Classification of

Obligations
Classification of Obligations
• Primary classification of obligations under the Civil Code:
– Pure a n d conditional obligations (Articles 1179-1192);
– Obligations with a period (Articles 1193-1198);
– Alternative (1199-1205) a n d facultative obligations (Article 1206);
– Joint a n d solidary obligations (Articles 1207-1222);
– Divisible a n d indivisible obligations (Articles 1223-1225); a n d
– Obligations with a penal clause (Articles 1226-1230)

• Secondary classification of obligations under the Civil Code:

– Unilateral a n d bilateral obligations (Articles 1169-1191);
– Real a n d personal obligations (Articles 1163-1168);
– Civil a n d natural obligations (Articles 1423); a n d
– Legal, conventional, a n d penal obligations (Articles 1157, 1159, 1161)
 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 contain a
resolutory condition shall also be
demandable, without prejudice to the
effects of the happening of the event.
(Art. 1179, N C C )
Pure Obligation- one without a condition or a term (hence,
demandable at once, provided there will b e no absurdity).

Examples:

a. I promise to p a y you P1million (This is demandable

at once, unless period was really intended, as when a loan
has just been contracted, or when some time is reasonably
necessary for the actual fulfillment of the obligation, as when
a person binds himself to p a y immediately for the subscription
of corporate share of stock.

b. “I’ll p a y you P1million o n demand”. But instant

perform a n ce is not a necessity, otherwise absurd
consequen c es will arise.

c. When the original period or condition has been

cancelled by the natural stipulation of both parties.
 Condition is a future a n d uncertain event, u p on the
happening of which, the effectivity or extinguishment of a n
obligation (or right) subject to it depends.

Characteristic of a condition
1. Future and uncertain – In order to constitute a n event as a
condition, it is not enough that it b e future; it must also b e
uncertain. The first paragraph of Article 1179 obviously uses
the disjunctive or between future a n d uncertain to
distinguish pure obligation from both the conditional
obligation a n d one with a period. Be that as it may, the
word or should b e and.
2. Past but unknown – a c o ndition m a y refer to a past event
unknown to the parties. (infra) If it refers to a future event,
both its very o ccurrence a n d the time o f such o c c urrence
must b e uncertain; otherwise, it is not a c o ndition.
 2 Principal Kinds of Condition
1. Suspensive condition (condition precedent or
condition antecedent) or one the fulfillment of which
will give rise to a n obligation (or right). In other words,
the demandability of the obligation is suspended until
the happening of the uncertain event which
constitutes the condition.

Example:
I will sell you the land if it is adjudicated to m e in
the division of my d e c e a s e d father’s estate. M y obligation
is demandable only after the condition is fulfilled – my
becoming the owner of the land. In the meantime, I a m
not liable to you.
2. Resolutory condition (condition subsequent) or one
the fulfillment of which will extinguish a n obligation
(or right) already existing.

Example:
“Dong binds himself to give C asy P1 thousand
monthly allowance until C asy graduates from
college.”

Dong’s obligation is demandable now but it

shall b e extinguished or terminated upon the
happening of the resolutory condition – Casy’s
graduating from college.
 Distinctions between suspensive and
resolutory conditions
The difference between the two conditions is very clear:
both bear a n influence on the existence of the obligation, but in
diametrically opposed manner.

1. If the suspensive condition is fulfilled, the

obligation arises, while if it is the resolutory
condition that is fulfilled, the obligation is
extinguished.
2. If the first does not take place, the tie
of the law (juridical or legal tie) does not
appear, while if it is the other, the tie of
the law is consolidated.

3. Until the first takes place, the

existence of the obligation is a mere
hope, while in the second, its effects
flow, but over it hovers the possibility of
termination.
 When obligation is demandable at
once
A n obligation is demandable at o n c e –

1. When it is pure. (Art. 1179, par. 1, N C C )

2. When it is subject to a resolutory condition (Ibid., par. 2)

3. When it is subject to a resolutory period (Art. 1993, par 2.)

 Past event unknown to the
parties
A condition really refers only to a n uncertain a n d future event. A past
event c a n n o t b e said to b e a condition since the demandability of a n obligation
subject to a condition d e p e n d s u p o n whether the event will h a p p e n or will not
happen.

