Section 6 - Obligation with Penal Clause

• ART. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

   The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. (1152a)
• ART. 1227. 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. (1153a)
• ART. 1228. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. (n)
• ART. 1229. 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. (1154a)
• ART. 1230. 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. (1155)
• • Obligations with penal clause- the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary.
• Damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation, according to Art. 1226.
• 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, according to Art. 1227.
• The creditor cannot demand the fulfillment of the obligation and the satisfaction of the penalty at the same time, unless this right has been clearly granted him, according to Art. 1227.
• 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, according to Art. 1227.
• Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded. (Art. 1228)

  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)