OBLIGATIONS

AND CONTRACTS
Atty. Marieglo G. Damocles
 TITLE 1 -
OBLIGATIONS
 KINDS OF
OBLIGATIONS
 AS TO PERFECTION
AND EXTINGUISHMENT
Pure Obligation
⮚ one that is demandable at once, because it does not depend upon a future or uncertain event
⮚ no term, no condition
Art. 1179. Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once.
Every obligation which contains a resolutory condition shall also be demandable, without
prejudice to the effects of the happening of the event.
Example:
I promise to pay X the amount of Ten Thousand Pesos (Php10,000.00) on December 1, 2020.
Conditional Obligation
Art. 1181. In conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition.

⮚ one the fulfillment of which is a subject to a certain condition which may be an

event, which may or may not happen
A condition could be:
o Suspensive
o Resolutory
Conditional Obligation
Suspensive Condition - a future or uncertain event, the happening of which
give birth to the obligation

Example:
A promised to give B a condo unit if B passes the bar exam.
The obligation cannot be demanded at once bur becomes demandable only
upon B passing the Bar.
Conditional Obligation
Resolutory Condition - an event the passing of which extinguishes the
obligation
Example:
A promises to pension B in the amount of five thousand per month until such
time that she gets married.
The obligation to give monthly pension starts immediately. But the moment
B is married the obligation stops. Marriage is the resolutory condition as it
extinguishes the obligation.
Conditional Obligation
Potestative Condition - one which depends upon the will of one of the contracting
parties
Example:
“ I promise to give you P1,000, if you build a house for me in three months.
Art. 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon
the will of a third person, the obligation shall take effect in conformity with the
provisions of this Code.
⮚ condition - suspensive
Conditional Obligation
Bar Exam Question: The grandfather promised his grandson a brand new car upon the
grandson’s passing the bar exam. The grandson passed it. When the grandson demanded
for the delivery of the car, the grandfather refused to deliver claiming that the obligation
is void as the condition is potestative in character. Is the contention of the grandfather
correct?
Answer: No. Under 1182, for the obligation to be void, it must be potestative on the part
of the debtor. In this case, the debtor is the grandfather. Definitely, even if it is
potestative, it is not dependent solely upon the will of the debtor. If ever, it is dependent
upon the will of the creditor because he will be the one to take the exam. That is why Art.
1182 is not applicable in this case.
Conditional Obligation
Casual Condition - depends exclusively upon chance or other factors (upon the will of
a third person), and not upon the will of the contracting parties
Example:
“ I will give you my land if a war breaks out next month.”
Art. 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon
the will of a third person, the obligation shall take effect in conformity with the
provisions of this Code.
⮚ An obligation dependent upon the will of a third person is valid.
Conditional Obligation
Mixed Condition - one which depends upon the will of one of the
contracting parties and other circumstances, including the will of a third
person
Example:
“I will give you a house if you marry Carolina.”
⮚ An obligation dependent upon the will of a third person is valid.
Conditional Obligation
Impossible Condition – physically not feasible
Illegal Condition - prohibited by law, good custom, public policy and morals
Art. 1183. Impossible conditions, those contrary to good customs or public
policy and those prohibited by law shall annul the obligation which
depends upon them. If the obligation is divisible, that part thereof which is
not affected by the impossible or unlawful condition shall be valid.
The condition not to do an impossible thing shall be considered as not
having been agreed upon.
Conditional Obligation
With a term –
a. Positive - extinguished if time expires or indubitable of condition to happen
Art. 1184. The condition that some event happen at a determinate time shall
extinguish the obligation as soon as the time expires or if it has become
indubitable that the event will not take place.
• Fulfillment of an event or performance of an act at a determinate time
• Obligation will lie only on condition that a future determinate event happens
Conditional Obligation
EVENTS THAT MAY CAUSE EXTINCTION of OBLIGATION:
1. When the expressed determinate time has expired without the event
taking place
2. When there is NO doubt that the determinate condition will NOT happen
although the time has not expired
Conditional Obligation
EXAMPLE:
A obliges himself to give B Php100,000
Condition: B marries C before B turns 23.
1. If B marries C before he reaches 23, A is liable.
2. If B marries C when he turns 23 or after, A is NOT liable BECAUSE time
has expired w/o the condition being fulfilled.
⮚ Obligation ceases as soon as B turns 23.
Conditional Obligation
3. If B dies at age 22 w/o marrying C, it is indubitable that the event will
NOT take place.
⮚ Obligation ceases although the time has NOT expired.
Conditional Obligation
With a term –
b. Negative - effective from moment of time elapsed or evident it can't
happen

