IV.

OBLIGATIONS WITH A PERIOD Requisites of a Period:

· Future
A. Definition · Certain
· Possible
Art. 1193. Obligations for whose fulfillment a day
certain has been fixed, shall be demandable only Kinds of Terms:
when that day comes. · Suspensive (ex die) – one that must lapse before
Obligations with a resolutory period take effect at the obligation becomes demandable
once, but terminate upon arrival of the day certain. · Resolutory (in diem) – the period after which the
performance must terminate
A day certain is understood to be that which must
necessarily come, although it may not be known
Kinds according to source:
when.
· Legal – fixed by law
If the uncertainty consists in whether the day will · Voluntary – by stipulation
come or not, the obligation is conditional, and it · Judicial - allowed by the courts
shall be regulated by the rules of the preceding
Section. (1125a) Other classifications:
· Express – specifically stated
Period or Term – a space of time which, exerting an · Tacit – refers to periods for obligations that can
influence on obligations as a consequence of a only be done within a specific period
juridical act, suspends their demandability or · Original
determines their extinguishment. · Period of Grace
· Definite – Fixed known date or time
Differences between a Period and a Condition · Indefinite – A future event that must necessarily
happen

Differences Condition Period Obligations with a period are demandable only when
regarding: the day fixed for their performance arrives. The right
of action arises only when the date fixed has arrived;
Fulfillment Uncertain Event that must hence the date of prescription must also be counted
event necessarily from this date, not from the date of the obligation.
come, regardless
of whether the A stipulation suspending a contract during the period
date is of a fortuitous even or force majeure does not
predetermined suspend the period. It only suspends the fulfillment of
the obligation during the said period.
Influence on Gives rise or No effect on the
the extinguishes existence of the
Definition of a Period (According to Prof. Cases):
Obligation an obligation obligation A span of time starting or ending on “a day certain”
Effect is on at which point an obligation begins or ends.
demandability
No retroactive
effect Lirag Textile Mills, Inc v CA
Rule: A period has been defined as a space of
Time Refers to the Always refers to time which has an influence on obligation as a
future or a the future result of a juridical act and either suspends their
demandableness or produces their
past unknown
extinguishment.
Obligations with a period are those whose
If the Annuls the Merely consequences are subjected in one way or another
Condition Obligation empowers the to the expiration of said period or term.
and Period is court to fix a
up to the Will period
of Debtor Solante v COA
Facts: The City of Mandaue and F. F. Cruz had a
Contract of Reclamation where F. F. Cruz would
reclaim part of the city in exchange for a share in
the land. It was stipulated that the project was
estimated to be completed in 6 years. They also
had a MOA where F. F. Cruz could put up
structures on a portion of the City’s land provided
that upon completion of the project, said structures
will be owned by the City.
However, the City had a road widening project
which includes the land where F.F. Cruz put up the
said structures. The head of the road widening
project asked F. F. Cruz to demolish the said
structures in exchange for a sum of money.
However, when the compensation for the
demolition was being processed, the ownership of
the said structures was questioned. It was
contended that it was already owned by the City
because 6 years have already passed; hence,
there was no need to compensate F. F. Cruz for
the demolition.
The SC ruled that the structures were still owned
by F. F. Cruz. Thus, they still have to be
compensated for the demolition of the project.
Rule: “A plain reading of the Contract of
Reclamation reveals that the 6 year period
provided for project completion or, with like effect,
termination of the contract, was a mere estimate
and cannot be considered a period or a ‘day
certain’ in the context of Art.1193…as such, the
lapse of 6 years did not, by itself make the
obligation to finish the reclamation project
demandable…”
Ratio: The MOA states that the structures built by
F. F. Cruz on the property of the city will belong to
the latter only upon completion of the project.
Clearly, the completion of the project is a
suspensive condition that has yet to be fulfilled.
Until the condition arises, ownership of the
structures properly pertains to F. F. Cruz.
*Even if the contract indicates a period, it
doesn’t necessarily mean that it is an obligation
with a period.
QUESTION: “the expected date of completion is 2
years” Is it the same with “estimate”?
B. When courts may fix a period
Art. 1197. If the obligation does not fix a period, but
from its nature and the circumstances it can be
inferred that a period was intended, the courts may
fix the duration thereof.
The courts shall also fix the duration of the period
when it depends upon the will of the debtor.
In every case, the courts shall determine such
period as may under the circumstances have been
probably contemplated by the parties. Once fixed
by the courts, the period cannot be changed by
them. (1128a)
DIGESTED: The courts may fix the duration of
obligations when:
a. If the obligation does not fix a period
a. But its nature and circumstances necessitate
that a period is intended
b. The duration depends on the will of the
debtor
IN ALL CASES: Courts shall determine such period
as may under the circumstances have been probably
contemplated by the parties
ONCE FIXED BY THE COURTS: periods cannot be
changed
INSTANCES WHEN THE COURT MAY NOT FIX
THE TERM:
1. When no term was specified because no term was
ever intended;
2. When the obligation is “payable on demand”
(pure);
3. When specific periods are provided by law
(implicit);
4. When what appears to be a term is really a
condition;
5. When the period w/in which to ask the court to
have the period fixed has itself already prescribed.
