JOSE MARIA COLLEGE

OBLIGATIONS AND CONTRACTS NOTES

Lesson 7
Alternative Obligations

Introduction:
What are the different classifications of obligations based on plurality of objects or prestations?

(1) Simple obligation – one where there is only one object or prestation.

Examples:
D obliged himself to deliver to C a piano.
D promised to repair the car of C.

(2) Compound obligation – one where there are two (2) or mor prestations. It may be:
a. Conjunctive – is one where debtor has to perform all the several prestations in the
contract to extinguish the obligation.

b. Distributive – one where two (2) or more prestations is due. It may be:
i. Alternative – is one where debtor is alternatively bound by different prestations
but the complete performance of one of them is sufficient to extinguish the
obligation.

One where several prestations are due but the performance of one is sufficient.
(Art. 1199)

ii. Facultative – is one where the debtor is bound to perform one prestation or to
deliver one with a reserved right to choose another prestation or thing as
substitute for the principal.

One where only one prestation is due but the debtor may substitute another. (Art.
1206)

SECTION 3. - ALTERNATIVE OBLIGATIONS

Art. 1199. A person alternatively bound by different prestations shall completely perform one of them.

The creditor cannot be compelled to receive part of one and part of the other undertaking.

Art. 1200. The right of choice belongs to the debtor, unless it has been expressly granted to the creditor.

The debtor shall have no right to choose those prestations which are impossible, unlawful or which could
not have been the object of the obligation.

What is an Alternative Obligation?

An obligation is alternative when several objects or prestations are due, but the payment or performance
of one of them is sufficient.

“Different Prestations” refers to both strict and loose sense of the word.
➢ Either different kinds of prestations (one to give [real obligation] and one to do [personal
obligation])
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➢ It may merely be different objects (to give a car, or to give a boat)

Example:
D borrowed from C P10,000. It was agreed that D could comply with his obligation by giving C
P10,000, or a color television set, or by painting the house of C.

The delivery of the P10,000 or the color television set, or the painting of the house of C, is
sufficient to comply with the obligation. Performance must be complete. C cannot be compelled
to accept, for instance, P5,000 and half of the television, thereby establishing co-ownership
between them or P5,000 and the painting of a part of his house. (Art. 1199[2])

As a general rule who is given the right to choose which of the prestations he will perform in an
alternative obligation? Exceptions?

General Rule:
In an alternative obligation, it is the debtor who is given the right to choose which of the prestations he
will perform. The right to choose the prestation belongs to the debtor.

Exception:
a. When right is expressly granted to the creditor, (Art. 1205) or;
b. When it is expressly agreed upon by the parties that a third person shall make the choice (Art.
1306)

Note: Implied grant of choice to creditor or third person is not allowed, as Art. 1200 grants this
right to choose the prestation to be performed to the debtor.

Q. What are the limitations on debtor’s right to choose?

Restriction on Debtor’s Power of Choice – the law, the intention of the parties and the realm of
possibility.

a.) Debtor cannot choose part of the prestation and part of another; it must be indivisible.

Partial Performance of different prestations does not fulfill the obligation, unless the creditor
accepts such partial performance as complete performance.
➢ Debtor must choose complete performance of one or the other.

Example:
A promises to deliver either 100 sacks of diamond rice OR 6 cows to B, in exchange for B’s
100 sq.m. lot in the province. The obligation is alternative.

Q. Can A simply choose to deliver to B instead, 50 sacks of rice and 3 cows?

A. No, for this is in violation of Art. 1199.
Exception: if creditor B agrees.
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b.) Debtor cannot choose prestations which are impossible or unlawful undertakings, or those which
could not have been the object of the obligation.

Debtor has no right to choose the prestations which are:

o Impossible – Ex. Fly to the moon, turn water into wine
o Unlawful – Ex. Steal a car, deal with drugs
o Could not have been the object of the obligation

o These prestations are void. But their presence do not invalidate the obligation if it
includes other undertakings otherwise free from such defects. This means that under Art.
1200, the debtor’s right of choice is not extinguished altogether but limited to the
remaining valid prestations.

c.) The debtor has no more right of choice when among the prestations whereby he is alternatively
bound, only one is practicable. (Art. 1202). If all but one of the alternatives becomes legally
impossible, obligation becomes simple. The right of choice does not pass to the creditor, nor may
it be exercised by any one.

Example:
“A promises to deliver either 100 sacks of diamond rice or 6 cows to B, in exchange of the
latter’s 100 sq.m. lot.” The obligation is alternative.

Q. Can A simply choose to deliver to B instead, 50 sacks of rice and 1 kilo of dried marijuana
leaves?
A. No, for this is in violation of Art. 1199.

“S will deliver to B his horse, or his carabao, or his refrigerator.”

The horse and the carabao were lost without the fault of S. S has no more choice. He must deliver
the refrigerator which is the only one practicable.

Article 1201
Choice Communicated

Art. 1201. The choice shall produce no effect except from the time it has been communicated.

The creditor is entitled to be notified of the choice.

Once choice by debtor is communicated to creditor, what are its effects or legal consequences?