What is really con te m p l ated b y the law is the kn owle d g e to b e

acquired in the future of a past event which a t the mome n t is unknown to the
parties interested, for it is only in that sense that the event c a n b e d e e m e d
uncertain. This kn owle d g e determines whether the obligation will arise or not
 ART. 1180. 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 article 1197.
(Art. 1180, N C C )
Where duration of period depends upon the will of the
debtor?

A period is a future and

certain event upon the arrival of
which the obligation subject to
it either arises or is extinguished.
1. The debtor promises to pay when his
means permit him to do so. – the
obligation shall b e d e e m e d to b e one
with a period. In this case, what
depend s upon the debtor’s will is not
whether he should p a y or not for indeed
he binds himself to p ay. What is left only
to his will is the duration of the period. If
the debtor a n d the creditor cannot
agree as to the specific time for
payment, the court shall fix the same on
the application of either party. (Art.
1197, par. 2)
[Link] cases. – As when the debtor binds himself to
pay:
a. “little by little”(Scone v. Francisco, 24 Phil. 309.)
b. “as soon as possible” (Gonzales v Jose, 66 Phil. 369.)
c. “from time to time”
d.“at any time I have the money” (Soriano v. Abalos,
84 Phil. 206.)
e.“in partial payments” (Levy Hermanos v. Paterno,
18 Phil. 353.)
f.“when I a m in a position to pay” (see Luding Hahn v
Lazatin, 105 Phil. 1358)
 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. (Art. 1182, N C C )
 This article deals with three
kinds of Conditions
a. Potestative – depends on the exclusive will
of one of the parties. (this is also called
facultative condition)

b. Casual– depends on c h a n c e O R upon the

will of the third person. [If I win the lotto.
(valid)]
A. Potestative on the part of the DEBTOR
1. If also suspensive – both the condition
a n d the obligation are VOID, for the
obligations is really illusory.

2. If also resolutory – valid

[Link] on the part of the CREDITOR-

VALID
 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 the 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. (Art. 1183, N C C )
Two kinds of impossible
conditions
[Link] impossible conditions – when they, in
nature of things, cannot exist or cannot b e done.

Examples:
a.“I will p a y you P1 thousand if it will not rain for one
year in the Philippines.”
b. “I will p a y you P1 thousand if you c a n carry
20cavans of palay on your shoulder.”
2. Legally impossible conditions – when they are contrary
to law, morals, g o o d customs, public order, or public
policy.

Examples:
Xander will give Agnes P1 thousand if A g n e s —
a. Will kill Barney (against the law)
b. Will b e the common-law wife of Xander (against morals)
c. Will slap her father (against g o o d customs)
[Link] publicly advocate the overthrow of the government
(against public order)
[Link] not appear as a witness against Xander in a criminal
case (against public policy)
 Effect of Impossible Conditions
[Link]– Impossible conditions an n u l the obligation w h i c h
d e p e n d s u p o n them. Both the obligation a n d the condition a r e void. The
r e a s o n b e h i n d the law isthat the obligor kn o ws his obligation c a n n o t b e
fulfilled. H e h a s n o intention to c o m p l y with his obligation.
2. Conditional obligation valid– If the condition is negative,
that is, not to d o a n impossible thing, it is disregarded a n d
the o b ligation is rendered pure a n d valid. Actually, the
condition is always fulfilled when it is not to d o a n
impossible thing so that it is the same as if there were no
condition.

Examples:
a.“I will sell you my land if you d o not carry 20 cavans of
palay on your shoulder”
b.“I will sell you my land if you d o not give m e a d o g that
talks.”

