – This is a condition that some event will not happen at a determinate time.
Here, the obligation becomes effective as soon as the time indicated has elapsed or it
has become evident that the event will not occur. (Art. 1185)
Classifications of Condition
• As to divisibility
• Divisible – one that is capable of partial performance.
• Under Art. 1183, if the obligation is divisible, that part thereof which is not affected by the
impossible or unlawful condition shall be valid.

• Indivisible – one that is not capable of partial performance by its nature or by law or
agreement of the parties.
Effects of fulfillment of suspensive condition
• Obligation to give
• The effect of the fulfillment of the suspensive condition retroacts to the day of the
constitution of the obligation.
• In reciprocal obligations, the fruits and interest shall be deemed to have been
mutually compensated, i.e., each party shall keep the fruits and interest received by
him prior to the fulfillment of the condition.
• In unilateral obligation, the debtor keeps the fruits and interest received before the
fulfillment of the condition, unless from the nature and circumstances of the
obligation it should be inferred that the intention of the person constituting the same
was different.

• Obligation to do and not to do

• The courts shall determine, in each case, the retroactive effect of the condition that
has been complied with.
Rights of the parties before the fulfillment of the condition
• Creditor –may bring the appropriate actions for the preservation of his
right, such as registering his claim with the Register of Deeds, if
appropriate, to notify all third persons, or asking debtor to provide a
security if the debtor is about to become insolvent.
• Debtor – may recover what he has paid by mistake in case of a suspensive
condition.
Effect when the debtor voluntarily prevents fulfilment of
the condition
• The condition is deemed fulfilled if the debtor voluntarily prevents
fulfillment (Art 1186); hence, the obligation becomes immediately
demandable.
• Here, there must be an intent on part of the debtor to prevent compliance
with the condition and actually prevents its fulfillment.
Rules in case of loss, deterioration or improvement of
determinate thing before the fulfillment of the suspensive
condition (Art. 1189)
• Loss of the thing
• Without debtor’s fault – Obligation is extinguished.
• With debtor’s fault – Debtor is obliged to pay damages.

• Concept of loss. A thing is considered lost when it perishes or goes out

of commerce or disappears in such a way that its existence is unknown or
it cannot be recovered.
Rules in case of loss, deterioration or improvement of
determinate thing before the fulfillment of the suspensive
condition (Art. 1189)
• Deterioration of the thing
• Without debtor’s fault - the impairment shall be borne by the creditor,
i.e., no liability on the part of the debtor to pay damages.

• With debtor’s fault – the creditor may choose between:

• Rescission plus damages, and
• Fulfillment plus damages.
Rules in case of loss, deterioration or improvement of
determinate thing before the fulfillment of the suspensive
condition (Art. 1189)
• Improvement of the thing
• By the nature or by time – The improvement shall inure to the benefit
of the creditor.
• At the expense of the debtor - the debtor will have the rights granted
to a usufructuary, i.e., he can have enjoyment of the use of the
improved thing and its fruits. He may remove the improvement if no
damage is caused to the principal thing. If the improvement cannot be
removed without causing damage to the principal thing, the thing and
the improvement shall be delivered to the creditor without any right on
the part of the debtor to indemnity. He may, however, set off the
improvements against any damage to the thing. (Arts. 579 and 580)
Rule in case of fulfillment of resolutory condition
• Upon the fulfillment of the resolutory condition, the obligation is
extinguished.
• The parties shall return to each other what they have received.
• In case of loss, deterioration or improvement of the thing, the provisions
of Art. 1189 will govern, in which case those pertaining to the debtor shall
be applied to the party who is bound to return.
Power to rescind (Art. 1191)
• The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.
• The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.
• The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
• This is understood to be without prejudice to the rights of third persons
who have acquired the thing, in accordance with Articles 1385 and 1388
and the Mortgage Law.
When both parties are guilty of breach
• In case both parties have committed a breach of the obligation, the
liability of the first infractor shall be equitably tempered by the courts.
• If it cannot be determined which of the parties first violated the contract,
the same shall be deemed extinguished, and each shall bear his own
damages.
(3) OBLIGATION WITH A PERIOD
• An obligation with a period is one whose demandability or extinguishment
is subjected to the expiration of the term which must necessarily come. In
other words, there is a day certain when the obligation will arise or cease.
• Period is a space of time which determines the effectivity or
extinguishment of an obligation. Thus, the space of time between January
1, 2021 and January 1, 2021 is a period the lapse of which will cause an
obligation to arise or cease.
• A day certain is that which must necessarily come although it may not be
known when. (Art. 1193) An example is the death of a person which will
necessarily come. Thus, if the obligation of D is to give C P10,000.00 when
X dies, the obligation is one with a period.
Period distinguished from condition
• As to fulfillment: A condition is an event that may or may not happen; a
period is an event that must necessarily come, at a date known
beforehand or at a time that cannot be determined.
• As to time: A condition may refer to the future or to a past event
unknown to the parties; a period always refers to the future.
• As to influence on the obligation: A condition causes an obligation to
arise or to cease; a period merely fixes the time for the effectivity of an
obligation.
• As to the will of the debtor: A period that depends upon the will of the
debtor authorizes the court to fix its duration (Art. 1197, par 2), while a
condition that depends upon the will of the debtor which is suspensive
shall annul the obligation. (Art. 1182)
Kinds of period
• Ex die – This is a period with a suspensive effect. Here, the obligation
becomes demandable upon the lapse of the period. (Art. 1193)
• In diem – This is a period with a resolutory effect. Here, the obligation is
demandable at once but is extinguished upon the lapse of the period. (Art.
1193)
• Other kinds are:
• Legal – A period that is fixed by law
• Voluntary – This is fixed by the parties.
• Judicial – One that is fixed by the court.
Sample problem
• “I will pay you my debt when my means permit me to do so.”
• Is this an obligation with a period or with a condition?

