Jan.

5,2018-Lectur
eNotes
Sour
ces:Obl
i
gations&Cont
ract
sby-Tol
ent
ino,
Pineda,
Par
as

Art.1189.Whenthecondi
tionshav ebeenimposedwi t
ht heint
ent
ionofsuspendi
ng
theeffi
cacyofanobli
gati
ont ogive,t
hef ol
lowi
ngrulesshallbeobser
vedincaseof
the improv
ement
,loss ordet er
iorat
ion ofthe t
hing duri
ng t
he pendencyofthe
conditi
on:

(1)Ifthet hi
ngi
slostwi
thoutt
hef
aul
toft
hedebt
or,t
heobl
igat
ionshal
lbe
exti
nguished;

(2)I
fthethingislostthroughthefaul
toft hedebtor,heshal
lbeobligedtopay
damages;itisunderst
oodt hatthethi
ngisl ostwhenitperi
shes,orgoesoutof
commerce,ordisappearsinsuchawayt hatitsexi
stencei
sunknownori tcannot
berecov
ered;

(3)Whenthethi
ngdeteri
orat
eswi
thoutt
hef
aul
toft
hedebt
or,
thei
mpai
rmenti
sto
bebornebythecredi
tor
;

(4)Ifitdet
eri
orat
est hr
oughthef
aultofthedebt
or,t
hecredi
tormaychoose
betweentheresci
ssionoftheobl
igat
ionandi
tsful
fi
ll
ment
,withindemni
tyf
or
damagesineit
hercase;

(
5)I
fthethi
ngisi
mpr ovedbyi
tsnat
ure,
orbyt
ime,
thei
mpr
ovementshal
linur
eto
t
hebenef
itoft
hecredit
or;

(
6)Ifi
tisimprovedatt
heexpenseofthedebt
or,heshal
lhav
enoot
herr
ightt
han
t
hatgr
antedtotheusuf
ruct
uar
y.(1122)

SCOPE&APPLI
CABI
LITYOFARTI
CLE–I
tappl
i
esonl
ytot
hef
oll
owi
ngcases:
1.
)Whent hecondi
ti
onsaresuspensi
ve,
andhav
ebeenful
fi
ll
ed.
2.
)Wheni tisanobligat
iontogiveordel
iv
eradeter
minateorspeci
fi
c
t
hing(
notgener
ic)
.

Q. Whyaret hepr
ovi
si
onsofAr
ti
cle1189appl
i
cabl
eonl
ytosuspensi
veandf
ulf
il
led
condi
ti
ons?

A. Becauseifthesuspensiv
econdi t
ionshadnotbeenfulf
il
led–
a.
)noobl igati
onisyetcreat
ed;
b.
)theeffectsofimprovement s,l
ossordeteri
orat
ionofthethi
ngsubj
ectoft
he
conditi
onwil
l onl
ybebor nebydebtoral
one;

1
 c.
)thecr
edi
torwi
l
lhav
enot
hingt
odoany
mor
ewi
tht
hel
oss.

Q.Whatar
etheRISKS,CHANGESOR ALTERATI ONSON THECONDI TI
ON OFTHE
THI
NGTOBEDELI
VEREDduringpendencyoft
hehappeni
ngofsuspensi
vecondi
ti
on?

A.Ther
e maybe (a.)Loss;(
b.)Deter
ior
ati
on ori
mpai
rment
;(c.
)impr
ovementor
i
ncr
easeinv
alueoft
hethi
ngtobedeli
ver
ed.

Q.Whatist
heLIABILI
TYofDEBTORincaseofLOSSorDETERI
ORATI
ONoft
heTHI
NG
pendi
ngt
heeff
ecti
vi
tyoft
heobli
gat
iont
ogive?

A.I
tdepends:
1.
)Ifi
tisNOTduetoanyfaultofthedebtor/
obl
igor,
hei snotl
iabl
ef oranydamages.
 Incaseofl
oss,t
heobligati
ont odel
iv
erbydebt ori
sexti
nguished.
 Incaseofdet
eri
orat
ion,cr
editormustacceptthethingi
nitsimpairedcondi
ti
on.

2.
)Ifi
tisduetoFaultofDebt
or,thecredi
tormayhavethef
oll
owingr
ecourse:
a.)demandoracceptt hethi
nginit
simpai
redcondi
ti
on,
plusdamages;
or-
b.)demandforrescissi
onplusdamages

Q.WhoBENEFI TSFROM THEIMPROVEMENToft

het
hingsubj
ectoft
hesuspensi
ve
condi
ti
onalobl
i
gationpendi
ngi
tsef
fi
cacy
?

A.Anyimprov
ementincor
por
atedorattachedtothet
hingthati
sdue,
thati
scausedby
i
tsnat
ure,
orbyti
me,shal
lbet
ot hebenefi
toftheCREDITOR.

Howev
er,i
fitistheDEBTORwhomadet hei
mpr ov
ementsathi
sexpense,heshal
l
havet
hesameright
sasthatofausuf
ruct
uar
yunderArt
s.579&580oft
hisCode,such
as:

1.
)TheRi
ghtt
odousef
ul&l
uxur
iousI
mpr
ovement
s.

2.
)Buthemustnotal
tert
hef
orm orsubst
anceoft
hepr
oper
tyhel
dinusuf
ruct
.

