Consider the following problem based on a question in the 1973 Civil Law bar exam:
“D borrowed ₱3,000,000 from C in 2014. The debt is evidenced by a promissory note executed by D wherein he promised to pay as soon as he has money or as soon as possible. C has made repeated demands upon D for payment, but up to now no payment has been made. Suppose that C will bring an action against D for payment of the debt, will the action prosper?”
The answer is that the action will not prosper for failure to state a cause of action. Article 1197 of the Civil Code provides that “[i]f 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.” Under Article 1180 of the Civil Code, “[w]hen 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.”
Here, the debtor D bound himself to pay when his means permit him to do so since the promissory note states that the note is payable “as soon as he has money or as soon as possible.” Hence, D’s obligation to pay the loan is deemed to be one with a period and not a pure obligation[1] which is immediately demandable. Thus, the period to pay should first be fixed by the court pursuant to Article 1197. It is only when D does not pay within the period fixed that C may file an action for the payment of the debt against D.[2]
There is thus a two-step process to be observed by the creditor. The first is to file an action to fix the period pursuant to Article 1197.[3] The creditor cannot yet file a complaint for specific performance or damages against the obligor. The reason is that there is no cause of action yet if no period has been fixed by the court since it cannot be said that the obligor has breached his obligation.[4] Should the creditor immediately file a complaint for collection or damages against the obligor, the latter can set up in his answer the affirmative defense of failure to state a cause of action.
The second is for the creditor to file a complaint for specific performance or for damages against the obligor after the latter has failed to pay or comply with his obligation within the period fixed by the court.[5] This will now prosper since a cause of action in favor of the creditor already arose when the obligor failed to pay or comply within the period fixed by the court.
Is it possible to combine in one complaint the prayer to fix the period and the prayer to order the obligor to pay or comply within such period as may be fixed by the court? This procedural shortcut would not be in accord with the provision in the Rules of Court that “[e]very ordinary civil action must be based on a cause of action.”[6] It would be premature to ask the court to order the obligor to pay if the period for payment has not yet arrived. If such a complaint for specific performance or damages had been filed as a stand-alone complaint, it would be dismissible for failure to state a cause of action.[7] Combining it with an action to fix the period would not cure the prematurity or absence of a cause of action.[8]
However, some decisions[9] have held that an action to fix a period can be coupled with one for specific performance where a separate action to demand performance would be a mere formality and only dilatory, citing or taking off from the 1956 case of Tiglao v. Manila Railroad Co.[10] My reading of Tiglao is that there is nothing therein which states that an action to fix a period can be coupled or combined with the action for specific performance.
Tiglao involved an action by retired employees against the defendant Manila Railroad Co. for the payment of the remaining portion of their salary differentials. Pursuant to an agreement, the defendant had promised to pay the remaining portion “after funds for the purpose would be available.” The trial court rendered judgment stating that defendant’s obligation to pay was deemed to be one with a period pursuant to Article 1180 and fixing a period of one year for the defendant to pay the salary differentials. On appeal, the defendant contended that it was error for the trial court to fix the period because “the duration of the term should be fixed in a separate action for that express purpose.”
The Supreme Court held that although the general rule is that the fixing of the period can be made only in an action brought for that express purpose, if the fixing of a period for the payment of the obligation has been amply discussed by the parties in their pleadings (as happened in the case), the court can consider the action for specific performance as one to fix a period. This holding is also supported by Section 5, Rule 10 of the Rules of Court which states that “[w]hen issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.” Thus, the complaint filed by the employees for recovery of the salary differentials may be deemed impliedly amended to one for the fixing of the period.
In fine, Tiglao tackled only the issue of whether an action for specific performance may be considered as one to fix the period. Tiglao did not touch upon the issue of whether an action to fix the period and an action for specific performance may be joined in one complaint or initiatory pleading. The decision should not be read as authorizing a court to fix the period and to order the defendant to pay or comply within the period fixed in one go. To hold that Tiglao authorizes a combined proceeding would be an unwarranted expansion of the Tiglao doctrine. Such a view would run roughshod over the finely crafted provisions of Rule 2 of the Rules of Court on cause of action, especially the provision that every ordinary civil action must be based on a cause of action.
-oOo-
[1] Article 1179 of the Civil Code provides that an obligation not subject to a term or condition is demandable at once.
[2] See Patente v. Omega, 93 Phil. 128; TIMOTEO B. AQUINO, REVIEWER ON CIVIL LAW 380 (1st ed., 2014).
[3] Jurisdiction over this case is with the RTC since the action or proceeding is incapable of pecuniary estimation (Sec. 19, B.P. Blg. 129). In a case involving a promissory note, the Supreme Court held that the action to fix the period must be brought within ten years from the perfection of the contract (Gonzales v. Jose, 66 Phil. 369).
[4] Pages v. Basilan Lumber Co., G.R. No. L-10679, 29 November 1958.
[5] Jurisdiction would be vested in either the MTC or the RTC, depending on the amount of the claim or demand or on the assessed value of the real property involved (B.P. Blg. 129).
[6] Section 1, Rule 2, Rules of Court.
[7] Swagman v. Court of Appeals, 455 SCRA 175 (2005).
[8] See 4 ARTURO M. TOLENTINO, COMMENTARIES & JURISPRUDENCE ON THE CIVIL CODE 199-200 (1985).
[9] Borromeo v. Court of Appeals, 47 SCRA 65 (1972); Central Philippine University v. Court of Appeals, 246 SCRA 511 (1995); Clemente v. Republic, 894 SCRA 66 (2019). See RUBEN F. BALANE, JOTTINGS & JURISPRUDENCE IN CIVIL LAW (OBLIGATIONS & CONTRACTS) 228 (2018 ed.).
[10] 98 Phil. 181 (1956).