• Answer: When the debtor binds himself when his means permit him to do
so, then obligation is deemed to be with a period. Here, the remedy of the
creditor is to ask the court to fix the period. (Art. 1180, 1197) Once the
court has fixed the period, parties may no longer change it as it becomes
a part of the agreement by the parties.
Presumption as to who has the benefit of the period
• Whenever a period is designated in an obligation, it shall be presumed to
have been established for the benefit of both the creditor and debtor,
unless from the tenor of the obligation or other circumstances, it should
appear that it has been established for the benefit of only one of the
parties.
• Therefore, the debtor cannot be compelled to perform, and the creditor
cannot be compelled to accept performance, before the term expires.
Period is for the benefit of one of the parties
• For the benefit of the debtor – he cannot be compelled to perform his
obligation before the expiration of the term, but he may choose to perform
such expiration at his option.
• Anything paid or delivered before the arrival of the period, the obligor being unaware
of the period or believing that the obligation has become due and demandable, may
be recovered, with the fruits and interests.

• For the benefit of the creditor – he cannot be compelled to accept

performance before expiration of the term, but he may choose to demand
performance before such expiration at his option.
When may the courts fix the period
• If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts
may fix the duration thereof.
• The courts shall also fix the duration of the period when it depends upon
the will of the debtor.
• In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once
fixed by the courts, the period cannot be changed by them. (Art. 1197)
Debtor loses the benefit of the period (immediately
demandable)
1. When after the obligation has been contracted, he becomes insolvent,
unless he gives a guaranty or security for the debt;
2. When he does not furnish to the creditor the guaranties or securities
which he has promised;
3. When by his own acts he has impaired said guaranties or securities after
their establishment, and when through a fortuitous event they disappear,
unless he immediately gives new ones equally satisfactory;
4. When the debtor violates any undertaking, in consideration of which the
creditor agreed to the period; and
5. When the debtor attempts to abscond.
Alternative and Facultative Obligations
• Kinds of obligations according to the number of prestations
1. Simple – one where there is only one prestation.
2. Compound – one where there are several prestations
• Conjunctive – several prestations are due but all must be performed
(Example: A obliged himself to give B a specific ring, specific watch,
and specific bracelet. All must be delivered to B.)
• Distributive or disjunctive – either be alternative or facultative
(4) ALTERNATIVE OBLIGATION
• One where several prestations are due but the complete performance of
one of them is sufficient to extinguish the obligation.
• Example: A obliged himself to give B a specific ring, specific watch, or
specific bracelet. The delivery of any of the three specific things will
extinguish the obligation.
Right to choose prestation
• Right to choose prestation: The right of choice belongs to the debtor,
unless it has been expressly given to the creditor.