3.
)Heisnotentit
ledt
oaref
und(
lesthei
mpr
ovest
henakedowneroutofhi
s
pr
oper
ty)
,buthemay–

a.Removet he i
mprovement
sifno subst
ant
ialdamage t
othe pr
oper
tyi
n
usuf
ructi
scaused,or
,

2
 b.Setof
fthecostofi
mpr
ovement
sagai
nstdamagesf
orwhi
chhemaybel
i
abl
e.

“Art
.579.Theusuf ructuar
ymaymakeont hepropert
yheldinusufructsuch
usefulimprov
ementorexpensesf ormerepleasureashemaydeem pr oper,
provi
dedhedoesnotal teri
tsf
orm orsubstance;butheshallhavenor i
ght
tobei ndemnif
iedtherefor
.Hemay ,however
,remov esuchimprovement s,
shoulditbepossibl
etodosowi thoutdamaget otheproper
ty.

Art
.580.Theusufr
uctuar
ymaysetof
fthei
mprov
ement
shemayhav
emade
ontheproper
tyagai
nstanydamaget
othesame.
”

Art
.1190.Whent hecondi t
ionshavefortheirpur
posetheext
ingui
shmentofan
obli
gat
iontogive,thepart
ies,upontheful
fi
ll
mentofsai
dcondi
ti
ons,shal
lret
urnt
o
eachotherwhattheyhavereceiv
ed.

I
ncaseoft heloss,deteri
orat
ionori
mpr
ovementofthet
hing,t
heprov
isi
onswhich,
wit
hrespectt
othedebt or,
arelai
ddowni
nthepr
ecedi
ngar
ticl
eshal
lbeappl
iedt
othe
par
tywhoisboundt oretur
n.

Asf ort
heobli
gat
ionst
odoandnottodo,t
heprovi
sionsoft
hesecondparagr
aphof
Art
icle1187shal
lbeobser
vedasregar
dst heef
fectoftheext
ingui
shmentofthe
obl
igati
on.(
1123)

Ar
t.1190i
sappl
i
cabl
eincaseoff
ulf
il
mentofaRESOLUTORYCONDI
TION.

Q.Whati
sthenat
ureofar
esol
utor
ycondi
ti
on?
A.NATUREOFRESOLUTORYCONDI
TION:
 Immediatelyvestst
herightst othecredi
tor
 Thehappeni ngoft her esolutorycondit
ionextingui
shest heobl
igat
ionthati
s
alr
eadyexisti
ng
 Ifthe condition i
s notf ulf
il
led,ordoes nothappen,t he r
ight
s become
consol
idatedandabsolut ei
nf avourofthecredi
tor/obl
igee.

Q.Whatar
etheef
fect
swhent
her
esol
utor
ycondi
ti
onhappens?

A.EFFECTSWHENRESOLUTORYCONDI
TIONHAPPENS:
 Theobl
i
gat
ioni
sconsi
der
edext
ingui
shed;
asi
fitdi
dnotexi
st
 Ther
ewi
l
lber
eci
procalr
est
it
uti
on.Eachpar
tyi
sboundt
oret
urnt
otheot
her
3
 whatt
heyhadr
ecei
vedf
rom eachot
her
.

 Thepart
iesarebacktostat
usquoort
othei
ror
igi
nalcondi
ti
onbef
oret
he
cr
eat
ionoftheobl
i
gat
ion.

 Theparti
eswil
laccountfort
hef
rui
tsandint
erest
stheyder
ivedf
rom t
het
hings
theyhadact
ual
lyrecei
vedandwi
l
lnowretur
n.

- Mutualcompensati
onunderArt
.1187;or
- perTolentinoal
sopayf ortheexpensesf
ort
hepr
oduct
ion,gat
her
ingand
pr
eserv
at i
onofthefr
uit
s(Art
.443)

I
LLUSTRATI
ON:ofResol
utor
yCondi
ti
onHappeni
ng-

OnOct.2015,Mr
.Changav
e30cowstohisnephewJet
,onthecondi
ti
ont
hatJet
wi
llnotrunformayori
nthei
rtownagai
nstMr.Chan’
sson,JackinMay2016
el
ect
ion.

1.
) I
fJetdoesnotr
unf
ormay
ori
nMay2016.Whati
sthel
egal
eff
ect
?

2.
) I
fduetopubli
cdemand,Jetranf
ormay ori
n2016agai
nstJack.Whati
sthe
l
egal
eff
ectofther
esol
utor
ycondi
ti
onhappeni
ng?

ANSWER:

1.
)Jetbecomestheful
landabsol
uteowneroft
he30cowsaf
tert
heMay2016el
ect
ioni
fhe
doesnotr
unagai
nstJack.

2.
)Theresol
utor
ycondi
ti
onhavingbeenf
ulf
il
led,i
.e.Jethav
ingr
unagai
nstJack,t
henhemust
ret
urnthe30cowstoMr.Chan.

ofReci
procalResti
tut
ions–f r
uit
sandi
nter
est
sshal
lbecompensat
edagai
nsteach
ot
her(mutualcompensati
on)
.

 Jetpai
dP10,000toavet
eri
nar
iantosav
eabul lf
rom i
tsi
njur
iesandf
ort
he
di
ffi
cul
tbi
rt
hof1femal
ecowwhichgav
ebirt
hto2calv
es.

1.I
fJetmustretur
nthecowstoMr.Chanbecauseheranintheelecti
onagai
nst
Jack,
shoul
dMr .Chanrei
mbur
setheP10,
000paidtotheveter
inari
an?
2.Whataboutthe2calv
esbornt
othefemalecow,mustJetalsoretur
ntheseto
Mr.Chan?

