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OBLICON Art.1193-
SECTION 2. — Obligations with a 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. Meaning of obligation with a period. An obligation with a period is one whose consequences are subjected in one way or another to the expiration of said period or term. (8 Manresa 158; see Lirag Textiles, Inc. vs. Court of Appeals, 63 SCRA 374 [1975].) Meaning of period or term. A period is a future and certain event upon the arrival of which the obligation (or right) subject to it either arises or is terminated. It is a day certain which must necessarily come (like the year 2005; next Christmas), although it may not be known when, like the death of a person. (Art. 1193, par. 3.) Period and condition distinguished. The differences are as follows: As to fulfillment. — A period is a certain event which must happen sooner or later at a date known beforehand, or at a time which cannot be determined, while a condition is an uncertain event; As to time. — A period refers only to the future, while a condition may refer also to a past event unknown to the parties; As to influence on the obligation. — A period merely fixes the time for the efficaciousness of the obligation. If suspensive, it cannot prevent the birth of the obligation in due time; if resolutory, it does not annul, even in fiction, the fact of its existence. On the other hand, a condition causes an obligation to arise or to cease. Because of this difference, a period does not carry with it, except when there is a stipulation expressly made by the parties, the same retroactive consequences that follow a condition (8 Manresa 159- 160.) As to effect, when left to debtor’s will. — A period which depends upon the will of the debtor empowers the court to fix the duration thereof (Art. 1197, par. 2.), while a condition which depends upon the sole will of the debtor invalidates the obligation (Art. 1182.); and As to retroactivity of effects. — Unless there is an agreement to the contrary, the arrival of a period does not have any retroactive effect, while the happening of a condition has retroactive effect. Like a condition (see Art. 1183.), a period must be possible. If the period is impossible (e.g., February 30, because it will never come; within 24 hours to deliver a ship in foreign country because it is too short), the obligation is void. Kinds of period or term. According to effect: Suspensive period (ex die). — The obligation begins only from a day certain upon the arrival of the period (Art. 1193, par. 1.); and Resolutory period (in diem). — The obligation is valid up to a day certain and terminates upon the arrival of the period. (par. 2.) EXAMPLES: Ex die: “I will pay you 30 days from today.” (or on Jan. 1 next year, or at the end of this month.) Here, what is
suspended is not the obligation itself (or right acquired) but merely its demandability. “I will support you from the time your father dies.” Here, the uncertainty consists not in whether the day (death) will come or not, but only in the exact date or time of its taking place. (pars. 3 and 4, Art. 1193.) “I will pay you when my means permit me to do so.” This is considered by law as an obligation with a period. (Art. 1180.) According to source: Legal period. — When it is provided for by law; Conventional or voluntary period. — When it is agreed to by the parties (Art. 1196.); and Judicial period. — When it is fixed by the court. (Art. 1197.) According to definiteness: Definite period. — When it is fixed or it is known when it will come (Art. 1193, par. 3.); and Indefinite period. — When it is not fixed or it is not known when it will come. Where the period is not fixed but a period is intended, the courts are usually empowered by law to fix the same. (see Art. 1197.) 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. Effect of loss, deterioration, or improvement before arrival of period. See comments under Article 1189. 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. ( Payment before arrival of period. Article 1195 applies only to obligations to give. It is similar to Article 1188, paragraph 2, which allows the recovery of what has been paid by mistake before the fulfillment of a suspensive condition. The creditor cannot unjustly enrich himself by retaining the thing or money received before the arrival of the period. Debtor presumed aware of period. The presumption, however, is that the debtor knew that the debt was not yet due. He has the burden of proving that he was unaware of the period. Where the duration of the period depends upon the will of the debtor (see Art. 1197, par. 3.), payment by him amounts, in effect, to his determination of the arrival of the period. The obligor may no longer recover the thing or money once the period has arrived but he can recover the fruits or interests thereof from the date of premature performance to the date of maturity of the obligation. EXAMPLE: D owes C P2,000.00 which was supposed to be paid on December 31 this year. By mistake, D paid his obligation on December 31 last year. Assuming that today is June 30, D can recover the P2,000.00 plus P120.00, which is the interest for one half year at the legal rate of 12%^2 or a total of P2,120.00. But D cannot recover, except the interest, if the debt had already matured. Neither can there be a right to recovery if D had knowledge of the period. The theory under solutio indebiti obviously will not apply. (Art. 2154.) D is deemed to have impliedly renounced the 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
