Practice question
A creditor proves fraudulent fulfillment and compensable additional loss. The debtor invokes the penalty as an absolute ceiling, although no valid contrary legal limitation is established. Which analysis is correct?
- Fraud can never affect the substitute rule
- Article 1226’s fraud exception prevents treating the penalty as an automatic absolute bar to the applicable damages
- A signature immunizes all fraud
- No evidence of loss may ever be heard
- The penalty clause becomes a criminal acquittal
Legal references
- Civil Code, Articles 1209-1210,1223-1230,1238-1243,1266-1268 and1423-1430: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
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