Art. 1185. The condition that some event will not happen at a determinate time shall
render the obligation effective from the moment the time indicated has elapsed, or if it
has become evident that the event cannot occur.
If no time has been fixed, the condition shall be deemed fulfilled at such time as may
have probably been contemplated, bearing in mind the nature of the obligation.
Conditional Obligation
Obligations dependent on NEGATIVE CONDITION
❑NON-occurrence of a future event
❑NON-performance of an act

INSTANCES OF NEGATIVE CONDITION

❑Time has elapsed and the event indicated NOT to happen did NOT happen
❑It is evident that the event that should NOT happen CANNOT really happen
Conditional Obligation
Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.

PRINCIPLES
✔Parties must perform their obligations in good faith.
✔No person shall profit by his own wrong.
✔A party to a contract may NOT be excused from performing his promise by the
NON-occurrence of an event which he himself prevented.
Conditional Obligation
CONSTRUCTIVE FULFILLMENT OF A CONDITION REQUISITES
1. Intent of the obligor to prevent the fulfillment of the condition
2. Actually preventing the fulfillment

⮚ Prevention of compliance must be consummated

⮚ The act of obligor had in fact prevented compliance with the condition
Conditional Obligation
HOWEVER, there is NO Constructive Fulfillment:
1. The mere intention to prevent the happening of the condition or mere
placing of ineffective obstacles is NOT enough.
2. When obligor committed an act voluntarily BUT NOT to prevent the
fulfillment of the condition, there is NO Constructive Fulfillment.
3. If in preventing the fulfillment of the condition, the obligor acts in the
exercise of a right, the condition will NOT be deemed fulfilled.
Conditional Obligation
EFFECTS OF THE HAPPENING of the POSITIVE/ SUSPENSIVE CONDITION
Art. 1187. The effects of a conditional obligation to give, once the condition has been fulfilled,
shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation
imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the
condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the
debtor shall appropriate the fruits and interests received, unless from the nature and
circumstances of the obligation it should be inferred that the intention of the person constituting
the same was different.
In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of
the condition that has been complied with.
Between the creation of conditional obligation and fulfillment of positive/suspensive condition, the
creditor/obligee CANNOT enforce the obligation; his right is a mere expectancy.
Conditional Obligation
EFFECTS OF THE HAPPENING of the POSITIVE/ SUSPENSIVE
CONDITION
Between the creation of conditional obligation and fulfillment of
positive/suspensive condition, the creditor/obligee CANNOT enforce the
obligation; his right is a mere expectancy.
Conditional Obligation
The moment POSITIVE/SUSPENSIVE CONDITION happens:
❑Obligation becomes effective and enforceable
❑Debtor/obligor may be legally compelled to perform from that moment
❑Obligation retroacts to the date of the constitution of the obligation (NOT
when condition was fulfilled) BECAUSE the condition is only accidental,
NOT an essential element of the obligation ( juridical tie, active subject,
passive subject, and prestation ).
Conditional Obligation
If the condition is for the delivery of a determinate thing:
❑The debtor/obligor CANNOT, before happening of positive/suspensive
condition, make contracts alienating, disposing of or encumbering the thing
❑If debtor/obligor does that, all such contracts are abrogated and cease to
have any effect upon the happening of positive/suspensive condition
BECAUSE the creditor/obligee retains a superior right than the transferee
Conditional Obligation
EXAMPLE:
Chua sells a piece of land, subject to suspensive condition, to De Guzman.
Before happening of the condition, Chua sells it to Pulumbarit. NO registration
NOR delivery of possession to either De Guzman or Pulumbarit.
NOTE: It is delivery that actually transfers ownership.

