Art. 1193. Obligations for whose fulfi llment a day certain has been fi xed, 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.95
Concept of Term or Period. — According to Manresa’s classic defi nition, a term or period is an interval of time, which, exerting an infl uence on an obligation as a consequence of a juridical act, either suspends its demandability or produces its extinguishment.96 Hence, obligations with a period may be defi ned as those whose demandability or extinguishment is subject to the expiration of a term or period.
93New provision.
94Report of the Code Commission, p. 130.
95Art. 1125, Spanish Civil Code, in amended form. 968 Manresa, 5th Ed., Bk. 1, p. 370.
Idem; Distingished from condition. — A term or period must not be confused with a condition. As we have already seen, a condition is a future and uncertain fact or event upon which an obligation is made to depend. Hence, the two may be distinguished from each other in the following ways:
(1) As to requisites: While a term or period refers to an inter- val of time which is future and certain, a condition refers to a fact or event which is future and uncertain.
(2) As to fulfi llment: While a term or period is an interval of time which must necessarily come, although it may not be known when, a condition is a future and uncertain fact or event which may or may not happen.97
(3) As to infl uence on obligation: While a term or period merely exerts an infl uence upon the time of the demandability or extinguishment of an obligation, a condition exerts an infl uence upon the very existence of the obligation itself.98
(4) As to retroactivity of effects: While a term or period does not have any retroactive effect unless there is an agreement to the contrary, a condition has retroactive effects.
(5) As to effect of will of debtor: When a term or period is left exclusively to the will of the debtor, the existence of the obligation is not affected, but when a condition is left exclusively to the will of the debtor, the very existence of the obligation is affected.99
Classifi cation of Term or Period. — A term or period may be classifi ed as follows:
(1) Suspensive or resolutory.— According to the fi rst and
second paragraphs of Art. 1193, a period may be suspensive (ex die) or resolutory (in diem). It is suspensive when the obligation becomes demandable only upon the arrival of a day certain; it is resolutory when the obligation is demandable at once, although it is terminated upon the arrival of a day certain. Day certain is defi ned in the third paragraph of the article. Thus, if A donates a parcel of land to B to be delivered after his death, there is a suspensive term. The time of the
97Ibid., p. 370. 98Ibid., p. 371.
99Arts. 1197, 1182, Civil Code.
DIFFERENT KINDS OF OBLIGATIONS Arts. 1192-1193
OBLIGATIONS
death of the donor is a day certain because it must necessarily come, although it may not be known when. On the other hand, if C donates the usufruct or use and enjoyment of a house and lot to D for ten years, the term is resolutory. As soon as the donation is perfected, D can demand the delivery of the house and lot immediately. However, after the expiration of ten years, he will have to return the house and lot to the donor.
(2) Legal, conventional or judicial. — A period may also be
legal, conventional or judicial. It is legal when it is granted by law; conventional, when it is stipulated by the parties; and judicial, when it is fi xed by the courts. Examples of legal periods are those provided for in Arts. 1606, 1623, 1682, and 1687 of the Code. Judicial periods will be discussed at length in a subsequent part of this section. (3) Defi nite or indefi nite. — A period may also be defi nite or
indefi nite. This classifi cation can be deduced from the provision of the third paragraph of Art. 1193 which states that a day certain is understood to be that which must necessarily come, although it may not be known when. From this it is evident that a period is defi nite when the date or time is known beforehand, and indefi nite when it can only be determined by an event which must necessarily come to pass, although it may not be known when.
If the happening of a future event is fi xed by the parties for the fulfi llment or extinguishment of an obligation, what is the nature of the obligation — is it with a term or is it conditional? This question requires a qualifi ed answer. If the event will necessarily happen or come to pass, although it may not be known when, the event constitutes a day certain; hence, the obligation is one with a term.100 However, if the uncertainty consists in whether the event will happen or come to pass, such event constitutes a condition; hence, the obligation is conditional.101 Thus, if the death of a person is fi xed by the parties for the demandability or extinguishment of the obligation, it is clear that the obligation is one with a term or period because death is an event which will certainly come, although the date or time when it will come is uncertain. The same is true when the parties enter into a contract whereby it is agreed that the obligation cannot be performed “while the war goes on.” Although
100Art. 1193, par. 3, Civil Code. 101Art. 1193, par. 4, Civil Code.
