OBLIGATIONS WITH A PERIOD

(Arts. 1193-1198)
Define Obligations with a Term or Period (Art. 1193)
Obligations with a term or period may be defined as those whose
demandability or extinguishment are subject to the expiration of a term or
period.
Those whose consequence are subjected to the expiration of a period
or term (future and certain event)
Certain event means:
- Must necessarily come like Christmas
- Although not known when like death
 A TERM or PERIOD is 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 extinguishments. (8 Manresa, 5th Ed., Bk. 1, p. 370.)
Requisites:
1. Futurity
2. Certainity

Distinguish between a condition and a term or period.

A condition and a term or period may be distinguished

from each other in the following ways:
(1) In general; A condition refers to an event, while a term or period refers to an
interval of time.
(2) As to requisites: A condition has for its requisites futurity and uncertainty,
while a term or period has for its requisites futurity and certainty.
(3) As to fulfillment: A condition may or may not happen, while a term or period
will surely come to pass, although it may not be known when.
(4) As to influence upon obligation: A condition exerts an influence upon the
very existence of the obligation itself, while a term or period exerts an influence
only upon its demandability.
(5) As to retroactivity of effects: A condition has retroactive effects, while a
term or period does not have retroactive effects unless there is an agreement to
the contrary.
(6) As to effect of will of debtor: When a condition is left exclusively to the will
of the debtor, the very validity of the obligation is affected; when the duration of
a term or period is left exclusively to the will of the debtor, the obligation is still
valid.
Give and define the different kinds of terms or periods.
(1) Suspensive or resolutory ~ According to the first and second paragraphs of Art.
1193, a period may be suspensive (ex die) or resolutory (in diem). It is suspensive
when the obligation becomes demandable only upon the arrival of a day certain; it is
resolutory when the obligation is demandable at once, although it is terminated
upon the arrival of a day certain.
Suspensive -
Obligation begins from a day certain upon arrival of period (Art. 1193, p.1)
Ex. I will pay you in 30 days from today
Resolutory
Obligation is valid up to a certain day and extinguished upon arrival (Art. 1193,
p.2)
Ex. I will support you from the time your father dies
(2) Legal, conventional or judicial - A period may also be legal, conventional or
judicial. It is legal, when it is granted by law; conventional, when it is stipulated by
the parties; and judicial, when it is fixed by the courts.

(3) Definite or indefinite — A period may also be definite or indefinite. This

classification can be deduced from the provision of the third paragraph of Art.
1193, which states that a day certain is understood to be that which must
necessarily come, although it may not be known when. From this it is evident that a
period is definite when the date or time is known beforehand, and indefinite when
it can only be determined by an event which must necessarily come to pass,
although it may not be known when.
If the happening of a future event is fixed by the parties for the
fulfillment or extinguishment of an obligation, what is the nature of
the obligation — is it with a term or is it conditional?
Our answer must be qualified. If the event will necessarily come, although the date or time
when it will come may be uncertain, the event constitutes a day certain; hence, the
obligation is one with a term. (Art. 1193, par. 4, NCC.) However, if the uncertainty consists
in whether the day will come or not, the event constitutes a condition; hence, the
obligation is conditional. (Art. 1193, par. 4, NCC.) Thus, if the death of a person is fixed by
the parties for the demandability or extinguishment of the obligation, it is clear that the
obligation is one with a term or period because death is an event which will certainly come,
although the date or time when it will come is uncertain. The same is true when the
parties enter into a contract whereby it is agreed that the obligation cannot be performed
while the war goes on.” Although the date of the termination of the war may be
uncertain, yet there is no question that the termination of the war must necessarily come.
(Nepomuceno vs. Narciso, 84 Phil. 542.) However, if the obligor binds himself to perform
his obligation as soon as “he shall have obtained a loan” from a certain bank, it is clear
that the granting of such loan is not definite. Consequently, it cannot be considered a day
certain; hence, the obligation is conditional. (Berg vs. Magdalena Estate, Inc., 92 Phil. 110.)
X Co. and Y Co. entered into a contract whereby the latter agreed that
the sugar cane which it will produce shall be milled by the former for a
period of 30 years. It was stipulated that in case of any fortuitous
event, the contract shall be suspended during said period. For four (4)
years during the last war and for two (2) years after liberation when
the mill of X Co. was being rebuilt, Y Co. failed to deliver its sugar
cane to the central of X Co. After the expiration of the 30-year period,
Y Co. stopped the delivery of its sugar cane to the central of X Co.
Subsequently, X Co. brought an action against Y Co. in order to
compel the latter to deliver its sugar cane for six (6) additional years
on the ground that the fortuitous event had the effect of stopping the
running of the term or period agreed upon. Will the action prosper?
Reasons.
The facts stated in the above problem are exactly the same as those in the case of Victorias Planters
vs. Victorias Milling Co., 97 Phil. 318, where the SC held that the effect of a fortuitous event upon the
term or period agreed upon is not to stop the running of the term or period but merely to relieve the
contracting parties from the fulfillment of their respective obligations during the pendency of the
event. According to the SC:

