Business Law

Emulsion Obligations with a Penal Cause Quiz

1. Quizzes

(a) Racy Ann Oliva promises to deliver to Zara Lopez a specific horse. Their contract
contains a penal clause that in case of non-fulfillment. Racy Ann Oliva shall pay a
penalty of P 10,000.00. Racy Ann Oliva wants to just pay that penalty instead of
delivering the horse. Has Zara Lopez the right to refuse to accept the penalty in lieu of
the horse?
- Zara Lopez has the right to refuse to accept the penalty in lieu of the horse. Racy
Ann Olivia cannot escape to the obligation that she has to deliver a specific horse to
Zara unless if Racy was told to pay instead.

(b) In the same problem, Racy Ann Oliva was able to show that Zara Lopez did not suffer
any damage by Racy Ann Oliva’s violation of her obligation. Can Zara Lopez still enforce
the penalty?
- Yes, Zara Lopez can still enforce the penalty. Proof of damage is not needed for the
creditor to enforce the penalty.

(c) In the same problem, suppose Racy Ann Oliva was guilty of negligence in the fulfillment
of her obligation. Is Racy Ann Oliva liable for damages in addition to the penalty?
- Yes, Racy Ann Oliva is liable for damages. Damages should be paid if the obligor is
guilty of fraud in the fulfillment of the obligation. Also, according to Article 1171,
responsibility arising from fraud is demandable in all obligations.