RFBT 1 – Law on Obligations and Contracts
TITLE I: OBLIGATIONS (Arts. 1156-1304.) – Chapter 3.2: Obligations with a Period
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CHAPTER 3: DIFFERENT KINDS OF OBLIGATIONS
Obligations with a Period
Art. 1193. Obligations for whose fulfilment 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.
Suspensive Period
(Ex Die)
A period that makes the obligation
demandable.
Resolutory Period
(In Diem)
A period that terminates an obligation.
Condition vs. Period
Condition
Period
An uncertain event
A certain event
Affects the existence of the
obligation
Affects the demandability of
the obligation
Has retroactive effects
Has no retroactive effects
A suspensive condition left
to the will of the debtor
makes the obligation void
A suspensive period left to the
will of the debtor makes the
obligation still valid
May refer to a future
uncertain event or to past
events unknown to the
parties
Refers only to a future day
certain
Obligations with a Period: Lost, Deterioration, &
Improvement of a thing during the pendency of the
condition
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.
Through Fortuitous Event/Nature
Lost (1-2)
Debtor’s liability is extinguished.
Deterioration (3-4)
Borne by the creditor
Improvement (5-6)
Inure to creditor’s benefit
Through Debtor’s Fault/Action
Lost (1-2)
Debtor is liable for damages.
Deterioration (3-4)
Creditor may choose between:
1. Rescission & damages; or
2. Fulfilment & damages
Improvement (5-6)
1. Debtor may remove improvement
provided that the thing will not be
damaged by the reason of
removal; or
2. He can offset any improvement to
damages he may pay by reason of
deterioration of the thing through
his fault.
Right of the Debtor in an Obligation with a 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.
Benefit of a 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.
General Rule: 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 favour of one or of the
other.
Example Scenario:
Selena (debtor) borrowed P 500,000 with 12% interest
from Taylor (creditor). The principal and interest will
mature after 12 months.
Selena cannot compel Taylor to accept payment
before maturity as it will deprive Taylor from
maximizing the interest.
On the other hand, Taylor cannot compel Selena to
make payment before maturity as it will deprive Selena
of using the money for 12 months.
When Debtor Losses Benefit of 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.
Example Scenarios:
1. When after the obligation has been contracted, he
become insolvent, unless he gives a guaranty or
security for the debt;
Selena borrowed PHP 400,000 from Taylor to
be paid after 1 year. After 5 months, Selena
became insolvent. In this case, Taylor need
not to wait for the lapse of 1 year to demand
the obligation. She can demand payment of
PHP 400,000 immediately unless Selena can
present a guarantor or other securities.
2. When he does not furnish to the creditor the
guaranties or securities which he has promised;
Selena borrowed PHP 400,000 from Taylor to
be paid after 1 year. Furthermore, they
stipulated that Selena will deliver a specific car
after 1 week to taylor as an object of pledge to
secure the obligation. 1 week has passed but
Selena failed to deliver the said car. In this
case, Taylor need not to wait for the lapse of 1
year to demand the obligation. She can
demand payment of PHP 400,000
immediately.
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;