the date of the termination of the war may be uncertain yet there is no question that the termination of the war must necessarily come.102 However, if the obligor or debtor binds himself to perform his obligation as soon as he has obtained a loan of P400,000 from a certain bank, it is clear that the granting of such loan is not defi nite. Consequently, it cannot be considered a day certain, for it may or it may not happen, the obligation is conditional.103
Effects of Term or Period. — If the term or period is sus- pensive, the fulfi llment or performance of the obligation is demand- able only upon the arrival of the day certain or the expiration of the term.104 What is therefore suspended by the term is not the acquisi- tion of the right or the effectivity of the obligation but merely its de- mandability. In other words, the obligation itself becomes effective upon its constitution or establishment, but once the term or period expires it becomes demandable. However, if the term or period is resolutory, the fulfi llment or performance of the obligation is de- mandable at once, but it is extinguished or terminated upon the ar- rival of the day certain or the expiration of the term.105
Phil. National Bank vs. Lopez Vito 52 Phil. 41
This action is for the recovery of a mortgage credit. It appears that the defendant spouses had mortgaged certain realty to secure the payment of a loan of P24,000 granted to them by the plaintiff. It was agreed under the mortgage contract that payment was to be made in ten annual installments at an interest of 8 per cent per annum. Defendants, however, failed to pay the sums corresponding to six yearly installments. The question presented is with regard to the effect of defendants’ failure to pay those installments which are due and demandable upon those which, normally, are not yet due and demandable.
Held: “It is undeniable that the effect of the period agreed
upon by the parties is to suspend the demandability of the obligation, in accordance with Article 1125 (now Art. 1193) of the Civil Code, which provides that obligations for the performance
102Nepomuceno vs. Narciso, 84 Phil. 542.
103Berg vs. Magdalena Estate, 92 Phil. 110; see also Smith, Bell & Co. vs. Sotelo
Matti, 44 Phil. 874.
104Art. 1193, par. 1, Civil Code. 105Art. 1193, par. 2, Civil Code.
DIFFERENT KINDS OF OBLIGATIONS Arts. 1192-1193
OBLIGATIONS
of which a day certain has been fi xed shall be demandable only when that day arrives. But the defendants’ right to avail themselves of the period was by the will of the contracting parties themselves made subject to the resolutory condition contained in paragraph 5 of the contract. Said condition has resolutory effects, since its fulfi llment resolves the period and leaves the creditor at liberty to demand the performance of the debtor’s obligation and to proceed to the foreclosure of the mortgage. According to the contract entered into by the parties, the obligation of the mortgagors was to pay the debt in yearly installments on a fi xed day of each year, until it has been fully satisfi ed, but in case of nonfulfi llment of any of the stipulations and conditions of the mortgage, such as the failure to pay any of the annual installments, the mortgagee could declare said stipulations and conditions violated and proceed to the foreclosure of the mortgage in accordance with law. We are of the opinion that the nonfulfi llment of the conditions of the contract renders the period ineffective, and makes the obligation demandable at the will of the creditor.”
Idem; Effect of fortuitous event. — In obligations with a term or period, any stipulation in the contract to the effect that in case of a fortuitous event the contract shall be deemed suspended during the term or period does not mean that the happening of the fortuitous event shall stop the running of the term or period agreed upon. Its only effect is to relieve the contracting parties from the fulfi llment of their respective obligations during the term or period.106
Problem — X Co. and Y Co. entered into a contract
whereby the latter agreed that the sugar cane which it will produce shall be milled by the former for a period of 30 years. It was stipulated that in case of any fortuitous event, the contract shall be suspended during said period. For 4 years during the last war and for 2 years after liberation when the mill of X Co. was being rebuilt, Y Co. failed to deliver its sugar cane to the central of X Co. After the expiration of the 30-year period, Y Co. stopped the delivery of its sugar cane to the central of X Co. Subsequently, X Co. brought an action against Y Co. in order to compel the latter to deliver its sugar cane for 6 additional years on the ground that the fortuitous event had the effect of stopping the running of the term or period agreed upon. Will the action prosper? Reasons.
106Victoria Planters vs. Victorias Milling Co., 97 Phil. 318.
Answer — The facts stated in the above problem are exactly
the same as those in the case of Victorias Planters vs. Victorias
Milling Co., 97 Phil. 318, where the SC held that the effect of
a fortuitous event upon the term or period agreed upon is not to stop the running of the term or period but merely to relieve the contracting parties from the fulfi llment of their respective obligations during the pendency of the event. According to the SC:
“Fortuitous event relieves the obligor from fulfi lling a contractual obligation. The stipulation in the contract that in the event of fl ood, typhoon, earthquake, or other force majeure, war, insurrection, civil commotion, organized strike, etc., the contract shall be deemed suspended during said period, does not mean that the happening of any of these events stops the running of the period agreed upon. It only relieves the parties from the fulfi llment of their respective obligations during that time — the planters from delivering sugar cane and the central from milling it. x x x To require the planters to deliver the sugar cane which they failed to deliver during the four years of the Japanese occupation and the two years after liberation when the mill was being rebuilt is to demand from the obligors the fulfi llment of an obligation which was impossible of performance at the time it became due.