Upon happening of condition, the sale to De Guzman will retroact to the date
when it was made, and he will have a better right than Pulumbarit.
Conditional Obligation
Art. 1188. The creditor may, before the fulfillment of the condition, bring
the appropriate actions for the preservation of his right.
The debtor may recover what during the same time he has paid by mistake
in case of a suspensive condition.
Conditional Obligation
The Creditor may, before the fulfillment of the condition, bring the appropriate
actions for the preservation of his rights
(1) action for prohibition restraining the alienation of the thing pending the
happening of suspensive condition;
(2) petition (with the appropriate Registry of Property if real property like land is
involved), for the annotation of the creditor’s right;
(3) action to demand security if the debtor in fraud of creditors; or
(4) actions against adverse possessors to interrupt the running of prescriptive period
Conditional Obligation
Art. 1189. When the conditions have been imposed with the intention of suspending the
efficacy of an obligation to give, the following rules shall be observed in case of the
improvement, loss or deterioration of the thing during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages;
it is understood that the thing is lost when it perishes, or goes out of commerce, or
disappears in such a way that its existence is unknown or it cannot be recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be
borne by the creditor;
Conditional Obligation
(4) If it deteriorates through the fault of the debtor, the creditor may choose
between the rescission of the obligation and its fulfillment, with indemnity
for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall
inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other
right than that granted to the usufructuary.
Conditional Obligation
Article 1189 applies only if:
❑The obligation is a real obligation;
❑The object is a specific or determinate thing;
❑The obligation is subject to a suspensive conditions;
❑The condition is fulfilled; and
❑There is loss, deterioration, or improvement of the thing during the
pendency of the condition.
Conditional Obligation
(1) If the thing is lost without the fault of the debtor, the obligation shall be
extinguished;
Loss of thing without debtor’s fault
Example:
Marie obliged herself to give Anna her car worth P1,000,000.00, if Anna will sell Marie’s
property. The car was lost without the fault of Marie.

The obligation is extinguished and Marie is not liable to Anna even if Anna sells property.
A person, as a general rule, is not liable for a fortuitous event. (Art. 1174.)
Conditional Obligation
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay
damages; it is understood that the thing is lost when it perishes, or goes out of
commerce, or disappears in such a way that its existence is unknown or it cannot
be recovered;
Loss of thing through debtor’s fault
Example:
In the same example, if the loss occurred because of the negligence of Marie,
Anna will be entitled to demand damages (Art. 1170.), i.e P1,000,000.00 plus
incidental damages, if any.
Conditional Obligation
(3) When the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor;
Deterioration of thing without debtors’s fault
Example:
If the car figured in an accident, as a result of which its windshield was
broken and some of its paints were scratched away without the fault of Marie,
thereby reducing its value to P900,000.00, Anna will have to suffer the
deterioration or impairment in the amount of P100,000.00. (Art.1174)
Conditional Obligation
(4) If it deteriorates through the fault of the debtor, the creditor may choose between
the rescission of the obligation and its fulfillment, with indemnity for damages in
either case;
Deterioration of thing through debtor’s fault.
• Rescission (or cancellation) of the obligation with damages; in this case, Marie is
liable to pay Anna P1,000,000.00, the value of the car before its deterioration plus
incidental damages, if any; or
• Fulfillment of the obligation also with damages. (see Art. 1191.) In this case, Marie is
bound to Anna to give the car and pay P100,000.00 plus incidental damages, if any.
Conditional Obligation
(5) If the thing is improved by its nature, or by time, the improvement shall
inure to the benefit of the creditor;
Improvement of thing by nature or by time
Example:
Suppose the market value of the car increased, who gets the benefit?
The improvement shall inure to the benefit of Anna. Inasmuch as Anna
would suffer in case of deterioration of the car through fortuitous event, it is but
fair that the she should be compensated in case of improvement of the car instead.
Conditional Obligation
(6) If it is improved at the expense of the debtor, he shall have no other right
than that granted to the usufructuary.
Improvement of thing at expense of debtor
Example:
During the pendency of the condition, Marie had the car painted and its
seat cover changed at his expense.
In this case, Marie will have the right granted to a usufructuary with
respect to improvements made on the thing held in usufruct.
Conditional Obligation
Art. 1190. When the conditions have for their purpose the extinguishment of an
obligation to give, the parties, upon the fulfillment of said conditions, shall
return to each other what they have received.
In case of the loss, deterioration or improvement of the thing, the provisions
which, with respect to the debtor, are laid down in the preceding article shall be
applied to the party who is bound to return.
As for the obligations to do and not to do, the provisions of the second
paragraph of Article 1187 shall be observed as regards the effect of the
extinguishment of the obligation.
Conditional Obligation
When the conditions have for their purpose the extinguishment of an
obligation to give, the parties, upon the fulfillment of said conditions, shall
return to each other what they have received. (Art. 1190, Paragraph 1)
Example No. 1:
“Badette” owns a first class fishpond. She conveyed it to “BJ” on
condition that “BJ” shall not run for Governor in their province. After three
(3) years “BJ” ran for Governor. The condition having been fulfilled, “BJ”
must return the fishpond and the fruits thereof
Conditional Obligation
Example No. 2:
Nestor allows Wilmer to use the former’s car until Nestor returns
from the province. Upon the return of Nestor from the province, Wilmer gave
back the car. The effect of the happening of the condition is to annul the
obligation as if it had never been constituted at all. In this case, the parties
intend the return of the car.
Conditional Obligation
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
Conditional Obligation
RIGHT TO RESCIND in RECIPROCAL OBLIGATIONS:
RECIPROCAL OBLIGATIONS – obligations where two parties are
reciprocally obliged to do or give something like a contract of sale. It is NOT
enough that both parties are indebted to each other.
The “power to rescind”, as used in this Article, means the right to cancel (or
resolve) the contract or reciprocal obligations in case of non-fulfillment on
the part of one of the parties.
Conditional Obligation
Rescission referred to here is NOT predicated on injury to economic interests
on the part of the Party-plaintiff, but on the breach of faith by the defendant,
which breach is violative of the reciprocity between the parties.

