52.docx

Minute 52-66 Topic: Article 1197 Case: [Macasaet v. Macasaet] The term of performance. So, the court said, no, that’s not a case falling under Article 1197, rather, continuation of the lease agreement, was subject to a condition. What was the condition? The subsistence of affection by the parents to the son and the wife so the moment there was no longer affection, then the contract terminated. So, the court said basically that love and affection is therefore a condition. Love fades. Giving the first few weeks, days, months, after a year, nah. Clearly love is a term! It will definitely fade. Do you agree? NO HAHAHAH It’s scientific. There’s a substance that’s in your body during those first few days, weeks, it’s very high. That’s why you have this warm fuzzy feeling. After a year or so, it’s gone. So, does that mean that every relationship is deemed failed? No. Your brain creates new relations, it’s not based on chemical content of your body. It’s still a term. So, again, this case is not about succession. The issue here is whether article 1197 is relevant. So, for article 1197 to be relevant, it must be an obligation whereby the parties intended a term but failed to do so. My speculation about this, is that they do not like the wife, they’re given free use of the party, and the wife is not getting along with parents in law. Now I usually ask, you’re confronted with this problem, how do you make it an article 1197. Because under article 1197, based on nature and circumstance of obligation, parties intended a period but failed to stipulate, or the term depends on the sole will of the debtor. So, you have that situation of Macasaet, how do you turn it into an Art 1197 case? Let’s say you’re the son, you want to make a case that the court should place a period. What you have to look into is not the basis of the lease. You have to use it also so you have to look at why was there a grant of the right to use the property? Residence and business. So, residence, nothing you can do, connect it to a business. If somehow you can make a case where the business has a gestation period, but the son will at least need X number of months or years, to grow the business, then you can possibly argue that the parties intended a term to stabilize the business, which is an intended term but the parties did not fix so you can now go to court based on that rather than it being gratuitous, then that’s a problem. That’s how you counter. You think of way that when you press upon the court that the parties intended some period where the debtor should have benefit of the term. Case: [Radiowealth case] Now, so we have the case of Radiowealth. Somehow, I gave you another example of this. In Radiowealth, there is a promissory note. PN with a blank. So it’s like, there’s a value received, then Radiowealth as borrower, I/WE promise to pay jointly and separately Radiowealth Finance Company, X amount without need of notice and demand. See why it’s important to place it here? Without need for notice and demand.

Why is it important? There’s a payment schedule, the debtor should pay without need or notice or demand. So, there will be automatic default which will trigger the penalties. There’s a penalty provided in this PN. So, the note says, the borrower shall pay Radiowealth X amount, in 12 consecutive monthly installments starting on ___. So, the commencement date was left blank. Until full payment. And then there’s a statement that the each’s __ shall be __ date of the month. And then there’s late payment charge of 2 ½ percent per month for each unpaid installment. So, the issue was, whether this case is a proper case for the application of article 1197. Was a term intended but parties failed to provide term? So, the court explained, remember that earlier case I mentioned, when the payment was late? What happens to the promissory note? It’s demandable! Because in that case, it’s a full amount. I promise to pay X amount on ___. And it was left blank, and nothing in that context of the note indicated that there was an agreement on the term or schedule of payment, but in this case, SC said that there was actually a term stipulated in the PN. What’s the term? It’s paid monthly, and there was even a stipulated penalty should there should be payment every month otherwise there will be a penalty. So, SC said that there is a clear agreement on the term. So, the SC disputed the claim that the borrowed could pay when the borrower’s means allow the borrower to do so. But that’s not the case, so the SC said that there’s a clear schedule of payment, in fact it should be exact. What would be our basis? Monthly payment, divide by 12, then penalty, then that one without need for demand. Again, this is just like the case of Macasaet. When you’re confronted with this situation, you have a PN, and the payment date is left blank. If you’re for the creditor, you argue first that it’s payable upon demand. You’re the creditor, you want the option to ask for payment in time. But if you’re the debtor, you have to make a case that a term was intended. When we were discussing this one, let’s say it’s left blank, you have to consider the amount and the purpose. From the purpose and the amount, the very least you can base the possible term intended by the parties. So, if the purpose let’s say is to fund the operations of an entity, then it cannot be immediately upon demand. It cannot be after the date stated for payment. Always assume that leaving blank the payment date makes the obligation payable upon demand. You have to check the context. Now after Art 1197 the court determines the period by ascertaining the intent based on the facts because remember, Art 1197 is based on the premise that the parties intended a term but failed to do so. So, in that case, the court somehow gives a period considering the intent of the parties. Again, this one is Art 1197, the sentence of the last paragraph. Once fixed by the Courts, the period cannot be changed by them. So, the court will fix the period, it says there that period can’t be changed by them. The courts. Don’t confuse it with the parties. The parties can still change the decision of the Court by subsequent agreement. There’s NOTHING to stop the parties from changing the decision of the Court by subsequent agreement. So, under art 1197, the relevant parties should file in action in court. Of course, in certain cases, the court allowed the fixing of the period even if the action is an action for a specific performance.