“Fortuitous event relieves the obligor from fulfilling a contractual obligation. The stipulation in the
contract that in the event of flood, typhoon, earthquake, or other force majeure, war, insurrection,
civil commotion, organized strike, etc., the contract shall be deemed suspended during said period,
does not mean that the happening of any of these events stops the running of the period agreed
upon. It only relieves the parties from the fulfillment of their respective obligations during that time
— the planters from delivering sugar cane and the central from milling it. x x x To require the planters
to deliver the sugar cane which they failed to deliver during the four years of the Japanese
occupation and the two years after liberation when the mill was being rebuilt is to demand from the
obligors the fulfillment of an obligation which was impossible of performance at the time it became
due. Memo tenetur ad impossibilia. x x x The performance of what the law has written off cannot be
demanded and required. The prayer that the plaintiffs be compelled to deliver was impossible, if
granted, would in effect be an extension of the term of the contract entered into by and between the
parties.”
In obligations with a term or period, for whose benefit is the term
or period?
When a period is designated for the performance of an obligation, it is presumed to be for
the benefit of both the creditor and the debtor. Consequently, the former cannot demand
the performance of the obligation before the expiration of the designated period; neither
can the latter compel the latter to perform the obligation before the expiration of such
period. This rule, however, is not absolute. If it can be proved either from the tenor of the
obligation or from other circumstances that the period has been established for the benefit
of either the creditor or the debtor, the general rule is no longer applicable. (Art, 1196, NCC.)

RULES:
Fixing of period - Presumed to be for the benefit of both creditor and debtor (Art. 1196)
If for Debtor’s benefit - He cannot be compelled to pay earlier before due, but he may
If for Creditor’s benefit - He may demand earlier but debtor cannot requirehim to
accept payment earlier
What are the different cases or instances under the NCC where the courts
are empowered to fix the duration of a term or period?
Under Art. 1197, NCC there are two (2) cases where the courts are empowered to fix the
duration of the term or period. They are:

1st, if the obligation does not fix a period but from its nature and circumstances it can be
inferred that a period was intended by the parties; and
2nd, if the duration of the period depends upon the will of the debtor.

We might add a 3rd — if the debtor binds himself to pay when his means permit him to do so.
(Art. 1180, NCC.) Strictly speaking, however, this case properly falls within the purview of the
second, because in such a case the power to determine when the obligation will be fulfilled is in
effect left exclusively to the will of the
debtor.
D borrowed P2,000 from C in 1958. The debt is evidenced by a promissory note executed by D
wherein he promised to pay as soon as he has money or as soon as possible. C has made
repeated demands upon D for payment, but up to now no payment has been made. Suppose
that C will bring an action against D for payment of the debt, will the action prosper?
No, the action will not prosper. In similar cases decided by the Supreme Court (Gonzales vs.
Jose, 66 Phil. 369; Patente vs. Omega, 49 Off. Gaz. 4846.), it was held where the debtor
promises to pay his obligation as soon as he has money or as soon as possible, the duration of
the term or period depends exclusively upon the will of the debtor; consequently, the only
remedy of the creditor is to bring an action against the debtor in accordance with Art. 1197 of
the NCC for the purpose of asking the court to fix the duration of the term or period. It is only
after the duration of the term or period has been fixed by the court that any other action
involving the fulfillment or performance of the obligation can be maintained. This has always
been the consistent doctrine in this jurisdiction. (Gonzales vs. Jose, 66 Phil. 369; Concepcion vs.
People, 74 Phil. 62; Ungson vs. Lopez, CA, 50 Off. Gaz. 4297; Pages vs. Basilan Lumber
Co., 104 Phil. 882.)
“M” and “N” were very good friends. “N” borrowed P10,000.00 from “M” Because of
their close relationship, the promissory note executed by “N” provided that he
would pay the loan “whenever his means permit.” Subsequently, “M” and “N”
quarrelled. “M” now asks you to collect the loan because he is in dire need of
money. What legal action, if any, would you take in behalf of “M”?
“M” must bring an action against “N” for the purpose of asking the court to fix the duration of the term
or period for payment. According to the NCC, 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
Art. 1197. In other words, it shall be subject to those provisions of the Code with respect to obligations
with a term or period which must be judicially fixed. Thus, in the instant case, the court shall determine
such period as may under the circumstances have been probably contemplated by the parties. Once
determined or fixed, it becomes a part of the covenant of the two (2) contracting parties. It can no
longer be changed by them. If the debtor defaults in the payment of the obligation after the expiration
of the period fixed by the court, the creditor can then bring an action against him for collection. Any
action for collection brought before that would be premature. This is well-settled.
(Note: The above answer is based on Arts. 1180 and 119 7 of the NCC and on Gonzales vs. Jose, 66 PhiL
369; Concepcion vs. People, 74 PhiL 62; Pages vs. Basilan, 104 PhiL 882, and others.
A Corporation, engaged in the sale of subdivision residential lots, sold to “B” a lot of
1,000 square meters. The contract provides that the corporation should put up an
artesian well with tank, within a reasonable time from the date thereof and sufficient
for the needs of the buyers. Five years thereafter, and no well and tank have been
fixed, up by the corporation, “B” sued the corporation for specific performance. The
corporation set up a defense that no period having been fixed, the court should fix the
period. Decide with reason.
First Answer: The action for specific performance should be dismissed on the ground that it is
premature. It is clear that the instant case falls within the purview of obligations with a term
or period which must be judicially fixed. Thus, “B” instead of bringing an action for specific
performance, should bring an action askingthe court to determine the period within which “A”
Corporation shall put up the artesian well with tank. Once the court has fixed the period, once
the courts, let us say, has declared that the period is six months, then that will become part of
the covenant between the contracting parties. It can no longer be changed by them. If the
Corporation does not put up the artesian well with tank within the period fixed by the court,
“B” can then bring an action for specific performance.
Second Answer: Normally, before an action for specific performance may be
maintained by “B” against “A” Corporation, the former must first bring an
action against the latter asking the court to fix the duration of the term or
period to install the artesian well with tank. However, an action combining
such action with that of an action for specific performance may be allowed if
it can be shown that a separate action for specific performance 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. Here, there
is no obstacle to such course of action.

