SECTION 2: OBLIGATIONS WITH A PERIOD
but once the term expires, it becomes
ART. 1193. Obligations for whose fulfillment a day certain
has been fixed, shall be demandable only when that day
comes.
Obligations with a resolutory period take effect at
once, but terminate upon arrival of the day certain.
A day certain is understood to be that which must
necessarily come, although it may not be known when.
If the uncertainty consists in whether the day will
come or not, the obligation is conditional, and it shall be
regulated by the rules of the preceding section.
Term or period – an interval of time, which, exerting an
influence on an obligation as a consequence of a juridical
act, either suspends its demandability or produces its
extinguishment (Manresa)
- Those whose demandability or extinguishment is
subject to the expiration of a term or period.
- Future and certain (condition: future and
uncertain);
- Interval of time which must necessarily come,
although it may not be known when
- Exerts an influence upon the time of the
demandability or the extinguishment of the
obligation (condition: exerts an influence upon
the very existence of the obligation itself)
- No retroactive effect unless there is an
agreement to the contrary
- When left exclusively to the will of the debtor,
the very existence of the obligation is affected.
Classifications
1. Suspensive (ex die) – the obligation becomes
demandable only upon the arrival of a day
certain;
- what is suspended is not the acquisition of the
right or the effectivity of the obligation, but
merely its demandability; the obligation becomes
effective upon its constitution or establishment,
- Payment or delivery must have been made either
demandable.
2. Resolutory (in diem) – demandable at once,
although it is terminated upon the arrival of a day
certain.
1. Legal – granted by law
2. Conventional – stipulated by the parties
3. Judicial – fixed by the courts
1. Definite – date or time is known beforehand
2. Indefinite – date or time can only be determined
by an event which must necessarily come to pass,
although it may not be known when
Fortuitous event – happening of fortuitous event shall not
stop the running of the term agreed upon, its only effect is
to relieve the parties from the fulfillment of their respective
obligations during the term or period
Q: What is the effect of a moratorium law on an obligation
with a period?
A: Merely suspends the right of the creditor to enforce the
obligation during the effectivity of the law but does not
extinguish the obligation, neither does it suspend the
running of the period
ART. 1194. In case of loss, deterioration or improvement of
the thing before the arrival of the day certain, the rules of
Article 1189 shall be observed.
- in case of an obligation subject to a suspensive
period, it does not preclude the debtor from
recovering not only what was paid by mistake,
but also the fruits and interest.
- Same rule is applicable to suspensive conditions
upon the fulfillment of the conditions
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.
- Applies only in obligations to give
because he was unaware of the period or he
believed that the obligation had become due and
demandable
- No right to recover if payment was not made by
mistake
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 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.
GR: The creditor cannot demand thte performance off the
obligation before the expiration of the designated period;
neither can the debtor perform the obligation before the
expiration of such period.
XPN: if it should appear that such period has been
established for the benefit of the debtor or the creditor
- If established for the benefit of the creditor, he
may demand the fulfillment or the performance
of the obligation at any time, but the debtor
cannot compel him to accept payment
- If established for the benefit of the debtor, he
may oppose any premature demand for the
performance of the obligation; he may also
renounce the benefit of the period by performing
his obligation in advance.
- if the period is for the benefit of both parties,
neither of the parties may demand performance
or demand acceptance before the arrival of the
period because of the presumption given byt the
law that the period is for the benefit of both
parties; both of them must wait
No presumption that the period is either for the benefit of
the creditor or the debtor.
Q: Why?
A: one who claims must prove such claim
Applies only to period fixed by the parties themselves.
ORIT VS. BALDROGA
ART. 1197. If the obligation does not fix a period, but form
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 will 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.
- DISCUSSED UNTER 1180
Two cases where the courts are empowered to fix the
duration of the term or period:
1. If the obligation does not fix a period, but from its
nature and the circumstances it can be inferred
that a period was intended by the parties
- Fulfillment of the obligation cannot be demanded
until after the courts have fixed the period for
compliance therewith, and such period has
arrived.