The obligations are pure and, therefore,

demandable at once.
3. Only the affected obligation void – If the
obligation is divisible, the part thereof not affected
by the impossible condition shall be valid.
Example:
“ I will give you P5,000 if you sell my land, a n d a car, if
you kill Pedro”

The obligation to give P5,000 is valid but the

obligation to give a car is void becau se it is
dependent upon a n impossible condition.
4. Only the condition void –If the
obligation is a pre existing
obligation, and, therefore, does not
d e p e n d upon the fulfillment of the
condition which is impossible, for its
existence, only the condition is void.
 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.
(Art. 1184, N C C )
Positive (Suspensive) Condition – the
happening of a n event at a determinate
time. The obligation is extinguished:

a. As soon as the time expires without the

event taking place; or

b. As soon as it has b e c o m e indubitable that

the event will not take place although the
time specified has not expired.
 Example
Xand e r obliges himself to g ive Barney P10,000 if Barney will
marry Charley before Barney reaches the a g e of 23.

[Link] is liable if Barney marries Charley before he reaches the

a g e of 23.

b. Xander is not liable if Barney marries Charley at the a g e of 23 or

after he reaches the a g e of 23. In this case, the time specified, before
reaching the a g e of 23, has expired without the condition (marrying
Charley) being fulfilled. The obligation is extinguished as soon as
Barney becomes 23 y/o.

c. If Barney dies at the a g e of 22, without having married Charley, the

obligation is extinguished b e c ause it has b e c o m e indubitable that
the condition will not take place. In this case, the obligation of
Xander is d e e m e d extinguished from the death of Barney, although
the time specified has not yet expired.
 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. (Art. 1185,
NCC)
 Example
Harry binds himself to give Ron P10,000 if Ron is not yet
married to Hermione on December 30.

[Link] is not liable to Ron if Ron marries Hermione on December 30 or

prior thereto.

b. Harry is liable to Ron if on December 30, Ron is not married to

Hermione a n d if Ron marries Hermione after December 30. In the latter
case, the condition (not marryin g Hermione) is fulfilled upon the
expiration of the time indicated, which is December 30.

c. Suppose Hermione dies on November 20 without having been

married to Ron. The obligation is rendered effective because it is certain
that the condition not to marry Hermione will b e fulfilled. In this case, the
obligation become s effective from the moment of Hermione’s death on
November 20 although the time indicated (December 30) has not yet
elapsed.
 ART. 1186. The condition
shall be deemed fulfilled when
the obligor voluntarily prevents
its fulfillment. (Art.
1186, N C C )
 There are three requisites for the
application of this article:

1. The condition is suspensive

[Link] obligor actually prevents the fulfillment of the
condition
3. He acts voluntarily

The law does not require that the obligor acts

with malice or fraud as long as his purpose is to
prevent the fulfillment of the condition. He should not
b e allowed to profit from his own fault or b a d faith.
 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. Ifthe 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. (Art. 1187,
NCC)
1. Inobligation to give – a n obligation to give subject
to a suspensive condition becomes demandable only
upon the fulfillment of the condition. However, o n c e
the condition is fulfilled, its effects shall retroact to the
d a y when the obligation was constituted. (par. 1; see
Enriquez v Ramos, 73 SC RA 116.)
The reason is becau se the condition is only a n
accidental element of a contract. (see Art. 1318) A n
obligation c a n exist without being subject to a
condition. Had the parties known beforehand that
the condition would b e fulfilled they would have
bound themselves under a pure obligation. Hence,
the obligation should b e considered from the time it is
constituted a n d not from the time the condition is
fulfilled.
2. Inobligation to do or not to do – with respect to
the retroactive effect of the fulfillment of a
suspensive condition, in obligations to d o or not
to do, no fixed rule is provided.
This does not mean, however, that in these
obligations the principle of retroactivity is not
applicable. The courts are empowered by the
use of sound discretion a n d bearing in mind the
intent of the parties, to determine, in e a c h case,
the retroactive effect of the suspensive condition
that has been complied with. It includes the
power to decide that the fulfillment of the
condition shall have no retroactive effect or from
what date such retroactive effect shall take
effect.
 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
mistaken in case of a suspensive
condition. (Art. 1188, N C C )
 Rights of the Creditor
He m a y take or bring appropriate actions for the
preservation of his right, as the debtor m a y render
nugatory the obligation upon the happening of the
condition. Thus, he ma y g o to court to prevent the
alienation or concealment of the property of the debtor
or to have his right annotated in the registry of property.
The rule in paragraph one applies by analogy to
obligations subject to a resolutory condition. (see Art.
1190, par. 1)
Right of the Debtor