3.CanMr .Chancompensat
ethecost
sincur
redbyJetbygi
vi
ngoneort
woof
thecal
vestoJet
?

• Answer
:Yest
oal
l3quest
ions.Ther
ewi
l
lber
eci
procalr
est
it
uti
onbet
.Mr
.Chanand
4
 Jet.Jetmustretur
nt he20cowstoMr.Chan,i
ncl
udingthe2cal ves.ButMr .Chan
mustal soreimbursetoJettheP10,000vetcostsplusi nt
erestsforthesear e
expensesincurr
edf ort
hei
rcar
e,pr
eserv
ati
onandharvest.(Applywit
hArt.1190the
pr
inci
plei
nAr t
.443–”Hewhor ecei
vest
hefrui
tshast
heobligat
iontopaytheexpenses
madebyat hi
rdper
soni
nthei
rpr
oducti
on,
gat
heri
ngandpreser
vati ”-Tol
on. ent
ino,
p.174)

Right
sofThird Persons.– When a thi
ng hasbeen del
ivered t
otheobli
gee,t
he
ownershi
phaspassedt otheobl
i
gee/possessor
,wi
thoutpr
ejudicetot
heef
fectoft
he
happeni
ngoft
heresolutor
ycondi
ti
on.

I
ll
ust
rat
e:OnFeb.2016,Jetsol
dtoJuan(abuyeri
ngoodfai
th)10cowsoutoft
he
30gi
venhi
m byMr.Chan.YetonMay2016,Jetr
anformay
oragainstJack.

1.CanMr .Chanbr
inganacti
onagainstthebuy
eri
ngoodf
ait
h-Juant
osuccessf
ull
y
recov
erthe10cowsthatJetsol
dt oJuan?

Answer:No.Whil
eMr .Chani senti
tl
edt or
estit
uti
onfrom Jetwhent heresolut
ory
condi
ti
onhappens,thi
sisapersonalri
ghthecanenfor
ceonlyagainstJet.Howev er
,
Mr.Chanhasnor ealr
ightt
oenforcethisdi
rectl
yagai
nstJuan,because:(i
.)Juanis
abuyeringoodfait
h,and;(
ii
.)heisnotapar t
ytothecontr
actbetweenJetandMr .
Chan.

MEANI NGOFPAR.2, ART.1190-Incaseoft hel

oss,deter
iorati
onorimpr
ovementof
thet hi
ng,t
hepr ovi
sionswhich,withrespecttothedebt or,arelai
ddownint he
precedi
ngart
icl
eshallbeappli
edtothepartywhoisboundtor et
urn.

o Beforethehappeni ngoft her esol utorycondi ti

on,thereisapossi bi
li
tythatthet hing
deli
veredtot hecreditormayst i
l
l ber et ur
nedt otheot herparty.
o Inthissense,t hecr edi t
ori si naposi ti
onsi mil
art oonewhohasanobl i
gation
subjecttoasuspensi v econdi ti
on.
o Thecr edit
orwi l
lhaveanobl i
gat iont or eturniftheresolutor
ycondi ti
oni sfulf
il
led.
o Thus, i
fthethingislost ,ordet eri
or atesori mpr oveinv al
ue, t
her ul
einAr t
.1189may
beappl i
ed.
o Thecr edit
or-part
ywhoi sboundt or eturnthet hi
ngbecauset heobligationisnow
exti
nguishedwhent her esolutorycondi ti
onhappenedi snowdeemedt hedebt or.
o Ift
het hingislostwithoutf aultbef orehappeni ngoft heresolutoryconditi
on, t
hel oss
i
sbor nebyt hepar t
yboundt or etur ni t(nowdebt or)
.LegalEf fect:ifhepai dapr i
ce
fori
t,hecannol ongerr ecoverf rom t heot herpar t
y.
o Ift
hel ossisduet onowdebt or’sf ault,hewi l
lstil
lbeliablefordamages.

Ar
t.1191.Thepowert
oresci
ndobl
igat
ionsi
simpl
iedi
nreci
procalones,i
ncaseone

5
oft
heobl
igor
sshoul
dnotcompl
ywi
thwhati
sincumbentuponhi
m.

Thei nj
ured par
tymaychoosebet ween thefulf
il
lmentand t
herescissi
on oft he
obli
gati
on,withthepaymentofdamagesi
nei t
hercase.Hemayalsoseekr esci
ssi
on,
evenafterhehaschosenful
fi
ll
ment,
ift
helatt
ershouldbecomei
mpossible.

Thecourtshal
ldecreet
her
esci
ssi
oncl
aimed,unl
esst
her
ebej
ustcauseaut
hor
izi
ng
thef
ixi
ngofaperiod.

Thisi
sunder
stoodtobewi t
houtprej
udicetotheri
ght
softhir
dpersonswhohave
acqui
redt
het
hing,
inaccor
dancewit
hAr t
icl
es1385and1388andtheMort
gageLaw.

Ar
ti
cle1191i
sappl
i
cabl
etoRECI
PROCALOBLI
GATI
ONSonl
y.

Q.Whatar
ethechar
act
eri
sti
csofr
eci
procalobl
igat
ions?
 Reci
procalobl
igat
ionscontemplatedarethosewhicharisefr
om ident
icalort
he
samecause.
 Thetwoparti
esaremut ual
lydebtorandcredi
torofeachother
.
 Theobli
gati
onofonei sdependentupontheobligat
ionoftheother
.
 Theyaret
obeper f
ormedsimultaneousl
y;per
for
manceofonei
scondi
ti
oned
upont
hesi
mul
taneousful
fi
lmentoftheother
.