• Limitations on debtor’s right to choose:

• The debtor must completely perform the prestation chosen. He cannot
compel the creditor to receive part of one and of another undertaking.
• He cannot choose those prestations which are impossible, unlawful, or
which could not have been the object of the obligation.
When obligation ceases to be alternative and becomes
simple obligation
• When the debtor has communicated his choice to the creditor.
• When among the prestations whereby the debtor is alternatively bound,
only one is practicable.
• When the creditor has communicated his choice to the debtor, if the
creditor has been expressly given the right of choice.
Rules in case if loss of things or impossibility of services
which are alternatively the object of the obligation
• When right of choice is with the debtor
• If only one or some are lost through fortuitous event or through the
debtor’s fault, the debtor may deliver any or the remainder, or that
which remains if only one subsists.
• If all are lost through a fortuitous event, the obligation is extinguished
(based on the rule that no person shall be responsible for fortuitous
event).
• If all are lost through the debtor’s fault, the debtor shall pay the value
of the last thing that was lost plus damages.
Rules in case if loss of things or impossibility of services
which are alternatively the object of the obligation
• When right of choice is expressly granted to the creditor
• If only one or some are lost through a fortuitous event, the debtor shall
deliver that which the creditor should choose among the remainder, or
that which remains if only one subsists.
• If all are lost through a fortuitous event, the obligation shall be
extinguished.
• If only one or some are lost though the debtor’s fault, the creditor may
claim any of those subsisting, or the price of those which were lost
through the debtor’s fault plus damages.
• If all are lost through the debtor’s fault, the creditor may claim the
price of any of them plus damages.
Creditor’s acts that warrant rescission
• If through the creditor's acts the debtor cannot make a choice according
to the terms of the obligation, the latter may rescind the contract with
damages.
(5) FACULTATIVE OBLIGATION
• An obligation where only one prestation is due but the debtor may render
another in substitution.
• Example: A obliged himself to give a specific ring to B with the agreement
that A may deliver a specific watch as a substitute.
Rules in case of loss of principal thing and substitute
• Before substitution (before the debtor has informed the creditor of the
substitution)
• Principal thing
• If lost due to fortuitous event, then obligation is extinguished.
• If lost due to debtor’s fault, then debtor shall pay damages.
• Substitute
• The loss of the substitute whether through a fortuitous event or
through the debtor’s fault imposes no additional obligation on the
debtor because it is not yet due. The debtor still has to deliver the
principal thing.
Rules in case of loss of principal thing and substitute
• After substitution
• Principal thing
• The loss of the principal thing, whether through a fortuitous event
or through the debtor’s fault, imposes no additional obligation on
the debtor because the thing due is already the substitute. After
substitution has been communicated, the thing due is the
substitute. The obligation also ceases to be a facultative obligation
and becomes a simple obligation.
• Substitute
• If lost through a fortuitous event, then the obligation is
extinguished.
• If lost through debtor’s fault, then debtor shall pay damages.
Alternative Obligations vs. Facultative Obligations
Several prestations are due, but the Only one prestation, the principal obligation,
performance of one is sufficient to extinguish is due.
the obligation.
If there are void prestations, the other If the principal obligation is void, then the
prestation may still be valid; hence, the debtor is not required to give the substitute.
obligation remains.
The right of choice is with the debtor, unless The right of choice belongs to the debtor
expressly given to the creditor. only.
If all prestations are impossible except one, If the principal obligation is impossible, then
that which is possible must still be given. the debtor is not required to give the
substitute.
(6) JOINT OBLIGATION AND (7) SOLIDARY OBLIGATION
• In a joint or solidary obligation, there is a concurrence of two or more
debtors and/or two or more creditors in one and the same obligation.

