For whose benefit is the period constituted?

General Rule:

When a period has been agreed upon for the performance or fulfillment of an obligation, it is presumed to have been established for the benefit of both the creditor and the debtor.

Exception:

When it appears from the tenor of the period or other circumstances that it was established for the benefit of one of the parties.

What is the effect of the term being for the benefit of either the creditor or the debtor?

1. When it is for the benefit of the Creditor – Creditor may demand the performance of the obligation at any time but the debtor cannot compel him to accept payment before the expiration of the period (e.g. “on demand”)

2. When it is for the benefit of the Debtor – Debtor may oppose any premature demand on the part of the creditor for performance of the obligation, or if he so desires, he may renounce the benefit of the period by performing his obligation in advance. (Manresa)

What is the effect of a fortuitous event in an obligation with a period?

It only relieves the contracting parties from the fulfillment of their respective obligation during the term or period.

When may the court fix the period?

1. If the obligation does not fix a period, but from its nature and circumstances it can be inferred that a period was intended by the parties

2. If the duration of the period depends upon the will of the debtor

3. In case of reciprocal obligations, when there is a just cause for fixing the period

4. If the debtor binds himself when his means permit him to do so

When may a debtor lose his right to make use of the period?

1. Insolvency of the debtor, unless security is provided

2. Did not deliver security promised

3. Impaired security through his own acts or through fortuitous event, unless he gives a new security equally satisfactory (if impairment is without the fault of DR, he shall retain the right)

4. Violates undertaking in consideration of extension of period

5. Debtor attempts to abscond (Art. 1198, NCC)