Reci
procalObl
i
gat
ions;
Il
lust
rat
e:

Alex(
owner
-sel
l
er)andBea( Buyer)
,enteredintoacontr
actofsaleofacar.The
pri
cei
sP1M.Absentanystipulat
ion,thedeli
veryoft
hecarbysel
leri
scondi
ti
oned
uponpay
mentbybuyeroft
hepr i
ce(vice-
versa)
.

Al
exasowner-sell
eri
sthecr
edit
or/obl
igeeastothepur
chasepriceofP1M,andhe
i
sthedebt
or/
obligorast
ohisobl
igati
ontodeli
vert
hecartothebuyer
,Bea.

Bea,
thebuyer
,isthecredi
tor
/obl
igeeast
ot hecart
hatist
obedeli
veredt
oher,and
shei
sthedebtor/
obli
gorastotheobli
gat
iontopaythepur
chasepr
icetoAl
ex.

ARTICLEISNOTAPPLICABLETONON- RECIPROCALOBLI
GATIONS– Iti
snot
enoughthatbot
hpar
ti
esaredebtorandcredit
ort
oeachother
.Thei
rCAUSEmustbe
thesameandmustbeperf
ormedsimult
aneousl
y.

ToI
ll
ust
rat
e:

Mar
ieboughtherusedcarf
rom RentandSel
l
,Inc.(
RASI
)forapr
iceofP420,
000

6
 payablewit
hin1-year
,orf orP40,000/
mo.i nst
all
ment
. RASIint
urn,leasedfor
P50,000/
mo.f r
om Mariethebuil
dingandlotwhereRASIhasi
tsof
fi
ce,showroom
andgarageforgoodquali
tysecondhandcars.

Mar
ie’
sobli
gati
onisbasedonherpur
chaseoft
hecar
,whi
l
ethatofRASIi
sbased
onl
easeofthebui
l
dingandlot
.

Whil
ebothpart
iesaremutualdebtorandcredi
torofeachother,t
hei
robli
gat
ions
ar
enotthesame,andnotdependentuponeachother
:NON-RECIPROCAL.

IfMariefail
stopayhermont hlyi
nstal
l
mentforthecarboughtf
rom RASI
,RASI
cannotresci
nditscont
ractofleaseforthebui
l
ding&lotwit
hMarie,byr
easonof
Marie’
snon-pay
mentoft hecarinst
all
ment.

Q.Whatar
ether
emedi
esoft
heaggr
iev
edpar
tyi
nreci
procalobl
i
gat
ionsunderAr
t.
1191?

A.REMEDI
ESOFTHEAGGRI
EVEDORI
NJUREDPARTYunderAr
t.1191–

Gen.Rul
e: Onl
yone oft
hef
oll
owi
ng r
emedi
esmaybechosen; al
ter
nat
ive,not
conj
unct
ive:

1.
)Speci
fi
cper
for
manceorf
ulf
il
mentofobl
i
gat
ionwi
thDamages;
OR
2.
)Resci
ssi
onorcancel
l
ati
onofcont
ractwi
thDamages.

Except
ion: I
fful
fi
lmenthadbeenchosenbuti
thadbecomei
mpossi
ble,t
hei
njur
ed
par
tymaystil
lseekr
esci
ssi
on+damages.

Q.Whohast
her
ightt
oresci
ndorr
esol
vet
hecont
ractorobl
igat
ion?

A. Thepar
tywhocandemandrescissi
onistheonewhoi sr eady,wi
l
li
ngandabl
eto
compl
ywit
hhisownobl
igat
ionswhil
etheothercannotperfor
m hi
spar
t.

Apar
tywhoisgui
l
tyorhasnotper f
orm hi
spar
tcannotr
esci
nd,andcannotuse
hi
sownwrongf
orhisbenef
itorpr
otect
ion.

Q. Canpar
tialr
escissi
onandpart
ialf
ulf
il
lmentbeall
owed?
A. Yes,
intheint
erestofj
ust
iceandequit
y.(
CBv .CA,139SCRA46)

7
Q.Whatar
ether
est
ri
cti
onsont
her
ightt
oresci
ndbyi
njur
edpar
ty?

A.RESTRI
CTI
ONSONTHERI
GHTTORESCI
NDBYI
NJUREDPARTY–

1.Duepr
ocessmustbeobser
ved.Theaggr
iev
edpar
tymustnott
akej
ust
icei
nhi
s
ownhands;
cour
tdecr
eei
snecessar
y.
2.Ri
ghtt
oresci
ndi
ssubor
dinat
edt
other
ight
soft
hir
dper
sonswhoacqui
redt
he
t
hingi
ngoodf
ait
h.
3.I
njur
edpar
tymustr
espectt
hepoweroft
hecour
ttof
ixt
heper
iodi
nli
euof
decr
eei
ngr
esci
ssi
on.
4.Sl
i
ghtormi
norbr
eachesoft
hecont
ractwi
l
lnotj
ust
if
yresci
ssi
on.

Q.Whatar
etheef
fect
sofr
esci
ssi
on(
cancel
lat
ion)ofcont
ract?