• In a joint obligation, each debtor is liable only for a proportionate part

of the debt, and each creditor is entitled only to a proportionate part of
the credit.
• In a solidary obligation, each debtor is liable for the whole obligation
and each creditor is entitled to demand payment of the whole obligation.
General rule if there is a concurrence of two or more debtors and/or
two or more creditors in one and the same obligation
• The obligation is presumed to be joint when there is a concurrence of two
or more debtors and/or two or more creditors in one and the same
obligation.
• If from the law, or the nature, or the wording of the obligations the
contrary does not appear, the credit or debt shall be presumed to be
divided into as many equal shares as there are creditors or debtors, the
credits or debts being considered distinct from one another.
• There is solidarity in the following cases:
• When the obligation expressly so states
• When the law requires solidarity (Example: Obligation arising from quasi-delict)
• When the nature of the obligation requires solidarity
Kinds of solidary obligation
• Passive solidarity – solidarity on the part of the debtors.
• Active solidarity – solidarity on the part of the creditors.
• Mixed solidarity – solidarity on the part of both the debtors and creditors.
EXAMPLES
• A, B, and C are obliged to give X, Y, and Z P27,000. How many distinct
debts are there in the obligation?
• A, B, and C, joint debtors, are obliged to give X, Y, and Z, solidary
creditors, P18,000. How much may X collect and from whom?
• A, B, and C, solidary debtors, are obliged to give X, Y, and Z, joint
creditors, P18,000. How much may A be held liable?
• A, B, and C, solidary debtors, are obliged to give X, Y, and Z, solidary
creditors, P18,000. How much may Z collect and from whom?
Existence of solidarity despite different periods and
conditions
• Solidarity exists although the creditors and the debtors may not be bound
by the same periods and conditions.
• Example: A, B, and C are solidarily liable to X for PhP9,000.00. The parties
stipulated that (i) the share of A is payable on demand, (ii) the share of B
is payable on Christmas day next year, and (iii) share of C is payable if X
passes the CPA Licensure Examination.
• X may demand payment of the share of A of PhP3,000 anytime from either A, B, or C.
• On Christmas day next year, X may demand payment of the share of B of PHP3,000
from either A, B, or C.
• When X passes the CPA Licensure Examination, X may demand payment of the share
of C of PhP3,000 from either A, B, or C.
Effect of unauthorized assignment of creditor’s right
• A solidary creditor cannot assign his rights without the consent of the
others. (Art. 1213)
• The solidarity creditors are bound by mutual trust and confidence. Hence,
a solidary creditor cannot assign his right to a third person without the
consent of the other solidary creditors because the assignee may not
enjoy the trust and confidence of the non-assigning creditors.
• If the assignment is without the consent of the co-creditors, then the
assignment is not valid as to them. Accordingly, they can recover their
respective shares from the assigning creditor in case the assignee who
collected the debt fails to given them their shares.
Solidary Obligation: Rules
• Each one of the solidary creditors may do whatever may be useful to the
others, but not anything which may be prejudicial to the latter. (Art. 1212)
• The debtor may pay any one of the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by one of them, payment should
be made to him. (Art. 1214)
Solidary Obligation: Rules
• Novation, compensation, confusion, or remission of the debt, made by any
of the solidary creditors or with any of the solidary debtors, shall
extinguish the obligation, without prejudice to the provisions of Article
1219. (Art. 1215)
• The creditor who may have executed any of these acts, as well as he who
collects the debt, shall be liable to the others for the share in the
obligation corresponding to them. (Art. 1215)
• The remission made by the creditor of the share which affects one of the
solidary debtors does not release the latter from his responsibility towards
the co-debtors, in case the debt had been totally paid by anyone of them
before the remission was effected. (Art. 1219)
Solidary Obligation: Rules
• The creditor may proceed against any one of the solidary debtors or some
or all of them simultaneously. The demand made against one of them shall
not be an obstacle to those which may subsequently be directed against
the others, so long as the debt has not been fully collected. (Art. 1216)
Solidary Obligation: Rules
• Payment made by one of the solidary debtors extinguishes the obligation.
If two or more solidary debtors offer to pay, the creditor may choose
which offer to accept. (Art. 1217)
• He who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest for the
intervening period may be demanded. (Art. 1217)
• When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall
be borne by all his co-debtors, in proportion to the debt of each. (Art.
1217)
Solidary Obligation: Rules
• Payment by a solidary debtor shall not entitle him to reimbursement from
his co-debtors if such payment is made after the obligation has prescribed
or become illegal. (Art. 1218)
• The remission of the whole obligation, obtained by one of the solidary
debtors, does not entitle him to reimbursement from his co-debtors. (Art.
1220)
Solidary Obligation: Rules
• If the thing has been lost or if the prestation has become impossible
without the fault of the solidary debtors, the obligation shall be
extinguished. (Art. 1221)
• If there was fault on the part of any one of them, all shall be responsible
to the creditor, for the price and the payment of damages and interest,
