Case Digest: Cabarroguis vs Vicente

Sharing my personal digest on the Cabarroguis vs Vicente case.

No. L-14304. March 23, 1960

ANTONIA A. CABARROGUIS and MAMERTO CABARROGUIS, plaintiff’s and appellees, vs. TELESFORO B. VICENTE, defendant and appellant.


Plaintiff, Antonia A. Cabarroguis, a registered nurse and midwife, sustained physical injuries as a result of an accident when the AC “jeepney” of which she was a passenger hit another vehicle at a street corner of Davao City. The injury caused her permanent partial disability to her right forearm. To avoid court litigation, Telesforo B. Vicente, owner and operator of the AC “jeepney” entered into a compromise agreement to pay Cabarroguis the sum of P2,500 which represents actual and compensatory, exemplary and moral damages. Defendant has paid a total of P1,500.00 leaving therefore, an unpaid balance of P1,000. The agreement also stipulates that failure to pay the balance within 60 days, he would pay an “additional amount of P200.00 as liquidated damages. Vicente, notwithstanding repeated demands, failed to pay. Spouses Cabarroguis filed a suit in the Municipal Court of Davao City, which rendered judgment in favor of the plaintiffs. The decision includes payment of P1,200.00 with interest at legal rate from the date of the filing of the complaint until full payment. Vicente appealed to the Court of Appeals citing Article 1226 of the new Civil Code, that in obligations with a penal clause, the penalty substitutes the indemnity for damages and payment of interest.


Whether or not the penalty substitutes the indemnity for damages and payment of interest for obligations with a penal clause


In obligations with a penal clause, as provided in Article 1226 of the new Civil Code, the penalty shall substitute the indemnity for damages and the payment of interests. The exceptions to this rule, according to the same article, are: (1) when the contrary is stipulated; (2) when the debtor refuses to pay the penalty imposed in the obligation, in which case the creditor is entitled to interest on the amount of the penalty, in accordance with Article 2209; and (3) when the obligor is guilty of fraud in the fulfilment of the obligation. Applying the law it is evident that no interest can be awarded on the principal obligation, the penalty of P200 agreed upon having taken the place of the payment of such interest and the indemnity for damages, the case not falling under any of the exceptions. However, in the case, it takes a different aspect with respect to the penalty attached to the principal obligation. It has been held that in obligations for the payment of a sum of money when a penalty is stipulated for default, both the principal obligation and the penalty can be demanded by the creditor. Defendant having refused to pay when demand was made by plaintiff, the latter clearly is entitled to interest on the amount of the penalty. It is well to observe that Article 2210 of the new Civil Code also provides that in the discretion of the court, interest may be alleged upon damages awarded for breach of contract. This interest is recoverable from the time of delay, that is to say, from the date of demand, either judicial or extrajudicial.


Wherefore, with the modification that the interest shall be allowed only on the amount of the penalty, the decision appealed from is hereby affirmed. Without costs.