2. If the duration of the period depends upon the
will of the debtor
- There would be a possibility that the obligation
will never be fulfilled
3. If the debtor binds himself to pay when his
means permit him to do so (falls within the
second)
Effect of potestative condition – cannot be left to the will of
the debtor because it affects the very existence of the
obligation itself; what is delegated to the debtor is the
popwer to determine whether or not the obligation shall be
fulfilled
Effect of potestative period – can be left to the will of the
debtor because its influence does not go as far as to
determine the existence of the obligation, since what is
delegated to the debtor is merely the power to determine
when the obligation shall be fulfilled; the courts must fix
the duration to avoid nonfulfillment
The only action that can be maintained under this articles is
an action to ask the court to fix the duration of the term or
period. Fulfillment cannot be demanded until after the
court has fixed the period for its compliance and such
period has expired.
- Not always the case; where the essential
allegations of the pleadings describe an
obligation with an indefinite period, the ocurt can
fix the duration of such period although the
complaint does not ask for such relief.
Prescription – 10 years
Judicial period – when parties give thei consent to the
period fixed by the court, said period acquires the nature of
a covenant; it becomes a law governing their contract.
An action combining such action with that of an action for
collection may be allowed if it can be shown that a separate
action for collection would be a mere formality because no
additional proofs other than the admitted facts will be
presented and would serve no purpose other than to delay.
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 give a guaranty o
security for the debt;
2. When he does not furnish to the creditor the
guarantees 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.
- Five different grounds or causes for the
extinguishment of the debtor’s right to make use
of the term or period
(1) Insolvent – includes any case in which it would not be
possible financially for the debtor to comply with his
obligation
- debtor cannot meet his obligations as they fall due;
liabilities are moer than his assets; it is either insolvency in
fact or when he is judicially declared insolvent
- Predicated upon the proposition that the
insolvency of the debtor arose after the
constitution of the obligation; if there is a
guaranty or security for the debt, the debtor, in
spite of insolvency, does not lose his right to the
period.
GR: when after the contraction of the obligation, the
debtor becomes insolvent
XPN: If he gives a security or guaranty for the debt
- The guaranty need not be supplied by the debtor
himself
Q: What is the basis of the debtor’s losing the benefit of the
period?
A: it is his insolvency which must occur after the
contraction of the obligation
If before the contraction of the contract, the debtor was
already insolvent and it is known by the creditor and the
latter still contracts, creditor becomes bound of that period.
GR: should the debtor becomes insolvent after the
obligation has been contracted, he loses the benefit of the
period. Therfor, the creditor need not wait for the arrival of
the period before he can demand the performance of the
obligation. The obligation becomes automatically
demandable.
XPN: if the debtor gives security or collateral for the debt.
- If he can give it even if he is insolvent, he does
not lose the benefit of the period. The creditor
can’t demand performance before the arrival of
the period.
Q: What is the type of insolvency contemplated by law
under par. 1 of Art. 1198?
A: The law does not distinguish between judicial insolvency
or insolvency in fact. What matters is the fact that if the
debtor can’t pay when his debts are due – he is insolvent.
Q: How can you expect an insolvent person give a security
when he is insolvent?
A: Under the law on guarantee, the law allows any person
to guarantee the obligation of another. If he can find a 3rd
person to guarantee his debt, the debtor does not lese the
benefit of the period.
(2) Obligation becomes pure and without any condition,
and consequently, becomes due and immediately
demandable
- Ex. Failing to register the mortgage over a parcel
of land in favor of the creditor in order to secure the loan
Absolute rule: BASIS of the debtor’s losing the benefit of the
period is the BREACH OF PROMISE (when he does not
deliver the guaranty or security which he has promised)
- The benefit is still lost even if the debtor secures a
guaranty other than what he promised
Ir must be understood to mean that there is failure to
deliver the guarantee or security promised. It also
contemplates a situation where the debtor delivers
something which is different from what he promised.
Q: Does the debtor lose the period even if what he delivers The law provides for a different rule because under the 1st,
is more valuable than the one he promised? there is bad faith on the part of the debtor, because it is
through his acts that the guaranties become impaired. But
A: Yes. Because the basis is breach of promise to give what in case of fortuitous events, since there are event not
he promised? imputable to him because they are inevitable, to make him
lose the benefit of the period, the guaranty must disappear.
Law is absolute, no exception.
If the debtor would lie to retain the benefit of the period
(3) Rules; two situations
under those 2 cases, the law says he must immediately give
new guaranties which must be equally satisfactory.
