Article 1227

Article 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)

Right of Debtor - generally, the debtor cannot just pay the penalty instead of performing the obligation. The purpose of the penalty is to secure compliance with his obligation. 

Exception - When the debtor is expressly granted the right.

Ex. - PPD promises to finish the house within a stipulated period of 8 months. The contract stipulates that in case he does not build the house at all, he is supposed to forfeit the sum of 100k pesos. In this case, as a general rule, SC as the contractor cannot just give the sum as a substitute for the non performance of the obligation.

Right of the creditor - As a general rule the creditor cannot demand the penalty and the fulfillment of the obligation at the same time.

Exception - The creditor can only demand both when it is clearly granted to him.

October 13, 1923

Santiago Navarro, ET AL vs. Felix Mallari, ET AL

Facts:

This action was instituted in the CFI of Pampanga by Navarro et al, to require the defendants to return the sum of P12k paid to them, together with the sum of P4kas stipulated damages for failure to construct the chapel according to specifications. The defendant, Mallari et al, was obliged to construct a chapel for the plaintiff for P16k. Of this amount P12k has  already been paid and there is a balance of P4k to be paid when the work should be finished and accepted to the satisfaction of the trustees.

There was a stipulation in their contract and agreed by both that if either party should fail to comply with any of its conditions, such party should pay P4k as indemnity. It was proved at the trial that the defendant did not construct the chapel according to the specifications. Judgement rendered against the plaintiff’s at the CFI to pay the sum of P4k to the defendant’s. Hence this appeal.

Issue:

Whether or Not the plaintiff’s are entitled to recover the said damages?

Held:

The SC ruled that the chapel appears to be in use for the purpose it was intended and the plaintiffs are not entitled to confiscate the sum of P4k which is yet unpaid upon the purchased price. The general rule is that the creditor cannot demand the fulfillment of the principal obligation and stipulated penalty at the same. The balance of Php 4,000.00 is not yet paid so Navarro cannot reimburse the said amount and claim the stipulated damages at the same time.