SECTION 1.

– PURE AND CONDITIONAL OBLIGATIONS

Article 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. (1113)
The first paragraph of this provision refers to pure obligation.
Pure obligation – an obligation which are not subject to any condition and no specific date is
given for its fulfillment and it is immediately demandable.
The second paragraph refers to a resolutory condition.
Two principal kinds of obligation:
Suspensive – the fulfillment of this will give birth to an obligation.
Resolutory – the fulfillment of this will extinguish an obligation.
An obligation is demandable at once when:
1. it is pure,
2. when it is subject to a resolutory condition, or
3. when it is subject to a resolutory period.

Article 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. (n)
In this case, what depends upon the debtor’s will is the duration of the period and not whether he
should pay or not for he binds himself to pay.
Period – a future and certain event upon the arrival of which the obligation subject to it either
arises or is extinguished.

Article 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. (1114)
Conditional obligation – the one whose consequences are subject in one way or another to the
fulfillment of a condition.
When there is a suspensive condition, the acquisition of rights by the creditor depends upon the
happening of the event which constitutes the condition. Therefore, if the condition does not take
place, then it would be treated as if the conditional obligation had never existed.
When there is a resolutory condition, the happening of the event which constitutes the condition
results to the extinguishment or loss of rights already acquired.

Article 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. (1115)
Potestative condition – if a condition depends upon the sole will of one of the contracting
parties.
When a conditional obligation depends solely upon the debtor’s will, it is void because it cannot
be easily demanded. In order for them to not to be liable, they will simply not comply or fulfill
the condition. Therefore, there is no burden on to the debtor.
But if the condition depends upon the will of the creditor, then it is valid.
Conditional obligations whose fulfillment depends partly upon the will of the debtor and partly
upon the will of a third person, or upon chance are valid.

Article 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. (1116a)
Two kinds of impossible condition:
1. Physically impossible condition – those that cannot exist or can’t be done in nature.
2. Legally impossible condition – those that are contrary to law, morals, good customs,
public order, or public policy.
If a condition is an impossible condition, it will automatically annul the obligation which
depends upon it because the debtor knows that the condition cannot be fulfilled. Therefore, he
has no intention to comply.
If the obligation is divisible (partially void), the part which are not affected by the impossible
condition will be valid.
But if a condition is negative (not to do), it is valid because it is always fulfilled when the
condition is not to do an impossible thing.

Article 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. (1117)
This article refers to positive condition (to give/to do) – the happening of an event at a
determinate time.
The obligation is extinguished as soon as the time expires without the event taking place, or as
soon as it has become indubitable that the event won’t take place although the time specified has
not expired.

Article 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.
(1118)
This provision refers to negative condition (not to do) – an event will not happen at a
determinate time.
The obligation shall become effective from the moment the time indicated has elapsed without
the event taking place, or from the moment it has become evident that the event cannot occur
although the time indicated has not yet elapsed.
But if no time has been fixed, the circumstances shall be considered to arrive at the intention of
the parties.

Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment. (1119)

Constructive fulfillment – refers to an obligation prevented by the obligor from happening.

In the article above, there must be a constructive fulfillment to consider that the condition was
deemed fulfilled.

Constructive fulfillment of suspensive condition

There are three requisites for the application of this article:
[1] The condition is suspensive;
[2] The obligor actually prevents the fulfillment of the condition; and
[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 is bound to deliver or to do what he promised to the
obligee. This provides that once the obligor prevented the condition from happening, he cannot
gain any profit from it.

Constructive fulfillment of resolutory condition.

It also applies to an obligation subject to resolutory condition with respect to the debtor who is
bound to return what he has received upon the fulfillment of the condition. (Art. 1190).

EXAMPLE
A will give a car to B once he passes the board exam. The night before the exam day, A
bought the strongest alcoholic drink and pour it into B’s drink. The plan worked and B wasn’t
able to take the exam due to severe hangover.

ANALYSIS
A still have to give the car even if B didn’t take and pass the exam just as the Art.1186 stated that
“The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment” as
if the condition was fulfilled. Art. 1186, however, does not apply if the act of the obligor is in the
exercise of a right.

In Exercise of Right – If the obligation prevented is a violation to a right, the condition is not

considered fulfilled.

Article 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 fruit interest 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 interest 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 obligation to do and not to do, the court shall determine, in each case, the
retroactive effect of the condition that has been complied with. (1120)

(1) 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.
The effects of conditional obligation to give are valid as of the day when the obligation was
constituted and the creditor annotated his right over the title of the property. If he did not
annotate his right, he has no right over any events that will occur prior to the fulfillment of the
obligation.

