Short answer. No. Article 1230 of the Civil Code states that the nullity of the penal clause does not carry with it that of the principal obligation. If your penalty provision is void, the main obligation you agreed to survives on its own; you simply lose the benefit of the void penalty as a remedy.
What the law says
The nullity of the penal clause does not carry with it that of the principal obligation.
Civil Code, Article 1230 — Nullity of the Penal Clause vs. the Principal. Read the full provision →
The penal clause is treated as separable
Article 1230 states directly that the nullity of the penal clause does not carry with it that of the principal obligation. A penal clause, the provision imposing a penalty for breach or delay, is an accessory stipulation attached to a contract, but it does not carry the main obligation on its back. If the penalty is void, for instance because it is unconscionable, contrary to law, or improperly drafted, the defect stays confined to that clause. The parties' underlying agreement, whatever it required them to do, remains intact and enforceable exactly as it would if the penal clause had never been written.
What you keep, and what you lose
Losing the penal clause does not mean losing your remedies altogether. You still have the main obligation to fall back on, meaning you can still demand performance of what was actually promised, or pursue the ordinary remedies the law provides for breach of that obligation. What disappears is the specific, often pre-agreed penalty amount or consequence the void clause tried to impose. In practice, this usually means falling back on proving actual damages instead of relying on the convenience of a predetermined penalty figure that the parties no longer have available to them.
Why the law separates the two this way
A penal clause exists to strengthen the principal obligation, typically by making the consequences of breach easier to prove and enforce, not to define what the parties actually owe each other in the first place. Because the penalty is meant to serve the main obligation rather than the other way around, voiding the accessory does not logically require voiding the principal it was attached to. This asymmetry runs one direction only, and the flip side, what happens when the main obligation itself is void, follows a different rule entirely under the same article.
What this means for your contract
If you have concluded that your penalty clause is void, treat your underlying contractual obligations as still standing on their own footing. Review what the contract actually required either party to do or deliver, since that obligation continues to bind the parties regardless of the penalty's fate. Anyone relying on a penalty clause as their main enforcement tool should also consider what remedies remain available once that clause is stripped away, since the principal obligation alone may require a different approach to enforce than the penalty would have offered.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Jose Menchavez, et al. vs. Florentino Teves Jr, G.R. No. 153201, January 26, 2005 — read the decision on LawPhil →