A.EFFECTSOFRESCI
SSI
ON(
Cancel
l
ati
on)OFCONTRACT–
1.
) Courtwil
lr equir
etheparti
estosur
renderwhat
evert
heyhav
erecei
vedf
rom
theother
,includi
ngint
erest
s,i
fappl
i
cable.

2.
) Par
ti
esarepl
acedi
nthei
ror
igi
nalsi
tuat
ionwi
thoutpr
ejudi
cet
oimposi
ti
onof
damagesi
fwarr
ant
ed.

3.
) Cont
racti
sdeemedt
otal
l
yabr
ogat
edorannul
l
ed.

Art
.1192.Incasebot hpar
tieshavecommi t
tedabr eachoft heobl
igat
ion,theli
abi
li
ty
ofthe fir
stinfract
orshallbe equit
ablyt empered byt he court
s.Ifitcannotbe
det
erminedwhi choftheparti
esfi
rstviol
atedthecont ract
,thesameshal lbedeemed
ext
ingui
shed,andeachshallbearhi
sowndamages.( n)
 
Art
.1192pr ov
idesforEqui
tabl
eOf f
sett
ingofl i
abi
l
ityfordamagesi fbot
hpar ti
esarein
def
ault.

Sect
ion2.-OBLI
GATI
ONSWI
TH A PERI
OD[
Art
s.1193-
1198]

1.Wheni
sanobl
i
gat
ionwi
thaper
ioddemandabl
e?
Ar
t.1193.Obl
i
gat
ionsf
orwhosef
ulf
il
lmentadaycer
tai
nhasbeenf
ixed,shal
lbe

8
demandabl eonlywhenthatdaycomes.Obl i
gationswitharesol
utor
yperiodtakeeff
ect
atonce,butterminateuponarri
valofthedaycer t
ain.Adaycert
ainisunderst
oodtobe
thatwhi ch mustnecessarilycome,al t
hough itmaynotbe known when.I ft he
uncert
aintyconsist
sinwhet hert
hedaywi llcomeornot ,theobli
gati
onisconditi
onal
,
anditshallberegul
atedbytherulesoftheprecedingSect
ion.

2.Whatr ulewillapplyifthethingislostordeter i
oratesorimprov
edbef orearri
valof
theperiod?
Art.1194.Incaseofl oss,deteri
orati
onorimpr ovementoft hethi
ngbef or
ethearri
valof
thedaycer tai
n,therul
esi narti
cle1189shallbeobser ved.
3.I fpaymentordel iver
yi smadepr ematurelyinanobl i
gati
ontogive,bymistake,can
thedebt orr
ecoveritwiththef r
uit
sandinterests?
Art
.1195.Anyt
hingpaidordeli
ver
edbeforethear r
ivaloft
heper
iod,t
heobl
i
gorbeing
unawar
eoftheperiodorbel
i
evingthatt
heobligat
ionhasbecomedueanddemandable,
mayberecover
ed,witht
hefrui
tsandint
erest
s.

4.Whati
sthe pr
esumpt
ion as t
o whose benef
iti
s an obl
i
gat
ion wi
th a per
iod
desi
gnat
ed?
Art.1196.Wheneveri
nanobli
gati
onaper i
odisdesi
gnated,
iti
spresumedtohavebeen
establi
shedfort
hebenefi
tofboththecredi
torandthedebtor
,unl
essfr
om thetenorof
thesameorot hercir
cumst
ancesitshoul
dappearthattheperi
odhasbeenestabli
shed
i
nf avorofoneoroftheot
her.

5.Whataret
heinst
anceswhent
hecour
tmayf
ixaper
iod? Whati
sther
uleoncet
he
cour
thasf
ixedaperi
od?
Art
.1197.I fthe obli
gat
ion does notf i
x a per i
od,butf r
om i t
s nat
ure and t
he
ci
rcumstancesi tcanbei nfer
redt hataper i
odwasi nt
ended,thecourtsmayf i
xthe
durat
ionthereof.Thecourtsshallalsofixthedur at
ionoftheperiodwhenitdepends
uponthewillofthedebtor
.Inev er
ycase, t
hecour t
sshalldeter
minesuchperi
odasmay
underthecircumstanceshav ebeenpr obablycontemplatedbytheparti
es.Oncefi
xed
bythecourts,t
heperiodcannotbechangedbyt hem.

6.Whatar
ethei
nst
anceswhent
heDebt
orl
oseshi
sri
ghtt
omakeuseoft
heper
iod?
Ar
t.1198.Thedebt
orshal
ll
oseev
eryr
ightt
omakeuseoft
heper
iod:
(
1)Whenaft
ertheobl
igati
onhasbeencont
ract
ed,hebecomesi
nsol
vent
,unl
esshe
gi
vesaguar
antyorsecuri
tyf
ort
hedebt;

(
2)Whenhedoesnotf
urni
sht
othecr
edi
tort
heguar
ant
iesorsecur
it
ieswhi
chhe

9
 haspr
omi
sed;

(
3)Whenbyhisownactshehasi mpair
edsai dguarant
iesorsecuri
ti
esaf t
ert
hei
r
est
abl
i
shment,andwhenthr
oughaf or
tuit
ouseventt heydi
sappear,unl
esshe
i
mmediat
elygi
vesnewonesequal
lysati
sfactor
y;

(
4)Whenthedebt
orvi
olat
esanyunder
taki
ng,i
nconsi
der
ati
onofwhi
cht
hecr
edi
tor
agr
eedtot
heperi
od;

(
5)Whent
hedebt
orat
tempt
stoabscond.
 