Substantial Breach of Reciprocal Obligations – entitles the injured party to

rescind the obligation.
Conditional Obligation
EFFECT OF RESCISSION:
Rescission abrogates the contract from its inception and requires a mutual
restitution of benefits received. It creates the obligation to return the object of the
contract. It can be carried out only when the one who demands rescission can
return whatever he may be obliged to restore.
To rescind is to declare the contract void from its inception and to put an end to it
as though it never was. It is NOT merely to terminate it and release the parties from
further obligations to each other, but to abrogate it from the beginning and restore
the parties to their relative positions as if no contract has been made.
Conditional Obligation
Remedies in reciprocal obligations
In case one of the obligors does not comply with what is incumbent upon
him, the aggrieved party may choose between two remedies:
(a) action for specific performance (fulfillment) of the obligation with
damages; or
(b) action for rescission of the obligation also with damages.
Conditional Obligation

NOTE: Remedy of rescission for non-compliance.- The

principal action of rescission for non-performance under
Article 1191 must be distinguished from the subsidiary
action for rescission by reason of lesion or damage under
Article 1381, et seq. and from cancellation of a contract
based, for example, on defect in the consent (see Art. 1381,
1330.) and not on violation by a party of his obligation.
Conditional Obligation

Example:
In contract of sale of a car between Faye and Kaye,
it was agreed that Faye, the owner, would deliver the car
and the necessary document duly signed by her to Kaye at
the house of Bea on December 1, and Kaye would deliver
the payment at the same place and on the same date.
Conditional Obligation

(a) Kaye may, in action for specific performance, demand

the delivery of the car with damages; or
(b) Kaye may demand from the court the rescission of the
contract also with damages.
Conditional Obligation
Article 1191 Is Not Applicable To Non-Reciprocal Obligations
It is not enough that both parties are indebted to one another. The cause must be identical and
the obligations must arise simultaneously.

Example:
“Kristine” deposited her goods in the warehouse of “Jacob” with an obligation to pay
P100,000.00 a month. Jacob on the other hand borrowed P500,000.00 from ”Kristine” while
“Kristine” and “Jacob” are both debtors and creditors to each other, their obligations are not
reciprocal. The obligation of ”Kristine” is based on deposit, while the obligation of “Jacob” is
based on loan.
Conditional Obligation

Hence, the obligations are not dependent upon each other.

Consequently, if ”Kristine” not pay her obligation to “Jacob”
the latter cannot rescind/resolve his contract of loan with
“Kristine” on account of “Kristine’s nonpayment of her
deposit fees.
In reciprocal contracts, the promise of each party is the cause
or consideration for the promise of the other.
Conditional Obligation

Art. 1192. In case both parties have committed a breach of

the obligation, the liability of the first infractor shall be
equitably tempered by the courts. If it cannot be determined
which of the parties first violated the contract, the same
shall be deemed extinguished, and each shall bear his own
damages.
⮚ Where both parties guilty of breach.
Conditional Obligation

The above article contemplates two situations.