{Note: The above answers are based on Art. 119 7 of the NCC and on decided
cases. Either answer should be considered correct.)
WHEN DO COURTS FIX PERIOD?
1. Art. 1197

Like when D contracts with C a contract but C failed to finish completion at an agreed time,
is there breach?
None, because no period, no delay

However, you can go to court to fix period and when period is fixed, and C still does
not comply, there will be now a breach

2. Art. 1197, p. 2
The courts shall also fix the duration of the period when it depends upon the will of the
debtor.
Relate with Art. 1180:
When the debtor binds himself to pay when his means permit him to do so, the
obligation shall be deemed one with a period.

How will courts fix period?

Art. 1197, p.3 - Once period is fixed, it cannot be changed
What are the different cases or instances under the NCC when the debtor shall lose
every right to make use of the term or period?

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; and
(5) When the debtor attempts to abscond. (Art. 1198, NCC.)
A executed in favor of B a promissory note for P10,000, payable after two years, secured by a
mortgage on a certain building valued at P20,000. One year after the execution of the note, the
mortgaged building was totally destroyed by a fire of accidental origin. Can B demand from A the
payment of the value of the note immediately after the burning without waiting for the expiration
of the term? Reasons.
Yes, B can demand from A the payment of the value of the note immediately after the
burning without waiting for the expiration of the term, unless A immediately gives another
security or guaranty which is equally satisfactory. This is clear from the provision of No. 3 of
Art. 1198 of the NCC which declares that when by his own acts the debtor has impaired the
guaranty or security, or when through a fortuitous event the guaranty or security
disappears, the debtor shall lose the benefit of the term or period. It must be observed that
there is a difference between the effect of impairment and the effect of disappearance as
applied to the security or guaranty. The rules may be restated as follows:

(1) If the guaranty or security is impaired through the fault of the debtor, he shall lose his
right to the benefit of the period; however, if it is impaired without his fault, he shall retain
his right.
(2) If the guaranty or security disappears through any cause, even without any fault of the
debtor, he loses his right to the benefit of the period. In either case, however, the debtor
shall not lose his right to the benefit of the period if he gives a new guaranty or security.
A sold his entire interest in 24,000 tons of iron ore to B for P75,000, PI0,000 of which was actually
paid upon the signing of the contract. With respect to the balance of P65,000, it was agreed that it
“will be paid from the first amount derived from the sale of the ore.” To insure payment thereof, B
delivered to A a surety bond which provided that the liability of the surety liability would
automatically expire after the lapse of two years. Inasmuch as the ore had not yet been sold and
the surety bond had expired without being renewed and the balance had not yet been paid in spite of
repeated demands, A finally brought an action against B for the recovery of said balance. B,
however, interposed the defense that his Obligation to pay is conditional and that inasmuch as the
condition has not yet been fulfilled, therefore, it is not yet due and demandable. Is this defense
tenable?
This defense is untenable. The sale of the iron ore is not a condition precedent to the payment of
the balance but only a suspensive term or period. There is no uncertainty whatsoever with regard
to the fact of payment; what is undetermined is merely the exact date of payment. Normally,
therefore, A will have to wait for the actual sale of the iron ore before he can demand from B for
the payment of the unpaid balance. However, inasmuch as by his own act B has impaired the
guaranty or security after its establishment without giving another one which is equally
satisfactory, it is clear that he has now lost the benefit of the term or period. Consequently, the
case now falls squarely within the purview of pars. 2 and 3 of Art. 1198 of the NCC. (Gaite vs.
Fonacier, 112 Phil. 728.)