(1) The Civil Code provides: “When the law speaks of years, months, days or nights, it shall be understood that years are of three hundred sixty-five (365) days each; months of thirty (30) days; days of twenty-four (24) hours; and nights from sunset to sunrise. If months are designated by their name, they shall be computed by the number of days which they respectively have. In computing a period, the first day shall be excluded, and the last day included.” (Art. 13 thereof.) If the last day is a Sunday or a legal holiday, the time shall not run until the end of the next day which is neither Sunday nor a holiday. 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. Court generally without power to fix a period. The period mentioned in the above provision refers to a judicial period as distinguished from the period fixed by the parties in their contract which is known as contractual period. If the obligation does not state a period and no period is intended, the court is not authorized to fix a period. The courts have no right to make contracts for the parties. (Tolentino vs. Gonzales, 50 Phil. 577 [1927].) Exceptions to the general rule. Under Article 1197 (pars 1 and 2), there are two cases when the court is authorized to fix the duration of the period. Article 1197 is part and parcel of all obligations contemplated therein. Hence, whenever the court fixes the term of an obligation, it does not thereby amend or modify the same. It merely enforces or carries out the intention of the parties. (Deudor vs. J.M. Tuazon and Co., Inc., 2 SCRA 129 [1961].) It cannot arbitrarily fix a period out of thin air for the law expressly prescribes “that the courts shall determine such period as may under the circumstances have been probably contemplated by the parties.” (Art. 1197, par. 3.) No period is fixed but a period was intended. If the obligation does not fix a period but it can be inferred from its nature and the circumstances that a period was intended by the parties, the court may fix the period. If the period fixed is extended by agreement, to be valid the same must be for a definite time, although if no precise date is fixed, it is sufficient that the time can readily be determined. In case the period of extension is not precise, Article 1197 applies. (Pacific Banking Corp. vs. CA, 173 SCRA 102 [1989].) Period fixed cannot be changed by the courts. If there is a period agreed upon by the parties and it has already lapsed or expired, the court cannot fix another period. (Gonzales vs. Jose, 66 Phil. 369; Millar vs. Nadres, 74 Phil. 307 [1903]; Millare vs. Hernando, 151 SCRA 484 [1987].) ART. 1198. The debtor shall lose every right to make use of the period: When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt; When he does not furnish to the creditor the guaranties or securities which he has promised;
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; When the debtor violates any undertaking, in consideration of which the creditor agreed to the period; When the debtor attempts to abscond. When obligation can be demanded before lapse of period. The general rule is that the obligation is not demandable before the lapse of the period. However, in any of the five (5) cases mentioned in Article 1198, the debtor shall lose every right to make use of the period, that is, the period is disregarded and the obligation becomes pure and, therefore, immediately demandable. The exceptions are based on the fact that the debtor might not be able to comply with his obligation. When debtor becomes insolvent. — EXAMPLE: D owes C P10,000.00 due and payable on December 20. If D becomes insolvent, say on September 10, C, can demand immediate payment from D even before maturity unless D gives sufficient guaranty or security. The insolvency in this case need not be judicially declared. It is sufficient that the assets of D are less than his liabilities or D is unable to pay his debts as they mature. Note that the insolvency of D must occur after the obligation has been contracted. When debtor does not furnish guaranties or securities promised. —
EXAMPLE:
Suppose in the same example, D promised to mortgage his house to secure the debt. If he fails to furnish said security as promised, he shall lose his right to the period. (Daguhoy Enterprises, Inc. vs. Ponce, 96 Phil. 15 [1954]; When guaranties or securities given have been impaired or have disappeared. — EXAMPLE: If the debt is secured by a mortgage on the house of D, but the house was burned through his fault, the obligation also becomes demandable unless D gives a new security equally satisfactory. In this case, the house need not be totally destroyed as it is sufficient that the security be impaired by the act of D. But in case of a fortuitous event, it is required that the security must disappear. But if the security given deteriorates in such a manner as to become illusory, it must be deemed to have disappeared or lost as contemplated in paragraph 3. If the debt is secured by a bond, the failure of D to renew the bond or replace it with an equivalent guarantee upon its expiration will likewise give C the right to demand immediate payment. (Gaite vs. Fonacier, 2 SCRA 831 [1961].) When debtor violates an undertaking. — EXAMPLE: Now, suppose that C in the example agreed to the period in consideration of the promise of D to repair the piano of C free of charge. The violation of this undertaking by D gives C the right to demand immediate payment of the loan. When debtor attempts to abscond. — EXAMPLE: Before the due date of the obligation, D (debtor) changed his address without informing C (creditor) and with the intention of escaping from his obligation. This act of D is a sign of bad