Art
.1193.Obl
igat
ionsf
orwhosef ul
fi
ll
mentadaycer
tai
nhasbeenf
ixed,shal
lbe
demandabl
eonlywhent
hatdaycomes.

Obl
igat
ionswit
har
esol
utor
yper
iodt
akeef
fectatonce,butt
ermi
nat
euponar
ri
valof
t
hedaycertai
n.

Adaycertai
nisunder
stoodt
obet
hatwhi
chmustnecessar
il
ycome,al
thoughi
tmay
notbeknownwhen.

Iftheuncert
aint
yconsist
si nwhetherthedaywillcomeornot ,t
heobl i
gat
ioni
s
condi
ti
onal,
anditshal
lberegul
atedbyther
ulesoft
heprecedi
ngSect
ion.(
1125a)

OBLIGATIONWI THAPERIODORTERM –consi stsi

naspaceorl
engt
hofti
meuponthe
arr
ivalofwhich,thedemandabil
i
tyorexti
nguishmentofanobl
igat
ioni
sdet
ermi
ned.
(Pi
neda,Obl
igati
ons&Contract
s,2000ed.
,p.109)

TERM ORPERI
ODDI
STI
NGUI
SHEDFROM CONDI
TION:

1.
) Ast
oFULFI
LLMENT–

 Condi
ti
oni
sanuncer
tai
nev
ent
;
 Term/Per
iodisaneventt
hatmustnecessar
il
ycomewhet heronadat
e
knownbefor
ehandoratti
mewhichcannotbepredet
ermi
ned.

2.
) Ast
oINFLUENCEONOBLI
GATI
ON–
 Condi
ti
ongi
vesr
iset
oanobl
i
gat
ionorext
ingui
shesoneal
readyexi
sti
ng;

 Ter
m/Per
iodhasno ef
fectonex
ist
enceofobl
i
gat
ions,butonl
ythei
r

10
 demandabi
l
ityorper
for
mance;no r
etr
oact
ive ef
fectunl
ess ot
her
wise
agr
eed.

3.
) Ast
oTI
ME–
 Condi
ti
onmayref
ert
oapastunknowntot
hepar
ti
es;
 Ter
m/Peri
odal
waysref
erst
othefut
ure

4.
) Ast
oWI
LLOFDEBTOR–
 Condit
ionthatdependsexcl
usi
vel
yont hewil
lofthedebt
orannulst
he
obl
igat
ion;
 Butterm/peri
odlefttodebtor
’swil
lonlyempowerscour
ttof i
xsuch
per
iod/ter
m.

REQUISI
TESOFPERI OD–Per iodmustbe:
a.) Future
b.) Cer t
ain(suretocome)
c.) Possible(physical
l
yandlegal
ly
)

GENERALCLASSI
FICATI
ONOFTERMSORPERI
ODS(
RomanLaw)

1.
) ExDie– thi
sisat er
m withasuspensiv
eeffect
.Theobl
i
gat
ionbecomes
ef
fect
iveonl
yfr
om t
hearr
ivalofacer
tai
nday.

2.
) InDiem –thisi
sat er
m wit
har esol
utor
yeff
ect.Theobli
gati
oncreat
edwi
l
l
subsistupt
oacert
ainday
.Itter
minat
esuponthearri
val
ofthatday
.

CLASSI
FICATI
ONACCORDI
NGTOSOURCE
1.
) Legal–peri
odi
sfixedbylaw
2.
) Volunt
ary–per
iodagreedbypar
ti
es
3.
) Judici
al– per
iod i
sf i
xed bycour
t(ei
thert
o per
for
m orext
ingui
sh t
he
obli
gati
on)

I
LLUSTRATE: PERIOD orCONDITI
ON?
(Pi
neda,
Obli
gat
ionsandCont
ract
s,2000ed.
,p.
112)

1.
) Ber
gvs.Magdal
enaEst
ate,
Inc.92Phi
l
.110

Fact
s:Thebuyermadeacommi tmentt
opaythepri
ce“aft
erheshallhaveobtai
neda
l
oanfrom t
heNati
onalCi
tyBankofNewYor
k,oraf
terithasobt
ainedfundsfr
om other
sour
ces.
”

11
Held:Theclause“
unti
lthedefendantshal
lhaveobtai
nedal oanfr
om t
heNati
onalCit
y
BankofNew Yor k,oraft eri
thasobt ai
ned fundsfrom othersour
ce” shoul
d be
consi
deredacondi
ti
onfortheobtaini
ngoffundsmayormaynothappen.
2.
) Compani aGener aldeTabacosvs.Araza,
7Phil.455

Facts:VicenteArazahasanP8,000debtt oplaint
if
fcorporat
ion.Thedebtispayableby
i
nstall
ment .Buttherewasnoaccel erat
ionclausebywhi cht hefail
uretopayone
i
nstalmentwillmaketheenti
reobli
gationdueanddemandabl e.Thedebtorf
ail
edt opay
oneinstall
mentont i
me.DefendantpaidonlyP400. 00.Thecredit
orfi
ledacompl ai
ntto
recoversai
dinstal
lmentandtheenti
reindebtedness.

Held:Thecredi
torcanonl
yrecovert
heinst
allmentdue,butnott
her
emai
ningbal
ance
becausesomearenotyetdueanddemandable.