(2) Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fruit
interest during the pendency of the condition shall be deemed to have been mutually
compensated.

In reciprocal prestations, there is no effect to the fruits and interest as both the creditor and
debtor are deemed mutually compensated. The creditor has no right when debtor receives income
from the property that was bound to give to him and vice versa.

(3) If the obligation is unilateral, the debtor shall appropriate the fruits and interest 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.

On the other hand, the debtor has the right over the fruits and interest received if the obligation is
unilateral unless it is expressed that the nature of the obligation was different.

(4) In obligation to do and not to do, the court shall determine, in each case, the retroactive
effect of the condition that has been complied with. (1120)

Lastly, in obligation to do and not to do, the court will determine whether there is
retroactive effect or none. This provides that the court will decide the effects of the
conditional obligation.

Article 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. (1121a)

Rights pending fulfillment of suspensive.

(1) Rights of creditors - Before the fulfillment of the condition, the creditor has the right to
bring appropriate actions for the preservation of his right as there may be constructive fulfillment
that will happen. To prevent that from happening, he may go to court and also to have his right
over the property that is bound to deliver once the condition has fulfilled. This only applies to an
obligation subject to a resolutory condition. (Art.1190)

(2) Rights of debtor – The debtor has the right to recover what has been paid by mistake
because the creditor may or may not be able to fulfill the condition. This provides that once the
payment has made before the fulfillment of the condition, the debtor must be mistaken:
otherwise, the condition is deemed fulfilled and he cannot recover the payment anymore.
Article 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;
(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. (1122)

Requisites for application for Art. 1189

This applies only if:

(1) The obligation is a real obligation
(2) The obligation is a specific or determinate thing;
(3) The obligation is subject to a suspensive condition
(4) The condition is fulfilled; and
(5) There is loss, deterioration or improvement of thing during the pendency of the condition.

Rules in case of loss, deterioration or improvement of thing during pendency of suspensive

condition.

LOSS OF THING

(1) Without debtor’s fault – the debtor is not liable for any fortuitous event (Art. 1174.)
A is obliged to give B a house worth P5,000,000 if B passes the board exam. The house was
destroyed by the typhoon. The obligation is extinguished and A is not liable to give a house to B
even he passes the board exam.

(2) Through debtor’s fault – the debtor is liable for the thing plus the damages.
If house was destroyed by the fire due to the negligence of A, then he has to pay 5,000,000 plus
any damages to the creditor.
DETERIORATION OF THING

(3) Without debtor’s fault – the debtor will not suffer the deterioration of the thing as the things
deteriorates without his fault.
The house deteriorates as it took so long for B to fulfill his obligation so he has to suffer any
impairment loss.

(4) Through debtor’s fault – the creditor may cancel the obligation and the debtor has to pay
worth of a thing plus damages. He may also choose to fulfill the obligation and the debtor has to
deliver the thing plus damages.

IMPROVEMENT OF THING

(5) By nature or by time – the creditor will benefit the improvement of the thing
In the same example, the improvement of the house by time will benefit B as contrary to rule in
deterioration of thing and in this case he has the right to receive any impairment gains.

(6) At expense of debtor – the debtor has granted right to usufructuary and he may set off the
improvements of the thing plus any damages.

Usufruct is the right to enjoy the use and fruits of thing belonging to another.

A has right to live and make improvements in the house until B passes the board exam. Though
he has to bring it back to its original form without damages.

Article 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 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 round.

As for 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. (1123)

(1) 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.

This provides that when an obligation to give was extinguished, the parties shall return the thing
including the fruits and interest they have received from each other.

( 2) 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
round.
This provides that in case of loss, deterioration or improvement of the thing, we will apply Art.
1189 to who is bound to round.

(3) As for 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. (1123)

Lastly, Art. 1187 applies for the effects of extinguishment of the obligations to do and not to do.
The court shall determine the retroactivity of the fulfillment of the resolutory conditions.

EXAMPLE
A let his friend B to use his toys until he goes back home. B must return all the toys he has used
when it’s time to go home.

ANALYSIS
In this case, the return of the thing was expressly declared and agreed by both parties.

Article 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. (1124)

Kinds of obligation according to the person obliged.

(1) Unilateral – one party is obliged to comply with a prestation.