1. If the guaranty or security is impaired through the
fault of the debtor, he shall lose his right to the
It is upon the agreement of the parties just as the
benefit of the period; if impaired without his
acceptability of a guaranty or security must be made by
fault, he shall retain his right
agreement of the parties. Any replacement of these
- Must take place after their establishment
guaranties must also be by agreement of the parties. If they
- If before, the creditor must accept the security in
cannot come into agreement, it will be resolved by the
its impaired condition
court.
2. If the guaranty or security disappears through any
cause, even without any fault, he shall lose his Q: Is the debtor entitled to be given sufficient time before he
right to the benefit of the period loses the benefit of the period?
- Mere impairment is not sufficient, the thing must
get lost for the debtor to lose the period A: Loss of the period is immediate. There is nothing in the
- As long as there has been an impairment or loss law that provides that he must be given time.
due to fortuitous event, out rightly the debtor
Q: Who must be the judge whether the new security is
loses the benefit of the period - conversion into a
equally satisfactory?
pure obligation (immediately demandable)
- IMMEDIATELY is a question of fact depending on
A: Both parties. If they can’t agree, the court will decide.
the circumstances
(4) When the debtor violates an undertaking in
XPN: unless the debtor immediately gives a new security or
consideration of which the creditor agreed to the period.
guaranties
- Rule is absolute, there is no exception
- Equally satisfactory as the original
- Both parties must agree to the new security; if
CORPUZ VS. ALIKPALA
not, the court will decide
The basis of the loss of the benefit of the period is bad faith
If the reason or cause for the impairment of the guaranty is
on the part of the debtor for violating an undertaking for
imputable to the act of the debtor, it is not necessary that
which reason the creditor agreed in fixing the period.
the guaranty should disappear. Mere impairment is
sufficient to make him lose the benefit of the period. But if It is not necessary that the debtor violates all the
the cause is a fortuitous event, mere impairment of the undertakings agreed upon, it is enough that he violates an
guaranty does not make him lose the benefit of the period. undertaking in consideration of the period.
What will make him lose the benegit of the period is when
the guaranty should disappear. (5) When the debtor attempts to abscond
To abscond means to disappear or to go into hiding
- Abscond means to go into hiding in such a way
that the creditor does not know the whereabouts
of the debtor.
if the debtor goes into hiding but gives to the creditor his
address, he won’t lose the period.
Absolute rule, no exception
It is not necessary that there be actual absconding because
a mere attempt is sufficient.
The law does not require that the act of absconding is for
the purpose of avoiding payment of the obligation.
Whatever may be the reason is immaterial.
If you tell your creditor that you will go into hiding because
of Miss so and so in so far as the creditor is concerned, it is
absconding; par, 5 will not apply
Q: Should any of the circumstances enumerated be present,
will the debtor lose the benefit of the period?
A: It depends. Art. 1198 applies only to an obligation with a
suspensive period that is intended for the benefit of the
debtor alone. Otherwise, the article will not apply.
Unless you know when a period is intended for the benefit
of a debtor alone, you cannot understand Art. 1198.
In determining whether Art. 1198 will apply, it is essential
that you first ascertain for whose benefit the period is
attached. If the period is suspensive and it is for the benefit
of the creditor alone, Art.1198 will not apply.
If at the time the obligation is contracted, the debtor is
already an insolvent and despite the insolvency, the
creditor agreed to a fixing of a period, the debtor shall not
lose the benefit of the period. He must wait for its arrival.
However, if at the time of the constitution of the contract,
the debtor is solvent but after which he becomes insolvent,
under Art. 1198, his insolvency will make him lose the
benefit of the period. So the creditor need not wait. This is
because there is no use waiting because even if he waits,
the debtor could not pay because of his insolvency.
Q: What reason must the debtor have to abscond?
A: Reason for absconding is not material. Mere attempt to
go into hiding will make the debtor lose the period.
Par. 5, 2 and 4 – no exception; the rule is absolute
Par. 1 and 3 – there is exception
Q: Effect of the presence of any of the 5 circumstances
mentioned?
A: The obligation shall be converted to a pure obligation,
therefore immediately demandable. The original obligation
subjected to a suspensive period.
But before Art. 1198 can be made to apply; it is not enough
that the obligation is subjected to a suspensive period. It
should be for the benefit of the debtor alone.
- This is because if the period is for the creditor
alone, he won’t be losing anything.

When after the obligation has been contracted, the debtor

becomes insolvent unless he gives a guaranty or security
for the same.

Q: When should insolvency occur so Art. 1198 should apply?

A: It must occur after the obligation has been contracted.