Obligations with a Period

An obligation with a period is one that has a fixed day certain for its fulfillment. Such an obligation is demandable only when that day comes. The term “a day certain” refers to “that which must necessarily come, although it may not be known when.”

Example: A furniture shop sold to a hotel carpets from India with the agreement that the items will be imported and delivered within the calendar year. The furniture shop has until the end of the calendar year to perform its obligations to the hotel.

If the thing is lost, deteriorates, or improves prior to the arrival of the day certain, the following rules are to be followed.

(1) If the thing is lost without the fault of the debtor, the obligation is extinguished;

(2) If the thing is lost through the fault of the debtor, he is 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 inures to the benefit of the creditor; and

(6) If it is improved at the expense of the debtor, he has no other right than that granted to the usufructuary.

Whether unaware of the period or believing that the obligation has become due and demandable, the debtor has the right to recover anything he paid or delivered, including the fruits and interests thereof, prior to the arrival of the period.

There is a rebuttable presumption that an obligation with a period has been established for the benefit of both the creditor and the debtor. If there is no period stipulated, the courts may fix a period so long as it can be inferred that one was intended from nature and the circumstances of the prestation. Conversely, the courts may fix the duration of the period if the parties agreed that the fulfillment of the obligation depends upon the will of the debtor.

Example: A restaurant bought meat products from its supplier with the agreement that the former will pay only when it has the financial capacity to do so. In such a case, the supplier may file a complaint in order for the court to decide the period when the restaurant should pay

The courts will determine the appropriate period depending on what the parties may have probably contemplated based on the circumstances. Once the period is fixed by the court, the parties cannot change them.

The debtor loses the right to make use of the period in the situations:

(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; and

(5) When the debtor attempts to abscond.