(2) Bilateral – both parties are debtors and creditors of each other.

a. Reciprocal obligations – each party performance is equivalent and also the condition
for the performance of the other. This provides that both of them are debtors and creditors of
each other.
b. Non-reciprocal obligations – the performance of one party does not depend on the
other. This provides that the obligations are not simultaneous and they do not dependent upon
each other.

Remedies in reciprocal obligations

(1) Choice of remedies – in case the obligor fail to do his obligation, the obligee may choose
between these two remedies: take action for specific performance of the obligation with damages
or action for rescission of the obligation also with damages.

(2) Remedy of rescission for non-compliance – this provides that the obligee can choose
between the remedies mentioned above. However, if the fulfillment of the obligation is
impossible the obligee has no choice but to rescind the obligation with damages.

Limitations on right to demand

The right to rescind by the injured party is not absolute. Thus –

(1) Resort to the court – no one can take justice or the law itself without the hearing the other
party.
(2) Power of court to fix period – the court has only the power to give time and let the person in
default perform his obligation if it is proven unwillful or cause by other reason.
(3) Right of third person – the third person who acted in good faith has the right over the thing
so rescission of the obligation will not be granted.
(4) Substantial violation – the general rules is that rescission will be granted if the thing cannot
be recovered due to the violation.
(5) Waiver of right – the right to rescind may be waived, expressly or implied.

Article 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 are guilty of breach:

(1) First infractor known – if one party violated his obligation followed by the other party, the
first infractor shall be equitably reduced by the court.

(2) First infractor cannot be determined – if both parties have violated their obligations and it
cannot be determined which of them was the first infractor, the contract is deemed extinguished
and both of them will bear his own damages.

EXAMPLE
A sold his phone to B. It shall be delivered on January 20 and the payment shall be made by B
upon delivery. A did not deliver the phone in spite of a demand made by B. The obligation has
fulfilled after a week but B incurred in delay of payment.

ANALYSIS
A was the first one violated his obligation followed by B then the liability of A shall be tempered
by the court. But, if both alleged that B was the first infractor, the contract shall be deemed
extinguished and both of them shall bear their own damages.
SECTION 2. – OBLIGATIONS WITH A PERIOD

Article 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. (1125a)
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.
PERIOD DISTINGUISHED FROM A CONDITION
(a) In their fulfilment — 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.
(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.
General classification of terms or period
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.
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.
Other classifications:
1. Legal – when period is fixed by law;
2. Voluntary – when the period is agreed upon by the parties;
3. Judicial – when the period is fixed by the court for the performance of the obligation or for its
extinguishment
Requisites for a valid term or period:
1. It must be future;
2. It must be certain, that is, sure to come but may be extended by mutual agreement;
3. It must be possible physically and legally.

Article 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.

This article speaks of loss, deterioration or improvement of the thing before the arrival of the day
certain.
Condition of the Thing Effect
Lost*
 Without fault of the debtor Obligation is extinguished
 Fault of the debtor Obligation to pay damages
Deteriorates
 Without fault of the debtor The impairment is borne by the creditor
The creditor may choose to rescind with
 Fault of the debtor indemnity for damages, or have it fulfilled,
but still with indemnity for damages
Improvement
 By its nature Inures to the benefit of the creditor
 At the expense of the debtor The debtor shall have no other right than that
 granted to the usufructuary.