Art
.1194.Incaseofloss,det
eri
orati
onorimprov
ementofthethi
ngbef
oret
hear
ri
val
ofthedaycer
tain,
therul
esinArti
cle1189shal
lbeobser
ved.(
n)

 Thi
srefer
sto an obl
igati
on wi
th a per
iod i
n case ofl
oss,det
eri
orat
ion or
i
mprov
ementbef
orearr
ival
ofthedaycer
tai
n.

 Buttherulesi
nArt.1189appli
esi
ncaseofl
oss,det
eri
orat
ionori
mpr
ovement
becauset
hepri
nci
plesar
esi
milar
.

Art
.1195.Any
thi
ngpai dordeli
veredbeforethearr
ivaloft
heperi
od,theobl
igorbei
ng
unawar
e oft he per
iod orbel i
eving thatthe obli
gati
on has become due and
demandabl
e,mayberecovered,withthefrui
tsandi
nterest
s.(
1126a)

Thi
sappl
i
est oobl
i
gat
ionsTOGIVEasi
tref
erst
opay
mentordel
i
ver
y.I
tdoesnotappl
y
toobl
i
gat
ions“t
odoornottodo”
.

CONSEQUENCESOFPREMATUREPAYMENTOFDELI
VERY-

1.I
fdebt ori
snotawar
eoft
heperi
odorbel
ievedi
ngoodfai
ththattheobli
gati
onhas
becomedueanddemandabl
e,debt
orcanrecov
erwhathepaid/
deli
veredincl
udi
ng
i
nterestorfr
uit
s.

12
 Debt
ormusthoweverprovehisignor
anceoftheperi
od,i
nthesamemannerthat
cr
edi
tormustpr
ovehisgoodfait
hinaccept
ingtheunduepay
mentordel
i
ver
y.

2.I
fdebtorisawareoftheperi
odbutpai
dv ol
untar
il
y,hecannotr
ecov
erwhathe
pai
d/deli
ver
ed.Debt
orisdeemedtohavewaivedthebenefi
toftheper
iod.The
obl
igat
ionisnowconsi
der
edtohav
ematured.

CASESOFNORECOVERYDESPI
TEMI
STAKEI
NGOODFAI
THBYDEBTOR:

a.
) Obl
igati
onisreci
procalandther
ehasbeenpr
emat
ureper
for
mancebybot
h
par
ties;(seeal
soArt.1187)

b.
) Obl
i
gat
ioni
sal
oanonwhi
chdebt
ori
sboundt
opayi
nter
est
;
c.
) Per
iodisexcl
usi
vel
yforthebenef
itoft
hecr
edi
tor
,becauset
hedebt
orl
oses
not
hingbypayi
nginadv
ance.

Art.1196.Whenev erinanobligat
ionaper i
odisdesignat
ed,i
tispresumedtohave
beenest abli
shedforthebenef
itofboththecredi
torandthedebtor
,unlessf
rom t
he
tenoroft hesameorot hercir
cumstancesitshoul
dappearthattheperi
odhasbeen
establ
ishedinfavorofoneoroftheother
.(1127)

Thi
sappli
esonl
ywheni
tist
hepar
ti
eswhof
ixedt
heper
iodont
heper
for
manceoft
he
obl
i
gat
ion.

LEGALPRESUMPTI
ON-t
hatt
heper
iodi
sfort
hebenef
itofbot
hcr
edi
toranddebt
or.

 Thismeans,
theCredi
torcannotdemandperf
ormancebef
oretheperi
odexpi
res,
and;
theDebt
orcannotbecompelledtoper
for
m befor
etheper
iodexpi
res.

 Thi
slegal
presumpt
ionmayber
ebut
ted.
 I
fitcanbeprov
edthattheper
iodwasestabl
i
shedforthebenef
itofthecr
edit
or,he
maycompelperf
ormancefr
om debt
orev
enbef or
earr
ival
ofthet
erm orper
iod.

 Ifitcanbeshownthattheperiodi
sf orthebenef
itoft
hedebtor
,hecanoppose
prematur
edemandforhi
sper f
ormance,buthemaybeall
owedtopayt
hecredi
tori
n
advance,
evenbef
orear
ri
v al
oftheperi
od.

13
 REASONSWHYCREDI
TORCANNOTBECOMPELLEDTOACCEPTPAYMENTBEFORE
ARRI
VALOFPERI
OD–

1.
) Pay
mentofi
nter
estdecr
easesi
fpr
emat
urepay
menti
smade.
2.
) Cr
edi
tormaywantt
okeephi
smoneyi
nvest
edsaf
ely
.
3.
) Cr
edi
tormaywantt
ohedgeagai
nstinfl
ati
on,asapr
otect
ionagai
nstdecl
i
ne
i
npur
chasi
ngpoweroft
hemoneyloaned.

Art
.1197.I fthe obl
igat
ion does notf
ix a per
iod,butfrom i
ts nat
ure and t
he
ci
rcumstancesitcanbeinfer
redthataperiodwasi nt
ended,t
hecourtsmayf i
xthe
durat
ionther
eof.

Thecourt
sshal
lal
sof
ixt
hedur
ati
onoft
heper
iodwheni
tdependsupont
hewi
lloft
he
debt
or.

Inever
ycase,thecourt
sshalldeter
minesuchperi
odasmayundert
heci
rcumst
ances
havebeenprobablycontemplat
edbyt hepar
ti
es.Oncef
ixedbyt
hecour
ts,t
heper
iod
cannotbechangedbythem.(1128a)

Q.Whati
sthest
atusoft
heobl
i
gat
ionbef
oret
hecour
tfi
xest
heper
iod?

