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    Obligations With A Penal Clause

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    uchan8557
    The document discusses penal clauses, which are accessory obligations that provide for greater liability if the primary obligation is not complied with. It defines a penal clause and provides an example. It describes the different types of penal clauses based on their origin, purpose, demandability, and effect. It distinguishes penal clauses from conditions and outlines rules regarding proof of damages, demandability of penalties and damages, and the effect of nullifying the primary or penal clause.

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    Obligations With A Penal Clause

    Uploaded by

    uchan8557
    34 views13 pages
    The document discusses penal clauses, which are accessory obligations that provide for greater liability if the primary obligation is not complied with. It defines a penal clause and provides an example. It describes the different types of penal clauses based on their origin, purpose, demandability, and effect. It distinguishes penal clauses from conditions and outlines rules regarding proof of damages, demandability of penalties and damages, and the effect of nullifying the primary or penal clause.

    Original Description:

    Notes in Obligation for Law

    Original Title

    09.-Obligations-with-a-Penal-Clause

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    The document discusses penal clauses, which are accessory obligations that provide for greater liability if the primary obligation is not complied with. It defines a penal clause and provides an example. It describes the different types of penal clauses based on their origin, purpose, demandability, and effect. It distinguishes penal clauses from conditions and outlines rules regarding proof of damages, demandability of penalties and damages, and the effect of nullifying the primary or penal clause.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    34 views13 pages

    Obligations With A Penal Clause

    Uploaded by

    uchan8557
    The document discusses penal clauses, which are accessory obligations that provide for greater liability if the primary obligation is not complied with. It defines a penal clause and provides an example. It describes the different types of penal clauses based on their origin, purpose, demandability, and effect. It distinguishes penal clauses from conditions and outlines rules regarding proof of damages, demandability of penalties and damages, and the effect of nullifying the primary or penal clause.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 13

    Obligations with

    a Penal Clause
    Different Kinds of Obligations

    1. Pure and Conditional Obligations


    2. Obligations with a Period
    3. Alternative and Facultative Obligations
    4. Joint and Solidary Obligations
    5. Divisible and Indivisible Obligations
    6. Obligations with a Penal Clause
    Obligations with a Penal
    Clause
    It is an obligation 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.

    EXAMPLE: D is obliged to construct a commercial


    building for C within a period of three months. The
    parties agreed that should D fail to finish the
    construction of the building within the said period,
    D shall pay C P1,000 for every day of delay as
    penalty.
    Penal Clause
    It is an accessory undertaking to assume
    greater liability in case of breach. It is
    attached to obligation in order to insure
    their performance. It is a coercive means to
    obtain from the debtor compliance of his
    obligation.
    Kinds of Penal Clause
    As to its origin:
    1. Legal penal clause - one that is imposed
    by law
    2. Conventional penal clause - that which
    has been agreed upon by the parties
    Kinds of Penal Clause
    As to its purpose:
    1. Compensatory penal clause - when the
    penalty takes the place of damages
    2. Punitive penal clause - when the penalty
    is imposed merely as punishment for
    breach.
    Kinds of Penal Clause
    As to its demandability or effect:
    1. Subsidiary or alternative penal clause -
    when only the penalty may be asked
    2. Joint or cumulative penal clause - when
    both the principal contract and the
    penal clause can be enforced.
    Penal Clause Distinguished
    from Condition
    1. Penal clause constitutes an obligation
    although accessory, while a condition
    does not.
    2. Penal clause may become demandable
    in default of the unperformed obligation
    and sometimes jointly with it, while a
    condition is never demandable.
    Proof not required for actual
    damages suffered if there is a
    penalty
    Proof of actual damages suffered by the
    creditor is not necessary in order that the
    penalty may be demanded.
    Rule in case obligation has a
    penal clause
    General rule: The penalty takes the place of the
    damages and interest in case of non-compliance.

    Exceptions, i.e., aside from the penalty, damages


    and interest may also be demanded:
    1. When there is stipulation to that affect
    2. When the debtor refuses to pay the penalty
    3. When the debtor is guilty of fraud in the
    performance of the obligation. This is so
    because there is no waiver of an action for
    future fraud.
    Problem
    D is obliged to deliver 10 sacks of rice to C
    on May 10. The parties agreed that if D fails
    to deliver on due date, he will pay a penalty
    of P500.
    a. Supposing that D failed to deliver on
    due date, may he just pay the penalty of
    P500?
    b. May C demand the delivery of 10 sacks
    of rice and the payment of the penalty
    at the same time upon default of D?
    When the court may reduce
    the penalty
    1. When the obligation has been partly
    complied with by the debtor
    2. When the obligation has been
    irregularly complied with by the debtor.
    3. When the penalty is iniquitous or
    unconscionable even if there has been
    no performance.
    Effect of nullity of principal
    obligation, penal clause
    1. The nullity of the principal obligation
    carries with it the nullity of the penal
    clause. This is so because the penal
    clause, being just an accessory
    undertaking, cannot stand by itself.
    2. The nullity if the penal clause does not
    carry with it that of the principal
    obligation. This is so because the
    principal obligation can stand by itself.

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