*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.
Illustration:
Jay obliged himself to sell his yacht to Zola at half its purchasing price on Zola’s graduation,
provided Zola graduates on time. On April 25, 2016, Zola graduated, on time and with honors.
However, the day before his graduation, Typhoon Hayan destroyed the yacht. Since the loss
happened before the day certain, and the loss was due to a fortuitous event, the obligation of Jay
to sell his yacht to Zola is extinguished.
Incase of loss, deterioration or improvement of the thing before the arrival of the day certain, the
rules in article 1189 shall be observe.
1. Loss of a thing without debtor’s fault.
Example:
Mr.A obliged himself to give Mr.B his car worht 200,000 if Mr. B will sell Mr.A’s property. The
car was lost without the fault of Mr.A. The obligation is extinguished and Mr.A is not liable to
Mr.B if Mr.B sells the property. A person, as a general rule, is not liable for a fortuitous event.
2. Loss of thing through debtor’s fault.
Same example stated above, incase of lost by negligence of Mr.A, Mr.B will be intitled to
demand damages.
3. Deterioration of thing without debtor’s fault.
In accident without the fault of Mr.A, the car windshield was broken, thereby reducing its value
to 190,000. Mr.B will have to suffer the deterioration or impairment in the amount of 10,000.
4. If incase that the Deterioration of thing through Mr.A’s fault.
The obligation may cancelled with damages in favor of Mr.B. In this case,Mr.A is liable to pay
Mr.B 200,000, the value of the car before its deterioration plus incidental damages if any.
Fulfillment of the obligation also with damages. Mr.A is bound to Mr.B to give the car and pay
10,000 plus incidental damages if any.
5. Improvement of thing during the pendency of the condition.
Mr.A painted the car with his own expenses. In this case Mr. A will have the right granted to a
usurfructuary with respect to improvements made on the thing held in usurfruct.
USUFRUCT- The right to enjoy the use and fruits of a thing belonging to another.
Article 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. (1126a)
Example:
X owes Y P20, 000 which is supposed to be paid on August 25 this year. By mistake X paid his
obligation on August 25 last year. Assuming that today is February 25, X can recover the P20,
000 plus P600 which is the interest for (6) six months or one half year at the legal rate of 12%
or a total of P10,600. But X cannot recover, except the interest, if the debt had already matured.
Payment before the arrival of period
Article 1195 is applied only in the obligation to give. It has no application to do or not to do. It is
similar to article 1188, para. 2, which allows the recovery of what has been paid by mistake
before the fulfilment of a suspensive condition. The creditor cannot unjustly enrich himself by
retaining the thing or money received before the arrival of the period.
Rigth to Interest and Fruits
The debtor has the right to demand for the thing which is been paid in mistake. This article is in
relation to solutio indebiti or payment is not due.
Acted in Bad faith– the creditor shall pay the legal interest if a sum of money is involved, or
shall be liable for fruits received or which should have been received if the thing produces fruits.
(Art.2159)
Acted in good faith– or under mistaken belief, the creditor is liable for fruits only.
Fruits and Interest cannot be recovered in the following cases:
1. When the obligation is reciprocal or mutual, and there has been premature performance on
both sides;
2. When the obligation is loan, debtor is bound to pay interest.
3. Period is exclusively for the benefit of the creditor, because the debtor by paying in advance
loses nothing.
Burden of Proof
The debtor in this provision must have to prove his ignorance of the period. That he is unaware
of the due date. The same rule should equally apply to the creditor.
Payment with knowledge of term
The payment cannot be recovered when the debtor voluntarily paid his debt with his knowledge
of the period. As if the debtor tacitly waived the term of the payment. As a result, obligation is
already matured.

Question
What are the things to be prove in order for the debtor to recover or demand for the payment
which is premature?
Answer
There must be burden of proof, the debtor must have to prove his ignorance of the period. He
must not aware of the due date of the agreed payment of the debt.

Article 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. (1127)
Presumption when a period is designated.
When a period is designated in the performance of an obligation, it is presumed that the period is
intended for the benefit of both the creditor and debtor such as a loan with interest.
Reasons why creditor cannot be compelled to accept before the arrival of the period
Payment of interest. The interest expected to be realized will be lessen if premature payment is
done;
Desire of the creditor to have his money invested safely instead of having it in his hands.
Under the usury law, there is a special prohibition of payment of interest in advance for more
than a year.
Exceptions to the General Rule
1. Term is for the benefit of the creditor- the creditor may demand performance at any time,
but the debtor cannot compel him (creditor) to accept payment before the period expires.
2. Term is for the benefit of the debtor- he may oppose a premature demand for payment,
but may validly pay at any time before the period expires.
BENEFIT OF TERM IN CONTRACTS OF LOAN
 For both parties- there is interest and period stipulated
 For the benefit of the debtor- gratuitous or without interest
NOTE: Even if there is no interest stipulated, the period may still benefit both parties, if the
creditor receives benefit from the period stipulated.
Example: Fruits from the products which were a part of the land mortgage by the debtor.
Article 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. (1128a)
Example:
No breach or violation is committed before period for fulfilment of obligation is fixed by the
court.
Facts:
Under the lease contract executed between R (lessor) and E(lessee), upon the expiration of the
lease for 20 years, the factory building to be constructed by E shall belong to R. The building
constructed by E was destroyed by fire. E could not rebuild the building because the insurance
proceeds were not yet paid. R filed a suit for ejectment.
Issue: Is the action of R proper?
Held: No. His remedy is to institute an action so that the court can fix the period for the
reconstruction of the burned building. Only after a competent court shall have fixed such period
in a proper action pursuant to the provisions of Article 1197 can there be a breach or violation of
the lease contract entered into R’s complaint for ejectment is dismissed
Court May Fix Term
1. When the term of a lease has been left to the will of the lessee;
2. Or when the obligation does not fix a period
Note: the Court cannot fix a definite term when the obligation is payable on demand
Action to Fix Term
An action that can only be vindicated under this article is an action to request the court to fix a
term which the debtor must comply with.
Effect of Term
Once the term has been fixed by the Court, it is already a part of the contract which cannot be
changed without the consent of both parties. If the period fixed by court expires, it is when the
debtor commences default
Prescription
An action to request the court to fix a term is subject to the rules of prescription.