He is entitled to recover what he has

paid by mistake prior to the happening of the
suspensive condition. This right is granted to
the debtor because the creditor m a y or m a y
not b e able to fulfill the condition imposed
a n d hence, it is not certain that the obligation
will arise. This is a case of solutio indebiti which
is based on the p rinciple that no one shall
enrich himself at the expense of another.
 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 the 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.
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 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. (Art.
1189, N C C )
Requisites for Application of Article 1189
Article 1189 applies only if:

1. The obligation is a real obligation

2. The object is in a specific or determinate thing
3. The obligation is subject to a suspensive
conditions
4. The condition is fulfille d
5. There is loss, deterioration, or improvement of
the thing during the pendency of the
condition
Rules in case of loss,
deterioration, or
improvement of thing
during pendency of
suspensive condition
1. Loss of thing without debtor’ fault
Example:
Francis obliged himself to give Paul his
car worth P100,000 if Paul will sell Francis’
property. The car was lost without the fault of
Francis.
The obligation is extinguished a n d
Francis is not liable to Paul even if Paul sells
the property. A person, as a general rule, is
not liable for a fortuitous event. (Art. 1174)
2. Loss of thing through debtor’s fault

Example:
In the same example, if the loss occurred because
of the negligence of Francis, Paul will b e entitled to
d e m a n d d a m a g e s (Art. 1170) i.e., P100,000 plus
incidental damages, if any.
3. Deterioration of thing without debtor’s fault –A thing deteriorates when its value is
reduced or impaired with or without the fault of the debtor.

Example:
If the car figured in a n accident, as a result of which its
windshield was broken a n d some of its paints were scratched
a w a y without the fault of Francis, thereby reducing its value to
P90,000, Paul will have to suffer the deterioration or impairment in
the amount of P10,000. (Art. 1174, N C C )
4. Deterioration of thing through debtor’s fault
Example:
In this case, B m a y choose between:
a. Rescission (or cancellation) of the
obligation with damages; in this case,
Francis is liable to p a y Paul P100,000, the
value of the car before its deterioration
plus incidental d a m a g e s, if any
b. Fulfillment of the obligation also with
damages. In this case, Francis is bound to
Paul to give the car a n d p a y P10,000 plus
incidental damages, if any.
5. Improvement of thing by nature or by time – A thing is
improved when its value is increased or enhanced
by nature or by time or at the expense of the debtor
or creditor. (see Art. 1187, N C C )

Example:
Suppose the market value of car increased,
who gets the benefit?
The improvement shall inure to the benefit of
Paul. In as much as Paul would suffer in case of
deterioration of the car through a fortuitous event, it is
but fair that he should b e compensated in case of
improvement of the car instead.
6. Improvement of thing at the expense of debtor

Example:
During the pend ency of the condition,
Francis h a d the car painted a n d its seat cover
c h a n g e d at his expense.
In this case, Francis will have the right
granted to a usufructuary with respect to
improvements m a d e on the thing held in
usufruct.
 ART. 1190. When the condition 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 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 obligations to do and not to do, the
provisions of the second paragraph of the Article 1187
shall be observed as regards the effect of the
extinguishment of the obligation. (Art. 1190, N C C )
 Effects of fulfillment of resolutory
condition
1. Inobligation to give – when the resolutory condition in a n
obligation to give is fulfilled, the obligation is extinguished (Art.
1181.) a n d the parties are obliged to return to e a c h other what
they have received under the obligation. There is a return to the
status quo. In other words, the effect of the fulfillment of the
condition is retroactive. But in case the thing to b e returned is
legally in the possession of a third person who did not act in b a d
faith, the remedy of the party entitled to restitution is against the
other.
 The obligation of mutual
restitution applies not only to the
thing received but also to the fruits
a n d interests. In obligations to give
subject to suspensive condition, the
retroactivity admits exceptions
according as the obligation is
bilateral or unilateral.
 The reason for the difference is
quite plain. The happening of the
suspensive condition gives birth to the
obligation. O n the other hand, the
fulfillment of the resolutory condition
produces the extinguishment of the
obligation as through it h a d never
existed. The only possible exception is
when the intention of the parties is
otherwise.
2. Inobligation to do or not to do –
In such obligations, the courts shall
determine the retroactive effect of
the fulfillment of the resolutory
condition as in the c a se where the
condition is suspensive. (Art. 1187,
par. 2) The courts in the exercise of
the discretion m a y even disallow
retroactivity, taking into account
the circumstances of e a c h case.
 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 (Art. 1191, N C C )
Kinds of obligation according
to the person obliged.
1. Unilateral – when only one party is
obliged to comply with a prestation.