Memo tenetur ad impossibilia. x x x The performance of
what the law has written off cannot be demanded and required. The prayer that the plaintiffs be compelled to deliver was impossible, if granted, would in effect be an extension of the term of the contract entered into by and between the parties.’’
Art. 1194. In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules of Article 1189 shall be observed.107
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.108
107New Provision.
108Art. 1126, Spanish Civil Code, in amended form.
DIFFERENT KINDS OF OBLIGATIONS Arts. 1194-1195
OBLIGATIONS
Effect of Advanced Payment or Delivery. — Under Art. 1195 of the Code, if the obligor, being unaware of the period or believing that the obligation has become due and demandable, paid or delivered anything before the arrival or expiration of the period, he may recover what he has paid or delivered with fruits and interests. This rule is different from that found in Art. 1126 of the Spanish Civil Code which states that the obligor may recover only the fruits or interests which the obligee may have received from the thing. The Code Commission explains the reason for the change in the following manner:
“The present article (Art. 1126, Civil Code of Spain) is unjust. The thing or sum not being due when it was delivered or paid, why should only the interest be returned? Why should not the thing or sum delivered be returned to the debtor if he was unaware of the period or if he believed that the obligation had become due and demandable? The present article is contrary to the manifest intention of the parties.’’109
It is obvious that the above article (Art. 1195) can only apply to obligations to give. It is also obvious that before the rule can be applied the payment or delivery must have been made by the debtor either because he was unaware of the period or he believed that the obligation had become due and demandable. Consequently, if the payment or delivery was made voluntarily or with knowledge of the period or of the fact that the obligation has not yet become due and demandable, there can be no right of recovery whatsoever.
Art. 1196. Whenever in an obligation a period is designated, it is presumed to have been established for the benefi t of both the creditor and 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.110
Benefi t of Term or Period. — The general rule is that when a period is designated for the performance or fulfi llment of an obligation, it is presumed to have been established for the benefi t of both the creditor and the debtor. Consequently, as a general rule, the
109Report of the Code Commission, pp. 130-131. 110Art. 1227, Spanish Civil Code.
creditor cannot demand the performance of the obligation before the expiration of the designated period; neither can the debtor perform the obligation before the expiration of such period.111 Thus, it has been held that in a monetary obligation contracted with a period, the debtor has no right, unless the creditor consents, to accelerate the time of payment even if the tender includes an offer to pay not only the principal, but also the interests in full.112 This is very well illustrated by the case of De Leon vs. Syjuco.113 In 1944, during the Japanese occupation, the debtor borrowed P216,000 in Japanese military notes from the creditor, promising to pay “within one year from May 5, 1948” in the legal tender of the Philippines. In the later part of 1944, after the Americans had landed in the Philippines, he tendered payment of the principal including interest up to the date of maturity. The creditor refused to accept the payment. Subsequently, he deposited the entire amount with the clerk of court. After liberation, he brought an action against the creditor to compel him to accept the amount deposited. The Supreme Court, however, held that the refusal of the creditor to accept the tender of payment was justifi ed in view of the fact that the term or period in this case is presumed to have been established for the benefi t of both the creditor and the debtor in accordance with Art. 1196 of the Code; consequently, the consignation made by the debtor is not valid. It may be argued that the creditor has nothing to lose and everything to gain by the acceleration of payment. There are, however, several reasons why the creditor cannot be compelled to accept payment. They are: fi rst, payment of interest; second, the creditor may want to keep his money invested safely instead of having it in his hands, in which case, by fi xing the period, he is thus able to protect himself against sudden decline in the purchasing power of the currency loaned especially at a time when there are many factors that infl uence the fl uctuation of the currency;114 and third, under the Usury Law, there is a special prohibition of payment of interest in advance for more than one year.115
1118 Manresa, 5th Ed., Bk. 1, p. 381; Sarmiento vs. Javellana, 38 Phil. 880. 112Nicolas vs. Matias, 89 Phil. 126; De Leon vs. Syjuco, 90 Phil. 311; Osorio vs.
Salutillo, 48 Off. Gaz. 103; Garcia vs. De los Santos, 49 Off. Gaz. 4830; Ochoa vs. Lopez, CA, 50 Off. Gaz. 5890.
11390 Phil. 311.
114Ponce de Leon vs. Syjuco, 90 Phil. 311. 115Nicolas vs. Matias, 89 Phil. 126.
DIFFERENT KINDS OF OBLIGATIONS Art. 1196
OBLIGATIONS
Idem; Exception. — However, if it can be proved either from the tenor of the obligation or from other circumstances that the period or term has been established in favor of the creditor or of the debtor, the general rule or presumption will not apply. Hence, if it should appear that such period has been established for the benefi t of the creditor, he may demand the fulfi llment or performance of the obligation at any time, but the obligor or debtor, on the other hand, cannot compel him to accept payment before the expiration of the period. If it should appear that the period has been established