Short answer. No, unless the contract expressly reserved that right to him. Article 1227 provides that the debtor cannot exempt himself from performing the obligation by paying the penalty. The clause exists to secure performance, not to price an exit from it, and silence in the contract works against him.
What the law says
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.
Civil Code, Article 1227 — No Escape by Paying the Penalty. Read the full provision →
What the law says
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.
Civil Code, Article 1227 — No Escape by Paying the Penalty. Read the full provision →
Buying your way out has to be bargained for
Article 1227 of the Civil Code is direct: 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. A penal clause strengthens your position; it is not a menu price for abandoning the contract. So a supplier who finds the job has become unprofitable cannot hand over the penalty and walk, and the reservation has to be express — a clause fixing a sum for non-delivery is not an option to choose non-delivery. If the reservation is not written in the contract, he does not have it.
The same article limits you as well
The rule runs in both directions: 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. Ordinarily you elect one remedy. You may insist on performance, or you may take the penalty, but you do not collect both unless the contract clearly says you can. That makes the election a commercial decision worth thinking through before you send the demand, because the wording you use will be read as the choice you made.
What happens if performance later becomes impossible
Article 1227 anticipates the obvious risk in electing performance. It provides that if, after the creditor has decided to require fulfilment of the obligation, performance becomes impossible without his fault, the penalty may be enforced. So choosing performance is not a trap: if the thing is subsequently destroyed or the work becomes impossible through no doing of yours, you are not left holding an unenforceable demand with the penalty forfeited. The qualification is the phrase without his fault, which is why anything you did that contributed to the impossibility will be examined closely.
Enforcing the clause, and its ceiling
Two neighbouring articles matter when you move. Article 1228 provides that proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded, which is the practical advantage of having the clause at all. Article 1229 supplies the counterweight: the judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with, and even where there has been no performance the penalty may be reduced if it is iniquitous or unconscionable. Read your clause with both in view before deciding what to insist on.
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.
- Heirs of Manuel Uy Ek Liong vs. Mauricia Meer Castillo, Heirs of Buenaflor C. Umali, represented by Nancy Umali, et al, G.R. No. 176425, June 5, 2013 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1227 — No Escape by Paying the Penalty
- Civil Code, Article 1226 — Effect of a Penal Clause
- Civil Code, Article 1228 — Penalty Without Proof of Damage
- Civil Code, Article 1229 — Equitable Reduction of the Penalty