SECTION 2.

— Obligations with a Period

No period is fixed but a period was intended.

-If the obligation does not fix a period but it can be inferred from its nature and the
circumstances that a period was intended by the parties, the court may fix the period. If the
period fixed is extended by agreement, to be valid the same must be for a definite time,
although if no precise date is fixed, it is sufficient that the time can readily be determined. In
case the period of extension is not precise, Article 1197 applies.

EXAMPLES:

 Suho agreed to construct the house of Seojun. The parties failed to fix the
period within which the construction is to be made. Here, the court can fix the
term for it is evident that the parties intended that Suho should construct the
house within a certain period.
 Ju kyung bought lumber from the store of Soojin on credit. The period for
payment in the invoice is left blank. From the nature of the obligation, it can
be inferred that a period is intended.

Legal effect where suspensive period/ condition depend upon will of debtor.

(1) The existence of the obligation is not affected although the period depends upon the
sole will of the debtor. It is only the performance with respect to time that is left to the will
of the debtor.

(2) If the obligation is subject to a condition which depends upon the will of the debtor, the
conditional obligation is void because in such case, it is actually the fulfillment of the
obligation that depends upon the will of the debtor.

Ultimate facts to be alleged in complaint

The ultimate facts to be alleged in a complaint to properly and adequately plead the right of
action granted by Article 1197 are:

(1) Facts showing that a contract was entered into, imposing on one of the parties an
obligation or obligations in favor of another; and
(2) Facts showing or from which an inference may reasonably be drawn, that a period
for performance was intended by the parties.
If the complaint does not ask that a period for the performance of an obligation be fixed,
the court cannot fix a period unless the complaint is first amended. The court, however, may
fix the duration of the period although the complaint does not expressly ask for such relief
where the ultimate facts above are sufficiently alleged therein.

Period fixed cannot be changed by the courts

(1) If there is a period agreed upon by the parties and it has already lapsed or expired,
the court cannot fix another period.
(2) From the very moment the parties give their acceptance and consent to the period
fixed by the court, said period acquires the nature of a covenant, because the effect
of such acceptance and consent by the parties is exactly the same as if they had
expressly agreed upon it, and having been agreed upon by them, it becomes a law
governing their contract. The period fixed in a final judgment is res judicata and as
such forms an integral part of the imperfect contract which gave rise to its
designation by the court, and thence, forward part of a perfect and binding contract.
Consequently, the court cannot change it. However, the parties may modify the term
by a new agreement.

ART. 1198. The debtor shall lose every right to make use of the period:

(1) When after the obligation has been contracted, he be- comes 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.

When obligation can be demanded before lapse of period

The general rule is that the obligation is not demandable before the lapse of the
period. However, in any of the five (5) cases mentioned in Article 1198, the debtor shall lose
every right to make use of the period, that is, the period is disregarded and the obligation
becomes pure and, therefore, immediately demandable.
 The exceptions are based on the fact that the debtor might not be able to comply
with his obligation.

(1) When debtor becomes insolvent.

EXAMPLE:

 Suho owes Seojun P10, 000.00 due and payable on December 20. If Suho
becomes insolvent, say on September 10, Seojun, can demand immediate
payment from Suho even before maturity unless Suho gives sufficient
guaranty or security.

The insolvency in this case need not be judicially declared. It is sufficient that
the assets of Suho are less than his liabilities or Suho is unable to pay his debts
as they mature.

Note that the insolvency of Suho must occur after the obligation has been
contracted.

(2) When debtor does not furnish guaranties or securities promised.

EXAMPLE:

 Suppose in the same example, Suho promised to mortgage his house to

secure the debt. If he fails to furnish said security as promised, he shall
lose his right to the period.

(3) When guaranties or securities given have been impaired or have disappeared.

EXAMPLE:

 If the debt is secured by a mortgage on the house of Suho, but the house
was burned through his fault, the obligation also becomes demandable
unless Suho gives a new security equally satisfactory.

In this case, the house need not be totally destroyed as it is sufficient that the
security be impaired by the act of Suho. But in case of a fortuitous event, it is
required that the security must disappear. But if the security given deteriorates in
 such a manner as to become illusory, it must be deemed to have disappeared or
lost as contemplated in paragraph 3.

If the debt is secured by a bond, the failure of Suho to renew the bond or replace
it with an equivalent guarantee upon its expiration will likewise give Seojun the
right to demand immediate payment.

(4) When debtor violates an undertaking.

EXAMPLE:

 Now, suppose that Seojun in the example agreed to the period in

consideration of the promise of Suho to repair the piano of Seojun free of
charge. The violation of this undertaking by Suho gives Seojun the right to
demand immediate payment of the loan.

(5) When debtor attempts to abscond.

EXAMPLE:

 Before the due date of the obligation, Suho (debtor) changed his address
without informing Seojun (creditor) and with the intention of escaping
from his obligation. This act of Suho is a sign of bad faith which results in
the loss of his right to the benefit of the period stipulated.

Observe that a mere attempt or intent to abscond is sufficient.