(1) First infractor known. — One party violated his

obligation; subsequently, the other also violated his part of
the obligation. In this case, the liability of the first infractor
should be equitably reduced.
Conditional Obligation

(2) First infractor cannot be determined. — One party violated

his obligation followed by the other, but it cannot be determined
which of them was the first infractor. The rule is that the contract
shall be deemed extinguished and each shall bear his own
damages. This means that the contract shall not be enforced. In
effect, the court shall not provide remedy to either of the parties,
who must suffer the damages allegedly sustained by them.
Conditional Obligation

Illustration:
Laki Meh is a manufacturer of dried noodles. He entered
into a contract with Loh Me to deliver and install within
three months a new pancit canton making equipment at
his existing plant for a P300,000 consideration payable
in three equal installments for three months.
Conditional Obligation

Laki Meh failed to pay the third P100,000 installment on the due date,
and it also turned out that Loh Me installed a noodle making equipment
that produces thick noodles similar to lomi noodles. In this case, both
parties are guilty of breach of their respective obligation in the contract.
If the first infractor is known, the liability of the first infractor shall be
equitably reduced by the court. But if the first infractor cannot be
determined, the contract shall be extinguished and each party shall be
liable for their own damages.
With a term or period
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.
With a term or period
Period and term have the same meaning and are used interchangeably. It consists in
a space or length of time upon the arrival of which, the demandability or
extinguishment of an obligation is determined.
A period is a certain length of time which determines the effectivity or the
extinguishment of obligations.
A day certain is understood to be that which must necessarily come, although it
may not be known when.
“On or about” may be two or three days before or after the date mentioned but not
so remote thereafter.
With a term or period
PERIOD DISTINGUISHED FROM A CONDITION

(a) In their fulfillment — A condition is an uncertain event; but a period is an

event which must happen sooner or later, at a date known beforehand, or a
time which cannot be determined.

(b) With reference to time — A period always refers to the future, a condition
may under the law refer even to the past.
With a term or period
(c) As to influence on the obligation — A condition causes an obligation to
arise or to cease, but a period merely fixes the time or the efficaciousness of
an obligation. It is true that a period may have a suspensive or resolutory
effect, but in the former, it cannot prevent the birth of the obligation in due
time, and in the latter, it does not militate against its existence.
With a term or period
REQUISITES FOR A VALID PERIOD OR TERM

(a) It must refer to the future.

(b) It must be certain (sure to come) but can be extended. (If eliminated subsequently
by mutual agreement, the obligation becomes pure and immediately demandable).
(c) It must be physical and legally possible, otherwise the obligation is void.
(Example: “I’ll give you my house one year after your death.” The obligation here is
void.)
With a term or period
KINDS OF TERMS

1. Ex Die – a term or period with a suspensive effect, which means the

obligation becomes effective only from the arrival of a certain day.

Illustration: Joey promises to support Rachel from the death of Rachel’s father,
which means the obligation only begins from the death of Rachel’s father.
With a term or period
2. In Diem – a term or period with a resolutory effect, which means the
obligation will subsist up to a certain day and it terminates upon the arrival of
that day.

Illustration: Joey promises to support Rachel until Rachel reaches her

majority age, which means the obligation is already effective but will
terminate once Rachel turns 18.
With a term or period
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.