Their presence do not invalidate the obligation if it includes other undertakings otherwise free from such defects. In other words, under Article 1200, the debtor’s right of choice is not extinguished altogether but limited to the remaining valid prestations. The debtor has no more right of choice, when among the prestations whereby he is alternatively bound, only one is practicable. (Art. 1202.) In this case, there is not only a limitation but a loss of the right of choice belonging to the debtor. The obligation becomes simple. The right does not pass to the creditor, nor may it be exercised by any one. The debtor cannot choose part of one prestation and part of another prestation. (see Art. 1199, par. 2.) ART. 1201. The choice shall produce no effect except from the time it has been communicated. Communication of notice that choice has been made. Effect of notice. — Until the choice is made and communicated, the obligation remains alternative. Once the notice of the election has been given to the creditor, the obligation ceases to be alternative and becomes simple. Where the choice has been expressly given to the creditor, such choice shall likewise produce legal effects upon being communicated to the debtor. (Art. 1205, par. 1.) Proof and form of notice. — The burden of proving that such communication has been made is upon him who made the choice. The law does not require any particular form regarding the giving of notice. It may, therefore, be made orally or in writing, expressly or impliedly. ART. 1202. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable. (1134) Effect when only one prestation is practicable. If more than one is practicable, it is Article 1200 that will apply. The obligation is still alternative because the debtor still retains the right of choice. Under Article 1202, if only one is practicable (e.g., the others have become impossible), the obligation is converted into a simple one. ART. 1203. If through the creditor’s acts the debtor cannot make a choice according to the terms of the obligation, the latter may rescind the contract with damages. (n) When debtor may rescind contract. Rescission creates the obligation to return the things which were the object of the contract together with their fruits, and the price with its interest. (Art. 1385, par. 1.) It is the very nature of an alternative obligation that the debtor can make his choice without the consent of the creditor. Hence, the right given the debtor to rescind the contract and recover damages if, through the creditor’s fault, he cannot make a choice according to the terms of the obligation. The debtor, however, is not bound to rescind. EXAMPLE: D borrowed from C P20,000.00. It was agreed that instead of P20,000.00, D could deliver item one, or item two, or item three. If through the fault of C, item one is destroyed, D can rescind the contract if he wants. In case of rescission, the amount of P20,000.00 must be returned by D with interest. C, in turn, must pay D the value of item one plus damages.
D, instead of rescinding the contract, may choose item two or three with a right to recover the value of item one with damages. If D chooses item one, his obligation is extinguished. C is not liable for damages. ART. 1204. The creditor shall have a right to indemnity for damages when, through the fault of the debtor, all the things which are alternatively the object of the obligation have been lost, or the compliance of the obligation has become impossible. The indemnity shall be fixed taking as a basis the value of the last thing which disappeared, or that of the service which last became impossible. Damages other than the value of the last thing or service may also be awarded. (1135a) Effect of loss or becoming impossible of objects of obligation. Articles 1203 and 1204 apply when the right of choice belongs to the debtor. Under Article 1205, the creditor has the right to choose. Some of the objects. — If some of the objects of the obligation have been lost or have become impossible even through the fault of the debtor, the latter is not liable since he has the right of choice and the obligation can still be performed. This is an exception to the general rule established in Article 1170 regarding liability for damages arising from negligence. All of the objects. — If all of them have been lost or have become impossible through the debtor’s fault, the creditor shall have a right to indemnity for damages since the obligation can no longer be complied with. Of course, if the cause of the loss is a fortuitous event, the obligation is extinguished. The phrase “or the compliance of the obligation has become impossible” refers to obligations “to do.” EXAMPLE: S agreed to deliver item one, or item two, or item three. If item one is lost through the fault of S, he can still select either item two or item three. The loss of item one and two with