Penalty in lieu of Performance of Obligation (Art. 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. (Civil Code of the Philippines)

The one who failed to perform that which is incumbent upon him cannot exculpate himself from the performance of the main obligation by the payment of the penalty provided by the penal clause except when the agreement so specifically provides that said payment will actually extinguish the main obligation. As for the creditor, he cannot ask the debtor to fulfill the main obligation and the penalty at the same time, unless, of course, again, when the agreement confers upon him the right to so demand. However, if after the creditor has already availed himself of the choice to require the fulfillment of the main obligation and the performance thereof proves impossible because of faults not imputable to him, the penalty may be enforced.

The provision provides that the creditor cannot demand the performance of the obligation and the penalty at the same time unless otherwise stipulated in the agreement. The right to claim both by the creditor from the debtor cannot be tacitly inferred from the stipulations of the contract; the right must be "clearly granted him." Furthermore, the impossibility of the performance of the obligation without the fault of the creditor automatically makes the penalty enforceable.

It would seem that from a reading of the Article, the imposition of the penalty is more of a second choice.

QUESTION: PAINTER promised to make a portrait of WIFE and HUSBAND. The thing must be delivered on January 1, under the pain of penalty of Php 1,000,000. PAINTER failed to fulfill his part of the agreement. What are the options of HUSBAND?

[1] HUSBAND may ask for the performance of the obligation but this will bar him from demanding the penalty of 1,000,000.

[2] HUSBAND may ask the payment of the 1,000,000 penalty. However, this will bar him from demanding the performance of the obligation.

[3] If HUSBAND asked for the performance of the obligation and it became impossible to perform due to other persons' or PAINTER's fault, the penalty becomes automatically enforceable.