Article 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. (1129a)
Explanation:
With reference to obligations with a period, “the general rule is that the obligation cannot be
demanded until after the lapse of the prescribed time.” However, when the debtor commits any
of the acts mentioned in article 1198, the period is disregarded and the creditor is entitled to
demand the fulfilment of the obligation. The obligation thus becomes a pure obligation which is
immediately demandable.
When Debtor Loses the Right to Make Use of a Period
The general rule is that the obligation is not demandable before the lapse of the period. The
exceptions are based on the fact that the debtor might not be able to comply with his obligation:
1. When debtor becomes insolvent:
The insolvency need not be judicially declared. It is sufficient that the debtor has less assets than
his liabilities or if debtor is unable to pay his debts as they mature. It is noted that the insolvency
of the debtor must occur after the obligation has been contracted.
Example:
When the debtor becomes insolvent:
On January 30, 2016, Mario borrowed P5, 000 from Sancho due and payable on January 30,
2016. On March 5, 2016, Sancho learned of the insolvency Mario. In this case, Sancho could
demand the payment of the debt from Mario without waiting for January 30, 2016 unless Mario
gave a guaranty or security of the debt. The insolvency to this case need not be judicially
declared.
When Debtor Loses the Right to Make Use of a Period
2. When debtor does not furnish guaranties or securities promised:
Example: Gaya borrowed loan from Tito which loan was secured by a chattel mortgage of
Gaya’s car as a guaranty. After obtaining the loan, Gaya fails or does not execute a chattel
mortgage, the loan becomes demandable or the debtor loses her right to make use of the period.
3. When by his own acts he has impaired said guaranties or securities:
Example: Gaya borrowed P50, 000 from Tito which loan was secured by a chattel mortgage on
Gaya‘s car. Later, Gaya’s fault, the car was damaged or she causes the impairment of the car,
Gaya loses her right to make use of the period, unless she gives another one equally satisfactory.

When Debtor Loses the Right to Make Use of a Period

4. When by fortuitous event, the guaranty or security was lost.
Example: Gaya borrowed P50, 000 from Tito which loan was secured by a chattel mortgage on
Gaya’s car. After obtaining the loan, the car was lost by fortuitous event. Gaya loss her right to
male use of the period unless she gives another guaranty or security equally satisfactory.
5. When debtor violates an undertaking
Example: Art secured a loan from Arnold on condition that Art will paint the house of Arnold. If
after the proceeds of the loan was given to Art, he did not paint the house of Arnold, Art loses his
right to make use of the period.
6. When the debtor attempts to abscond.
Abscond means a depart or escape from creditor’s knowledge to avoid payment of his debt. Mere
attempt on the part of debtor will entitle the creditor to demand payment of the obligation
without waiting for the period to expire.
SECTION 3. – ALTERNATIVE OBLIGATION

Article 1199. A person alternatively bound by different prestations shall completely