Examples:
Donation; in a contract of loan, the
lender has the obligation to give. After the
lender has complied with his obligation,
the debtor has the obligation to pay.
 2. Bilateral – when both parties are mutually bound to
e a c h other. In other words, both parties are debtors
a n d creditors of e a c h other. Bilateral obligations may
b e reciprocal or non-reciprocal.

a. Reciprocal obligations are those which arise from the s a m e c a u s e

a n d in which e a c h party is a debtor a n d creditor of the other, such that the
performance of o n e is designed to b e the equivalent a n d the condition for the
performance of the other. E a c h party m a y treat the fulfillment of what is incumbent
u p o n the other as a suspensive condition to his obligation (see Art. 1169, last par.)
a n d its n o n fulfillment, as a tacit or implied resolutory condition, giving him the right
to d e m a n d the rescission of the contract.
Remedies in reciprocal obligations
In case one of the obligors does not comply
with w h at is incumbent upon him, the a g g rieved
party nay choose between two remedies:

1. Action for specific performance (fulfillment) of the

obligation with damages.

2. Action for rescission of the obligation also with

damages.
 The principal action for rescission for non-
performance under Article 1191 must b e
distinguished from the subsidiary action for
rescission by reason of lesion or d a m a g e under
Article 1318, et seq., a n d from cancellation of a
contract based, for example, on defect in the
consent a n d not on violation by a party of his
obligation. Article 1191 governs where there is
non-compliance by one of the contracting
parties in case of reciprocal obligations. The
remedy is granted for breach by the other
contracting party that violates the reciprocity
between them.
 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.
(Art. 1192, N C C )
 Example
Simon sold his television set to Barbie. The agreement
is that set shall b e delivered on October 1 at the house of
Barbie a n d payment shall b e m a d e by Barbie upon delivery.
Simon did not deliver the set on October 1 in spite of the
d e m a n d m a d e by Barbie. Five days later, Simon delivered the
set but Barbie incurred in delay in paying the purchase price.
In suit between Simon a n d Barbie, the liability of
Simon for d a m a g e s should b e equitably tempered by the
court, taking into consideration the breach also of the
obligation on the part of Barbie.

If both alleged that the other was the first infractor

a n d the court cannot determine who of the two is telling the
truth, the court shall b e d e e m e d extinguished a n d e a c h shall
bear his/her own damages. This means that the contract shall
not b e enforced.
Obligations with period
 ART. 1193. Obligations for
whose fulfillment a day 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. (Art. 1193, N C C )
M e a n i n g of Obligation with a Period

A n obligation with a period is one

whose consequences are subjected in
one way or another to the expiration of
said period of term.
Meaning of Period or Term
A period is a future a n d certain event upon
the arrival of which the obligation (or right)
subject to it either arises or is terminated. It is a
d a y certain which must necessarily c o m e (like the
year 2013; next Christmas), although it m ay not
b e known when, like the death of a person. (Art.
1193, par. 3.)
Period a n d Condition distinguished
1. As to fulfillment.– A period is a certain event which
must h a p p e n sooner or later at a d a te known
beforehand, or at a time which ca n n ot b e determined, while a c o nditio n
is a n uncertain event.
2. As to time. – A period refers only to the future, while a
condition m a y refer also to past event unknown to the parties.
3. As to influence on the obligation. – A period merely
fixes the tome for the efficaciousness of the obligation.
If suspensive, itca n n ot prevent the birth of the
obligation in d u e time; If resolutory, it d oe s not
invalidate the fact that the obligation existed. O n the
other hand, a condition causes a n obligation either to arise or to cease.
Period a n d Condition distinguished
4. 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)
3. As to retroactivity of effects. – unless.– Unless there is a n
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 b e possible. If
the period is impossible (e.g.,
February 30 because it will never
come; construction of a building
within 24hrs because it is too short),
the obligation is void.
Kinds of Period or Term