DISCUSSION:
When a decision is rendered conformably with a
compromise agreement but no time is specified within
which the parties should comply with their
commitments, either party may move the court to
have a period fixed for the compliance of their
respective commitments.
Art. 1197 does not apply to contract of services and to
pure obligations. Mere failure of parties to fix a period
will not always justify the court in fixing one, especially
where the duration is to be implicitly fixed, in default of
express stipulation. The court, however, to prevent
unreasonable interpretations of the immediate
demandability of pure obligations, may fix a
reasonable time in which the debtor may pay.
The only action that can be maintained by the creditor
under Art. 1197 is the action to ask the courts to fix
the term within which the
debtor must comply with his obligation. The fulfillment
of the obligation itself cannot be demanded until after
the court has fixed the period for compliance
therewith, and such period has arrived.
Art. 1197 applies to a situation in which the parties
intended a period. [Where] no period was intended by
the parties… Their mere failure to fix the duration of
their agreement does not necessarily justify or
authorize the courts to do so. Furthermore, in fixing
the period. The term contemplated by the parties
should be ascertained. Once the period has been
fixed by the court, it becomes part of the contract, and
therefore, cannot be subsequently changed without
the consent of both parties. In this case, default of the
debtor only occurs after the expiration of the period
fixed by the court, and the obligations may not be
demanded any time before the fixed period.
Araneta v Phil Sugar
Facts: JM Tuason & Co. sold a land to Phil Sugar
Est Devt Co. through Gregorio Araneta Inc. The
parties stipulated that the buyer will build a church
while the seller will build streets around the piece of
land. When the buyer has built the church however,
the seller could not finish constructing the streets
yet because there were squatters occupying the
area where the streets would be. The buyer filed a
complaint for specific compliance against the seller.
The defense was that the action was premature
because the obligation did not have a definite
period. Hence, the complaint should have been to
ask the court to fix a period first. The CFI fixed a
period of 2 years for the seller to finish constructing
the street. The SC set aside the CFI ruling and fix
the period of the obligation to the date that all the
squatters were finally evicted.
Rule: “Art.1197 involves a two-step process. The
Court must first determine that the obligation does
not fix a period or that the period is made to
depend upon the will of the debtor, but from the
nature and circumstances it can be inferred that a
period was intended. This preliminary point settled,
the Court must then proceed to the second step,
and decide what period was probably contemplated
by the parties. So that, ultimately, the court cannot
fix a period merely because in its opinion it is or
should be reasonable but must set the time that the
parties are shown to have intended. As the record
stands, the trial Court appears to have pulled the
two-year period set in its decision out of thin air,
since no circumstances are mentioned to support
it.”
Ratio: Since the land was occupied by squatters,
the performance of the obligations depend on when
the squatters would be evicted.
Macasaet v Macasaet
Facts:
Rule: Art 1197 only applies to stipulations in which
parties intended a period.
Ratio: Parents invited the petitioners to live on the
land because of their familial love. The agreement
subsisted as long as parents and children mutually
benefitted, therefore it is a resolutory condition.
Because of their conflict, the agreement was
terminated. There is no period intended in the
agreement, therefore courts may not fix such.
Art. 1180. When the debtor binds himself to pay
when his means permit him to do so, the obligation
shall be deemed to be one with a period, subject to
the provisions of Article 1197. (n)
Notes
C. Beneficiary of Period
Art. 1196. Whenever in an obligation a period is
designated, it is presumed to have been
established for the benefit of both the creditor and
the debtor, unless from the tenor of the same or
other circumstances it should appear that the
period has been established in favor of one or of
the other. (1127)
Gerneral Rule: Whenever in an obligation a period is
designated, it is presumed to have been established
for the benefit of both the creditor and the debtor
Exception: unless from the tenor of the [obligation] or
other circumstances it should appear that the period
has been established in favor of one or the other
Effects of Art.1196 on the beneficiary:
1. If the term is for the benefit of both parties
(general rule) - before the period stipulated:
a. Creditor cannot demand payment
b. Debtor cannot make an effective
tender and consignation of payment
2. If it is for the benefit of the debtor only
a. Creditor cannot demand payment
anytime (debtor may oppose)
 b. Debtor may validly pay anytime
before the period expires
- A stipulation that the payment is to
be made “within” the stipulated
period is obviously for the benefit of
the debtor. Hence, the debtor may
waive the period and waive in
advance.
3. If it is for the benefit of the creditor only
a. Creditor can demand payment
anytime
b. Debtor cannot compel creditor to
accept payment before period
expires
- BUT, in a mortgage contract where
it was provided that the debtor
cannot pay the principal before the
expiration of the period therein
stipulated, if the creditor accepts
partial payment, this is deemed a
waiver by the creditor of his right to
refuse any payment before the
expiration of the term.