perform one of them.
The creditor cannot be compelled to receive part of one and part of the other
undertaking. (1131)
Kinds of Obligation according to object:
1. Simple Obligation – there is only one object
2. Compound Obligation – two or more prestations, it may be:
a) Conjuctive Obligation – one where there are several prestations and all of them is due; or
b) Distributive Obligation – one where two (2) or more of the prestations is due, it may be:
Kinds of Distributive Obligation:
1. Alternative Obligation – debtor is alternatively bound with various prestations that are due
but the performance of one of them is sufficient to extinguish the obligation.
Example: John borrowed P50, 000 cash from Shiela. It was agreed that John has the
alternative to pay Shiela either in P50,000 cash or an Iphone 6Splus, or a 40” LED TV.
1.1 Conjuctive Obligation – w/ several prestations and all of them are due
1.2 Distributive Obligation – two or more of the prestations is due
2. Facultative Obligation – debtor is bound to perform one prestation is due to deliver one thing
with a reserved right to choose another prestation or thing as substitute for the principal.
Example: Gigi, upon failure to pay her debt to Carlo in 30 days, will mortgage her land to
secure her debt which shall be payable in 90 days
Creditor cannot be compelled to receive parts of the different prestations (par2)
In the 1st example (Alternative Obligation), Creditor cannot be compelled to receive part of each
of the choices (Cash, TV, CP) for the satisfaction of the obligation. However, if the creditor
agrees to receive portion of each, there is no prohibition. There is novation in the prestation.
CONJUNCTIVE
There are several prestations, and all of them are due.
Example:Juan promise to deliver to Pedro a 2010 model BMW car and a Toyota corolla 2017
model
Article 1202. The debtor shall lose the right of choice when among the prestations
whereby he is alternatively bound, only one is practicable. (1134)
 The debtor loses his right of choice when there is only one left prestation. Since only one
prestation left is practicable, the alternative obligation will be converted into a simple
obligation.
Example: Lance promised to give his car, or 1 pack of drugs to Claire on December 25.
Explanation: In this example, the second object is unlawful so that the only one object left is
the car. The debtor losses his right to choose.
Article 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)
 The debtor’s right of choice cannot be exercise because of the creditor’s fault.
- The debtor may rescind the contract and demand for damages.
- The debtor may also remain the obligation enforce if the creditor still wants the
obligation to be fulfill.
Example: Lance promised to give his car or, give Claire 500,000, or fix the car of Claire
on December 25. Now, December 25 came, and Lance cannot reach out Claire because
she is in abroad.
Explanation: In this example, the loss of Lance (debtor) right of choice since Jane is in
abroad and Lance cannot reach Jane. Lance can rescind the obligation plus damages, or
he may not rescind if Jane still wants to the obligation fulfilled.

Article 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)
 The creditor has the right to indemnify the lost of all alternative objects in the obligation
as well as the impossibility of the fulfillment through fault of debtor but if it is just some
object was lost, the debtor could not be liable since the debtor still have other choices.
 The value of indemnification will be base on the last thing disappeared or service that
became impossible.
  Other than the value of the last thing lost or the last service that became impossible may
also be rewarded.
Example: Lance promised to give his car or, his branded watch, or his phone on December
25. Assuming that all objects was lost, and the last thing lost was the phone.
Explanation: In this example, the value of the phone will be the basis to be compensated by
the debtor.
Article 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:
(1) If one of the things is lost through a fortuitous event, he shall perform the
obligation by delivering that which the creditor should choose from among the
remainder, or that which remains if only one subsists;
(2) If the loss of one of the things occurs through the fault of the debtor, the creditor
may claim any of those subsisting, or the price of that which, through the fault of the
former, has disappeared, with a right to damages;
(3) If all the things are lost through the fault of the debtor, the choice by the creditor
shall fall upon the price of any one of them, also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do in case one, some or
all of the prestation should become impossible. (1136a)
 The right of choice was given to the creditor.
 The alternative obligation ceases and converted to a simple obligation when the creditor
had the selection and been communicated to the debtor.
 Responsibility of the debtor shall be governed by these following rules:
- If one object was lost through fortuitous event: debtor should inform the creditor and
make him choice to the remaining objects or to the only subsist object.
- If one object was lost through fault of the debtor: creditor has the right to choose any
of the subsisting or remaining object as the value for damages occurred.
- If all things were lost through fault of the debtor: creditor has the right to choose any
value of one object lost as the basis of indemnity with damages.

Article 1206. When only one prestation has been agreed upon, but the obligor may
render another in substitution, the obligation is called facultative.
The loss or deterioration of the thing intended as a substitute, through the
negligence of the obligor, does not render him liable. But once the substitution has
been made, the obligor is liable for the loss of the substitute on account of his delay,
negligence or fraud. (n)
Facultative obligation – an obligation that has only one prestation with substitute.
 The loss of substitute happens:
- Before substitution: the obligor is not liable.
- After substitution: the obligor is liable.
Example: Lance promised to give Claire his cellphone or his laptop as a substitute.
Explanation: Before substitution: When the laptop was lost, the obligor is not liable since
substitution has not been made. After substitution: When the laptop was lost, the obligor is liable
because the substitute object is the one that is due now.