1. According to effect:
a. Suspensive period (ex die). – The obligation
begins only from a d a y certain upon the
arrival of period. (Art. 1183, par. 1)
b. Resolutory period (in diem). – The obligation
is valid up to a d a y certain a n d terminates
upon arrival of the period.
Kinds of Period or Term

2. According to source:
[Link] period. – When– When it is
provided for by laws.
[Link] or voluntary period. –
When it is agreed to by the parties. (Art.
1196, N C C )
[Link] period. – When it is fixed by the
court.(Art. 1197, N C C )
Kinds of Period or Term
3. According to definiteness:
a. Definite period. – When it is fixed or it is
known when it will come. (Art. 1193, par. 1,
NCC)
b. Indefinite period. – When it is not fixed
or it is not known when it will come. Where
the period is not fixe d but a period is
intended, the courts are usually empowered
by law to fix the same. (see Art. 1197, N C C )
 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. (Art.
1194, N C C )
Note

The effect of loss, deterioration, or improvement before arrival of

period was discussed in the previous slides. (see slides on Art.
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. (Art. 1195, N C C )
Payment before arrival period
Article 1195 applies only to obligation 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 a w a r e of period

The presumption, however, is that the debtor knew that the d e b t was
not yet due. He has the burden of proving that h e was u n aware of the period.
Where the duration of the period d e p e n d s u p o n the will of the debtor (see Art.
1197, par 3), p a ym e n t b y him amounts, in effect, to his determination of the arrival
of the period.

The obligor m a y n o longer recover the thing or m o n e y o n c e the

period has arrived but h e c a n recover the fruits or interests thereof from the d a t e
of premature performance to the d a t e of maturity of the obligation.
Example:
Francis owes Paul P10,000 which was supposed
to b e paid on December 31 this year. By mistake,
Francis paid his obligation on December 31 last year.
Assuming that today is June 30, Francis can
recover the P10,000 plus P600 which is the interest for
one half year at the legal rate of 12% or a total of
P10,600. But Francis cannot recover, except the interest, if
the debt h a d already matured.
Neither c a n there b e a right to recovery if
Francis h a d knowledge of the period. The theory under
solutio indebiti obviously will not apply. Francis is
d e e m e d to have impliedly renounced the period.
N o recovery in personal obligations

Article 1195 has no application to

obligations to d o or not to d o because
as to the former, it is physically
impossible to recover the service
rendered, a n d as to the latter, as the
obligor performs by not doing, he
cannot, of course, recover what he has
not done.
 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. (Art. 1196, N C C )
Presumption as to benefit of period

In a n obligation subject to a period fixed by

the parties, the period is presumed to have been
established for the benefit of both the creditor a n d
the debtor. This means that before the expiration of
the period, the debtor may not fulfill the obligation
a n d neither may the creditor d e m a n d its fulfillment
without the consent of the other especially if the
latter would b e prejudiced or inconvenienced
thereby.
The presumption, of course, is rebuttable.
Exceptions to the general rule

The tenor of the obligation or the

circumstances may, however, show that it was
the intention of the parties to constitute the
period for the benefit of either the debtor or
the creditor. The benefit of the period ma y b e
the subject of express stipulation of the parties.
Exceptions to the general rule

1. Termis for the benefit of the debtor alone. – He cannot b e

compelled to p a y prematurely, but he can, if he desires to d o so.

Examples:
Kordell borrowed from Shane P1,000 to b e paid within 1
year without interest.
In this case, the period of 1 year should b e d e e m e d
intended for the benefit of Kordell only. Therefore, she c a n p a y
any time but she cannot b e compelled to p a y before 1 year.
Exceptions to the general rule
2. Term is for the benefit of the creditor. – He may d e m a n d fulfillment
even before the arrival of the term but the debtor cannot require him to
a c c e p t payment before the expiration of the stipulated period.