⮚A day certain is that which must necessarily come although it may not be
known exactly when. The classic example of a day certain is death. Death is
certain, although it may not be known when.
With a term or period
Illustration:
“Juan binds himself to deliver a Toyota Fortuner with plate numberABC 100,
chasis number 12345678910 to Pedro upon the latter’s father.”
If before the arrival of the day certain which is the death of Pedro’s father the
car was caught by fire and was reduce to ashes, the rules under article 1189
shall be considered, to wit:
(1.) If the thing is lost without the fault of the debtor, the obligation shall be
extinguished;
With a term or period
(2.) If the thing is lost through the fault of the debtor, he shall be obliged to
pay damages; it is understood that the thing is lost when it perishes or goes
out of commerce or disappears in such a way that its existence is unknown or
it cannot be recovered;
(3.) When the thing deteriorates through the fault of the debtor, the
impairment is to be borne by the creditor;
With a term or period
(4.) If it deteriorates through the fault of the debtor, the creditor may choose
between the rescission of the obligation and its fulfillment, with indemnity
for damages in either case;
(5.) If the thing is improved by its nature or by time, the improvement shall
inure to the benefit of the creditor;
With a term or period
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.
With a term or period
ILLUSTRATION:
Allen was supposed to pay Ben an amount of Php 500, 000.00 on December
31, 2017. But believing that the obligation was due and demandable already
on December 31, 2016, Allen paid Ben Php 500, 000.00 on said date. How
much may Allen recover from Ben, say on June 30, 2017?
With a term or period
Answer:
Allen may recover from Ben on June 30, 2017, the amount of Php 500,
000.00 which had been prematurely paid plus the interests at the legal rate
from January 1, 2016, to June 30, 2016, 6% of Php 500, 000.00=Php 30, 000.
00 (interest for one year). Php 30, 000.00/2 (interest for the half year period
from January 1, 2017, to June 30, 2016). So Allen may recover what had
been in good faith prematurely paid, plus interest of course.
With a term or period
Question: Suppose in the preceding problem, Allen had paid prematurely
knowing fully well of the existence of the term, how much can Allen
recover?
Answer: Allen can recover nothing. The reason is the law does not give him
such a right. To be able to recover, Allen:
1. Must have been unaware of the period; or
2. Must have believed that the obligation has become due and demandable.
With a term or 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.
⮚Obligation with a period is that neither the obligee may demand
performance nor obligor perform his obligation before the arrival of the
period agreed upon for the period in so constituted for the benefit of the two
parties to the obligation.
With a term or period
EXAMPLE
ON JANUARY 1, 2019, BRYAN BORROWED FROM John payable on December
31, 2019 at 18% interest.

John cannot pay before December 31 without the consent of Bryan. Neither can john
compel to Bryan to pay before the expiration of the term. It is presumed that the
period designated, which is December 31, has been established for the benefit of
both. Bryan is benefited because he can use the money for one year. john also
benefited because of the interest the money would earn for one year.
With a term or period
EXAMPLE:

D borrowed from C P10,000.00 to be paid within one year without interest.

In this case, the period of one year should be deemed intended for the benefit
of D only. Therefore, he can pay any time but he cannot be compelled to pay
before one year. Although the loan is gratuitous, the terms and conditions of
the contract or other circumstances may, however, indicate that the period has
been established for the benefit of both parties.
With a term or period
EXAMPLE:

D borrowed from C P10,000.00 payable on December 31 with the stipulation

that D cannot make payment before the lapse of the period but C may
demand fulfillment even before said date. Here, C can demand payment at
any time but D cannot shorten the one-year period without the consent of C.
With a term or 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.
With a term or period
Kinds of Period:

Judicial Period - period designated by the court

Contractual period - period fixed by the parties in their contract
With a term or period
Events when the courts may fix a period:

❑When the term of the lease has been left to the will of the lessee
❑When the terms of a donation imposing certain conditions do not fix the
time for the performance of the conditions
❑Where a building contract did not fix a definite period within which the
engineer was to complete the construction of the house covered by the
contract
With a term or period
❑When in connection with a contract of sale, the vendor was given the right
to redeem, but no term was specified for the redemption
❑Where the debtor promise to pay his indebtedness consisting of the sum of
money, “little by little,” or in partial payments or as soon as possible, or
when I please, or as soon as he has money, or when his means permit him to
do so.
With a term or period
Article 1182 talks about an obligation whose condition depends upon the will
(fulfillment of the obligation). Article 1197 speaks about the duration of the
obligation depending upon the will of the debtor.
Art. 1182. When the fulfillment of the condition depends upon the sole will
of the debtor, the conditional obligation shall be void. If it depends upon
chance or upon the will of a third person, the obligation shall take effect in
conformity with the provisions of this Code.
With a term or period
Court cannot fix the period:
If there is a period agreed upon by the parties and it has already lapsed or expired
⮚From the very moment the parties give their acceptance and consent to the
period fixed by the court, it becomes a law governing their contract.
Example: Kristia borrowed a sum of money amounting to Php 20,000.00 from
Bryan. It was not stipulated in the contract when Kristia will pay Bryan. The
court may fix a period because it can be inferred from its nature and
circumstances that a period was intended.
With a term or 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.