without prejudice to their action against the guilty or negligent debtor.
(Art. 1221)
• If through a fortuitous event, the thing is lost or the performance has
become impossible after one of the solidary debtors has incurred in delay
through the judicial or extrajudicial demand upon him by the creditor, the
provisions of the preceding paragraph shall apply. (Art. 1221)
Defenses available to solidary debtors
• Those derived from the nature of the obligation (such as prescription of
the obligation or illegality of the cause)
• Those personal to the debtor being sued, or those that pertain to his own
share (such as incapacity of the debtor or non-fulfillment of a suspensive
condition as to his share)
• Those personal to the other debtors with respect to their own share (such
as incapacity of another debtor or non-fulfillment of a suspensive condition
with respect to other debtor’s shares).
Joint indivisible obligation
• An obligation where the debtor or creditors are jointly bound but the
prestation or object is indivisible.
• Characteristics:
• The creditors must act collectively, that is, all of them must make the demand unless
one is specifically authorized to act for the others. A demand made by one or some of
the creditors, but not all, will not be effective.
• The demand must be made against all the debtors since compliance is possible only if
they act together.
• The right of the creditors may be prejudiced only by their collectively acts. Thus,
renunciation made by a joint creditor extinguishes only his own share. The obligation,
however, is converted into an obligation to pay the value of the thing. If all joint
creditors make the renunciation, the obligation is extinguished.
Joint indivisible obligation
• An obligation where the debtor or creditors are jointly bound but the
prestation or object is indivisible.
• Characteristics:
• If one of the debtors does not comply with his undertaking, the obligation is
converted into a monetary obligation to pay damages. The debtors who may have
been ready to comply shall not contribute to the indemnity beyond the corresponding
price of the thing or the value of the service which the obligation consists.
• If one of the debtors is insolvent, then the others shall not be liable for his share.
Indivisibility and solidarity
• Indivisibility of an obligation does not necessarily give rise to solidarity;
nor does solidarity of itself imply indivisibility.
• Indivisibility of an obligation refers to the subject matter or object not
being susceptible of partial performance.
• Solidarity refers to the tie between the parties.
• One therefore does not imply or give rise to the other.
• Thus, there may be the following obligations:
• Joint divisible obligation
• Joint indivisible obligation
• Solidary divisible obligation
• Solidary indivisible obligation
(8) DIVISIBLE OBLIGATION
• One capable of partial performance (Example: obligation to deliver 10
sacks of rice).
• The following are deemed divisible:
• When the obligation has for its object the execution of a certain number of days or
work (such as obligation to work for one week)
• When the obligation has for its object the accomplishment of work by metrical units
(such as the obligation to construct a pavement which is 10 meters long and 2
meters wide)
• Analogous things which by their nature are susceptible of partial performance.
(9) INDIVISIBLE OBLIGATION
• One not capable of partial performance (such as obligation to deliver a
specific car).
• The following are deemed indivisible:
• Obligation to give definite things (such as the obligation to give a specific horse)
• Those not susceptible of partial performance (such as the obligation of a singer to
sing a song in a program)
• Those where the object or service is physically divisible but it is indivisible by
operation of law (such as the obligation to pay a sum of money but the law provides
that the sum must be paid in full as in the case of certain taxes)
• Those where the object or service is physically divisible but it is indivisible by the
intention of the parties (such as where the obligation is to pay sum of money but the
parties agreed that the sum must be paid in full)
(10) OBLIGATION WITH A PENAL CLAUSE
• One which provides for a greater liability on the part of the debtor in case
of non-compliance.
• The accessory undertaking on the part of the debtor is called the penal
clause.
• A penal clause is attached to an obligation to ensure performance of
obligation and has double function:
• To provide for liquidated damages
• To strengthen the coercive force of the obligation by a threat of greater
responsibility in the event of breach.
Proof not required for actual damages suffered if there is a
penalty
• The obligor is bound to pay the stipulated indemnity without the necessity
of proof of the existence and measure of damages caused by the breach.

Kinds of penal clause

• Legal (imposed by law) and conventional (imposed by agreement of the
parties)
• Subsidiary (only the penalty may be enforced) and joint (both the
obligation and the penalty may be enforced).
Rule in case obligation has a penal clause
• General rule: Penalty takes the place of the damages and interest in case
of non-compliance.
• Exceptions (aside from penalty, damages and interest may also be
demanded):
• When there is a stipulation to that effect.
• When the debtor refuses to pay the penalty.
• When the debtor is guilty of fraud in the performance of the obligation.
Obligation with a Penal Clause (concepts)
• The debtor cannot exempt himself from the performance of the obligation
by paying the penalty, save in the 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.
Obligation with a Penal Clause (concepts)
• 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. (Art. 1229)
• 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. (Art. 1230)
Thank you!