Example:
Jojo borrowed from Junjun P1,000 payable on December 31
with the stipulation that Jojo cannot make payment before the lapse of
the period but Junjun m a y d e m a n d fulfillment even before said date.
Here, Junjun c a n d e m a n d payment at any time but Jojo
cannot shorten the one year period without the consent of Junjun.
Ordinarily, there must b e a stipulation granting the benefit of the term to
only the creditor.
Computation of term or period

When the laws speak of years, months, days or nights, it

shall b e understood that years are of 365 days each, months of 30
days; days of 24hours; a n d nights from sunset to sunrise.
If months are designated by their name, they shall b e
computed by the number of days which they respectively have.
In computing a period, the first d a y shall b e excluded, a n d
the last d a y included.
If the last d a y is a Sunday or a legal holiday, the time shall
not run until the end of the next d a y 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.
Inevery 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. (Art. 1197, N C C )
Court generally without power to fix a period

The period mentioned in the a b o v e provision refers to a judicial period

as distinguished from the period fixed b y the parties in their contract which is
known a s contractual period.

If the obligation d o e s not state a period a n d n o period is intended, th e

court is not authorized to fix a period. The courts h a v e n o right to m a k e contracts
for the parties. (Tolentino v. Gonzalez, 50 Phil. 577)
Exceptions to the general rule

1. No period is fixed but a period was intended.-

The obligation does not fix a period but it c a n b e
inferred from its n a ture a n d the circumstances
that a period was intended.

2. Duration of the period depends upon the will of

the debtor.
 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. (Art. 1198, N C C )
When obligation c a n b e d e m a n d e d
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 cases mentioned in Article
1198, the debtor shall lose every right to make use of
the period, that is, the period is disregard e d a n d the
obligation becomes pure and, therefore,
immediately demandable.
The exceptions are based on the fact that
debtor might not b e able to comply with his
obligation.
1. When debtor becomes insolvent. –

Example:

Dora owes Cris P1,000 due a n d payable on

Decembe r if Dora b e c o m es insolvent, say on September
10, Cris c a n d e m a n d immediate payment from Dora
even before maturity unless gives sufficient guaranty or
security.

The insolvency in this c ase need not b e judicially

declared. It is sufficient that the assets of Dora are less
than his liabilities or Dora is unable to p a y his debts as they
mature. Note that the insolvency of Dora must occur after
the obligation has been contracted.
2. When debtor does not furnish guaranties or securities promised.-

Example:

Suppose in the same example,

Dora promised to mortgage his house
to secure the debt. If he fails to furnish
said security, he shall lose his right to the
period.
Examples: 3. When guaranties or securities given have been impaired or have disappeared.-

If the debt is secured by a mortga g e on the house of Dora,

but the house was burned through his fault, the obligation also
b e come s d e m a n d a b le unless Dora gives a new security equally satisfactory.
In this case, the house n e e d not b e totally destroyed as it is
sufficient that the security b e impaired by the act of Dora. But in c a s e of fortuitous
event; it is required that the security must disappear.
If the security given deteriorates in such a manner as to
b e c o m e illusory, it must b e d e e m e d to h a v e disappeared or lost as
contemplated in paragraph 3.
If the debt is secured by a bond, the failure of Dora to renew
the b o n d or replace it with a n equivalent guarantee u p on its
expiration will likewise give Cris the right to d e m a n d immediate payment.
4. When debtor violates an undertaking.

Example:

Now, suppose that Cris agreed to

the period in consideration on the
promise of Dora to repair the piano of
Cris. The violation of this undertaking by
Dora gives Cris the right to d e m a n d
immediate payment of the loan.
5. When the debtor attempts to abscond.

Example:

Before the due date of the obligation,

Dora c h a n g e d her address without informing Cris
a n d with the intention of escaping from her
obligation. This act of Dora is a sign of b a d faith
which results in the loss f his right to the benefit of
the period stipulated.
Observe that a mere attempt or intent to
a b s con d is sufficient.