Art.

1220
Effect of Loss or Impossibility
-80 If without fault- no liability
-81 If with fault - there is liability ( also damages + interest)
-82 Loss because of fortuitous after default - here, there will be liability
because of default

The debtor in case with fault, the liability of the debtor will have price, damage
+ interest; the other solidary debtor are not liable for interest; he may be liable
for damages

Art. 1222
Defense of the debtor
a. Payment
b. Prescription
c. Minority
d. Vices of consent
a. Fraud
b. Force
c. Intimidation
d. Violence

2005

1226 - Obligations with penal clause

Ex. 0.001% of the cost construction for everyday delay

It is to strengthen the course of responsibility in case the obligation is not

comply.

It may be solidary or jointly; The purpose of which is reparation or

punishment.

The substitute for non-compliance is damages. If the actual damages is greater

than what was stipulated, then you cant ask for actual damages instead of the damages
stipulated in the contract.
 The good thing in obligation with penal clause is that actual damages may not
be proven since there is delay the payment of damages will be based in the stipulated
by both parties.

It is alternative for damages and interest but if there is fraud or refuse to pay
the injured party or if the law expressly provides.

The debtor cannot pay damages instead fulfilling the obligation unless the
debtor expressly reserved.
Cases:
Ligutan vs CA Feb 12, 2002
the penalty was lowered from .05% to .03% because there is partial payment

there is no law that waive the interest

RCBC vs CA 289 S 292

Take note:
Penal Clause - accessory undertaking

1227
Generally, debtor cannot substitute penalty for the principal obligation. He can
only do so if the right expressly reserved. The reason is that if he can pay, fulfillment
of the obligation will be considered an alternative one. Implied reservation is not
allowed.

1228
No necessity of proving actual damages

Compensatory - interest for damages

If none - 6%
Monatory - money
If none - 12%

The nullity of accessory does not mean the nullity of the principal obligation.

1229
The court may reduce the penalty if:

1. The obligation has been partly complied the prestation with the debtor
 2. Irregular performance
3. Unconscionable or iniquitous

1230
The nullity of penal clause does not mean the nullity of the principal

For ex:
In case of non-payment of P10,000, P1,000 per day as penalty shall be
imposed.

It is a void contract but it is not an excuse that you don't have to pay the
principal which is P10,000