or without the fault of S will reduce the obligation to a simple one. If all the items are lost through his fault, liability will attach; if through a fortuitous event, the obligation will be extinguished. EXAMPLE: In the above example, if items one and two are lost, S will be bound to deliver item three. If subsequently, item three is also lost through the fault of S, the basis for indemnity is the value of item three since S would have been bound to deliver it had it not also been lost. The liability of S is not affected although the loss of items one and two was through a fortuitous event. If item three is lost without the fault of S, his obligation is extinguished and he shall not be liable for damages although the loss of items one and two was due to his fault. The reason is that after the loss of items one and two, the obligation is converted into a simple one to deliver item three. (Art. 1202.) S cannot be held responsible for the loss of items one and two through his fault because having the right of choice, he was not bound to deliver either. The rule is just since he could have been liable for damages if item three instead was lost through his fault and items one and two, through a fortuitous event. ART. 1205. When the choice has been expressly given to the creditor, the obligation shall cease to be alternative from the day when the selection has been communicated to the debtor. Until then the responsibility of the debtor shall be governed by the following rules:
been made, the obligor is liable for the loss of the substitute on account of his delay, negligence or fraud. Meaning of facultative obligation. A facultative obligation is one where only one prestation has been agreed upon but the obligor may render another in substitution. EXAMPLES: “I will give you my piano but I may give my television set as a substitute.” In this obligation, only the piano is due. Hence, its loss through my fault will make me liable. “I will mortgage my land to secure my debt which shall be pay-able within 90 days upon my failure to pay my debt within 30 days.” Here, I may mortgage my land in substitution of the obligation to make payment within 30 days. (see Quizana vs. Redugerio, 94 Phil. 922 [1954].) Effect of loss. Before substitution. — If the principal thing is lost through a fortuitous event, the obligation is extinguished; otherwise, the debtor is liable for damages. The loss of the thing intended as a substitute with or without the fault of the debtor does not render him liable. The reason is that the thing intended as a substitute is not due. The effect of the loss is merely to extinguish the facultative character of the obligation. EXAMPLE: S will give B item one or if S wants, item two. If item one is lost through a fortuitous event, the obligation of S is extinguished. (Arts. 1174, 1262.) If item one is lost through the fault of S, S is liable for damages. (Art. 1170.) If item two is lost with or without the fault of S, S is still liable to deliver item one (see Art. 1165.); he is not liable for damage for the loss of item two as it is not due. After substitution. — If the principal thing is lost, the debtor is not liable whatever may be the cause of the loss, because it is no longer due. If the substitute is lost, the liability of the debtor depends upon whether or not the loss is due through his fault. Once the substitution is made, the obligation is converted into a simple one to deliver or perform the substituted thing or prestation. The substitution becomes effective from the time it has been communicated. (Art. 1201.) Alternative and facultative obligations distinguished. The differences are as follows: Number of prestations. — In the first, several prestations are due but compliance with one is sufficient, while in the second, only one prestation is due although the debtor is allowed to substitute another; Right of choice. — In the first, the right of choice may be given to the creditor or third person, while in the second, the right to make the substitution is given only to the debtor; Loss through fortuitous event. — In the first, the loss of one or more of the alternatives through a fortuitous event does not extinguish the obligation, while in the second, the loss of the thing due extinguishes the obligation; Loss through fault of debtor. — (a) In the first, the loss of one of the alternatives through the fault of the debtor does not render him liable, while in the second, the loss of the thing due through his fault makes him liable; and (b) In the first, where the choice belongs
to the creditor, the loss of one alternative through the fault of the debtor gives rise to liability, while in the second, the loss of the substitute before the substitution through the fault of the debtor does not render him liable; and Nullity of prestation. — (a) In the first, the nullity of a prestation does not invalidate the others, while in the second, the nullity of the prestation agreed upon invalidates the obligation; and (b) in the first, the debtor or creditor shall choose from among the remainder, while in the second, the debtor is not bound to choose the substitute. The second paragraph of Article 1206 speaks of “thing.” Nevertheless, the provision applies to both real and personal obligations. The word is employed in its broad sense to mean the same as prestation in the first paragraph. (see Art. 1223.)