A.Thest
atusoftheobli
gati
onissuspendedbefor
etheper
iodofcompl
i
ancei
sfi
xed
byt
hecourt
.(Cal
erov.Cari
on,
107Phi l
.549)

SI
TUATI
ONSWHENCOURTMAYFI
XATERM orPERI
OD:

A.When no per
iod is menti
oned butitcan be i
nferr
ed f
rom the nat
ure and
ci
rcumst
ancesoftheobli
gati
onthataper
iodwasi
ntendedbythepar
ti
es.

1.
)Whenacont r
actofsaleoncredi
tdoesnotstat
et het
imeofpayment
2.
)When t er
ms ofdonat ion imposi
ng condit
ions do notfixthe t
ime of
per
for
mancet her
eof
;
3.
)Whenabui l
dingcont
ractdoesnotfi
xaperi
odofcompl et
ion;

14
B. Whent
heper
iodi
smadedependentupont
hewi
l
loft
hedebt
or/
obl
i
gor
.

1.
) Whereadebtorpromisest
opayhisdebt“
li
tt
lebyl
i
ttl
e,i
npar
ti
alpay
ment ,as
soonaspossibl
e,withi
nreasonabl
eti
me,assoonashehasmoney ,orhis
meansper
mitshimt odoso.”

2.
) Whent
hedur
ati
onofl
easei
slef
ttot
hewi
l
loft
hel
essee;

NOTA BENE:

1.Whenacour tfi
xesaperi
oditmer el
yascert
ainsandgiveseff
ectorenf
orcest
he
i
mpliedstipul
ati
oninthecontr
actandwilloftheparti
es.I
tdoesnotamendthe
obl
i
gation.(Deudorv
s.J.
M Tuason&Co,112Phil.53)

2.Oncet
hecour
thadf
ixedt
heper
iod,
thi
scannotbechangedorext
ended.

3.I
tisessenti
althati
tbeall
egedint
hepleadi
ngthataper
iodwascl
ear
lyi
ntendedby
thepart
ies.(
Baret
tovs.Ci
tyofMani
l
a,11Phil
.624)

4. Thef ixi
ngoft heperi
odandorderi
ngofpay mentcannotbemadei nthesame
compl ai
ntbecausea.
)thi
swouldimply2causesofact
ioninthesamecompl
aint
;
b.)compell
ingpaymentbef
oreaperi
odisf
ixedwouldbeprematur
e.

Except
ion:Ifseparat
eacti
onwil
lbeamerefor
mal
it
yandser
vesnopur
posebutt
o
delay(Ti
glaov s.Manil
aRai
lr
oadCo.
,98Phi
l
.181)

5.Thepr
escri
pti
veperi
odforfil
ingact
iontofi
xaper
iodi
s10y
ear
sfr
om per
fect
ionof
cont
ract
.(Gonzal
esvs.Jose,66Phil
.369)

Ar
t.1198.Thedebt
orshal
ll
oseev
eryr
ightt
omakeuseoft
heper
iod:

(1)Whenaftertheobli
gati
onhasbeencont
ract
ed,hebecomesi
nsol
vent
,unl
esshe
givesaguar
antyorsecuri
tyf
ort
hedebt
;

(2)Whenhedoesnotf
urni
sht
othecr
edi
tort
heguar
ant
iesorsecur
it
ieswhi
chhehas
promi
sed;

(3)Whenbyhi sownactshehasi mpai

redsai dguarant
iesorsecurit
iesaft
erthei
r
establ
i
shment,and when t
hrough a fort
uitous ev
entt hey di
sappear,unl
ess he
i
mmedi at
elygi
vesnewonesequall
ysati
sfactory;

(
4)Whent
hedebt
orv
iol
atesanyunder
taki
ng,i
nconsi
der
ati
onofwhi
cht
hecr
edi
tor

15
agr
eedt
otheper
iod;

(
5)Whent
hedebt
orat
tempt
stoabscond.(
1129a)
 

 Art
icl
e1198appli
esonl yi
ft hepart
iestothecont
ractfi
xedaperiodfort
he
ful
fi
lmentoft
heobl
igat
ion.Itwil
lnotappl
ytoonewi
thoutafi
xedper
iod.

 Art
icl
e1198enumer
ates5i
nst
anceswher
etheDEBTORLOSESTHERI
GHTTO
USETHEPERIODorTERM.

 I
fanyofsuchcasesoccur
,theobl
i
gati
onisconver
tedi
ntopureobli
gati
on,
andi
s
i
mmediatel
ydueanddemandableeveni
ftheper
iodhasnotyetexpi
red.

NOTA BENE:

1.
) Insol
vencyofdebt
orinpar.1neednotbedecl
aredbyacour
t.I
tisenoughthathe
cannol ongerpayhisdebts.Al
so,t
hisi
nsolv
encymustoccuraftert
heterm of
theobli
gati
onwasfixed.

2.
) I
npar.2,t
helossofsecuri
ti
esgi
venneednotbetotali
fthisiscausedbyt
heact
s
ofthedebtor
.Butifthelossi
scausedbyf or
tui
tousev ent
,theremustbet
otal
di
sappear
anceinordert
odepri
veofdebtoroft
hebenefitoftheterm.

3.
) Mereattemptt
oabscondi
senoughf
ort
hedebt
ort
olosehi
sri
ghtt
ouset
he
per
iod.

16