Example - Contracts of Loan:
1. If the interest is stipulated - period is
generally for the benefit of both parties;
hence, debtor cannot pay in advance against
the will of the creditor, unless he pays, the
full interest for the period agreed upon
2. If the loan is gratuitous or without interest -
the term is ordinarily for the exclusive benefit
of the debtor, who may therefore pay in
advance of the period.
- BUT even when there is no interest
stipulated, the period may still be
for the benefit of both parties, and
the debtor cannot pay in advance
without consent of the creditor, if
the creditor receives other benefits
by reason of the term.
Other circumstances where the general rule does not
apply:
- Creditor may want to keep his money
invested safely instead of having it in his
hands*
- Creditor by fixing a period may protect
himself from sudden decline in the
purchasing power of the currency loaned*
*Note: in these circumstances, the benefit of the
term/period is for the creditor; hence, the creditor
cannot be compelled to receive payment in advance
even if the debtor offers to pay the full interest for the
entire period stipulated
LL and CO v Huang Chao
Facts:
Rule: There is a presumption that the period is for
the benefit of both parties. Therefore, renewal of
the contract would only be upon mutual agreement
of joint will.
Ratio: The contract of lease had a definite period of
5 years. Extension of such contract must be made
before the term expires. Since the contract had the
term “option to renew,” which indicated that it was a
reciprocal obligation, it follows that the period
stipulated is presumed to be for the benefit of both
parties. Therefore, renewal of such would require
the agreement of both parties.
D. When debtor loses right to make use of a
period
Art. 1198. The debtor shall lose every right to make
use of the period:
(1) When after the obligation has been contracted,
he becomes insolvent, unless he gives a guaranty
or security for the debt;
(2) When he does not furnish to the creditor the
guaranties or securities which he has promised;
(3) When by his own acts he has impaired said
guaranties or securities after their establishment,
and when through a fortuitous event they
disappear, unless he immediately gives new ones
equally satisfactory;
(4) When the debtor violates any undertaking, in
consideration of which the creditor agreed to the
period;
(5) When the debtor attempts to abscond. (1129a)
E. In case of loss, deterioration or improvement of
thing
Art. 1194. In case of loss, deterioration or
improvement of the thing before the arrival of the
day certain, the rules in Article 1189 shall be
observed. (n)
Art 1189:
 1. Loss
a. Without fault of debtor: obligation
shall be extinguished
b. Through the fault of the debtor:
obliged to pay damages
2. Deteroriation
a. Without fault of debtor: impairment
is to be borne by creditor
b. Through fault of debtor: Creditor
may choose between (1) rescission
or (2) fulfillment, with indemnity for
damages for either
3. Improvement
a. By its nature of by time: inure to the
benefit of the creditor
b. At the expense of the debtor: debtor
has usufructuary rights
F. In case of premature payment/delivery
Art. 1195. Anything paid or delivered before the
arrival of the period, the obligor being unaware of
the period or believing that the obligation has
become due and demandable, may be recovered,
with the fruits and interests. (1126a)
HISTORY/ SOURCE OF THE PROVISION: The
present article changed the old rule (Art 1126, Old
Civil Code) by allowing the debtor to recover what has
been delivered prematurely together with the fruits.
Observations of Tolentino:
1) General Rule (Before): What has been delivered
cannot be recovered
● Assumes knowledge of the term or period
● Exception: Right to recover fruits and
interests, if one paid in ignorance of the term
2) According to Tolentino, the present article
provides the exception without providing for the
general rule.
● Implied General Rule (Present): Recovery is
barred if the premature payment was made
with knowledge of the term.
3) Dictated by reason and equity: it is but just to
allow the debtor to recover such fruits and
interests before the maturity of the obligation.
4) For Tolentino, the right to recover what has been
paid or delivered in advance has no justification,
given that there is an existing obligation.
OBLIGATION COVERED: Obligations to give only
EFFECT OF ARRIVAL OF TERM:
1) Allows recovery of the thing or money itself, plus
fruits of interests (from the moment of payment to
the date of recovery)
2) If action to recover has not been brought before
the date of maturity, the right to recover the thing
or money will cease, but the recovery of fruits
and interests is still justified.
RIGHT TO INTERESTS AND FRUITS:
1) In all cases where the debtor paid under mistake
as to period
2) Comment of Tolentino: The article must be
construed in relation to provisions on solutio
indebiti (payment of what is not due)
● If creditor accepts in bad faith: Creditor shall
pay legal interest (if sum of money), or shall
be liable for fruits received or should have
been received (if the thing produces fruits)
● If creditor accepts in good faith: Creditor is
liable for fruits only in so far as they
benefitted him
WHEN FRUITS CAN BE RECOVERED:
1) Reciprocal obligations where there has been
premature performance on both sides
2) When the obligation is a loan on which the
debtor is bound to pay interest
3) When period is exclusively for the benefit of
the creditor, because the debtor by paying in
advance loses nothing.
BURDEN OF PROOF: Debtor will have the burden of
proving ignorance of the period
PAYMENT WITH KNOWLEDGE OF TERM: Payment
cannot be recovered (debtor can be considered as
having tacitly waived the benefit of the term)