Until the choice is made and communicated, the obligation remains alternative.
➢ Once the notice of the election has been given to the creditor:
(1) The obligation is now limited or concentrated to the object or prestation chosen with all
consequences provided by law.
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(2) It becomes a simple obligation to perform the prestation chosen.

(3) It becomes irrevocable.

When does the choice of the prestation by the debtor takes effect?
How should this choice be communicated to the creditor?

• Choice by debtor of prestation takes effect from the time it is communicated to the creditor;

• Mode of communication may vary. It is also the debtor’s choice.

Communication may be made:
(a.) orally
(b.) in writing,
(c.) tacitly;
(d.) other unequivocal means

• Choice may be given by, or to an authorized representative.

Does the law require the creditor’s agreement to the debtor’s choice?
No, otherwise this would be contrary to the very nature of alternative obligation which empowers the
debtor to perform completely one of the prestations pursuant to his choice. The same principle applies if
the right of choice is given to the creditor.

The creditor has no right to oppose the choice, provided such choice of prestation is not unlawful,
impossible or outside what the parties wanted.

If the debtor without announcing to the creditor his choice among the prestations proceeded to
perform one of them, will this be considered as binding?
The fact of performance by debtor who has the right to choose is a form of an implied or tacit selection,
unless debtor performs one of the prestations by mistake. In the latter case, there is no selection nor a
binding performance of the obligation. Debtor can recover what is given according to the law on quasi-
contracts.

For the choice to be effective, what is the rule if there are several debtors or creditors?
If obligation is JOINT, consent of all is necessary for choice to be effective, because none of them can
extinguish the entire obligation alone.

If obligation is SOLIDARY, and without stipulation to contrary, choice of one will be binding to all.

What is the effect of delay by debtor in making a choice or selection?

The right to choose by debtor is not lost by mere delay in his selection. But if a case is filed in court
before any choice is made by debtor, an issue arises as to who will make the selection or choice now? The
following theories in foreign jurisprudence may be adopted:

a.) French Theory – court gives the party with right of choice to make the choice, otherwise the
court will make the choice or will give it to the other party.
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b.) German Theory – right to choose passes to the other party upon delay by party entitled to
choose; the latter is deemed to have waived his right to choose in favour of the other party who may
then exercise such right. Debtor cannot paralyze the remedy of the creditor to demand performance
when due, by simply refusing to make a selection.

The court may however in the interest of justice & equity grant the debtor a period to make his
choice before creditor is allowed to choose.

Article 1202
Only One Choice is Practicable

Art. 1202. The debtor shall lose the right of choice when among the prestations whereby he is
alternatively bound, only one is practicable.

• Article 1202 applies only when Debtor has the right of choice.

What is the legal effect, when among the prestations whereby the debtor is alternatively bound, and
only one is practicable?

A. OBLIGATION BECOMES SIMPLE & CEASES TO BE ALTERNATIVE – when all prestations are
impossible, unlawful, except for one, then debtor is left with only one choice. The obligation becomes
pure and simple; it ceases to be alternative.

NOTE: Impossibility of other prestations must not be due to creditor’s acts, otherwise, Art. 1203 shall
apply. (In such case, debtor may rescind contract)

Article 1203
Debtor Cannot Choose due to Creditor’s Acts

Art. 1203. If through the creditor's acts the debtor cannot make a choice according to the terms of the
obligation, the latter may rescind the contract with damages.

What are the legal consequences if by Creditor’s acts would render debtor’s choice impossible?
(1) Debtor may rescind contract plus damages [Art. 1203]
(2) Debtor may also opt to select the remaining prestation because rescission is not automatic.

Rescission creates the obligation to return the things which were the object of the contract together
with their fruits, and the price with its interests. (Art. 1385[1]). The debtor, however, is not bound to
rescind.

Example:
Ella agreed to do the interior design of James’ house, or his office for a fee of P100,000. James
however, before Ella can make a choice, James opted to have his fiancé Kiara do the interior design
of his residence.
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The alternative prestation of doing the interior design of James’ residence is now impossible due to
his act. Ella is now left with one choice, which is the simple obligation to do the interior design of
James’ office.

What are the options of debtor Ella in this case?

1. Do the interior design of James’ office or;
2. May rescind the contract (plus damages if any)

Why rescind the contract when it was clear that debtor has 2 alternative choices in the contract?
Because the debtor is now deprived of her right to choose which prestation to do by reason of creditor’s
own acts. (Art. 1203)

Article 1204
Through Debtor’s Fault All Choices are Lost

Art. 1204. The creditor shall have a right to indemnity for damages when, through the fault of the debtor,
all the things which are alternatively the object of the obligation have been lost, or the compliance of the
obligation has become impossible.

The indemnity shall be fixed taking as a basis the value of the last thing which disappeared, or that of the
service which last became impossible.

Damages other than the value of the last thing or service may also be awarded.

• Article 1204 applies if Debtor has the right to choose prestation, and all the prestations are made
impossible due to the fault of debtor.

ILLUSTRATION:
Willy agreed to deliver his house in Alabang, or his gold bars, or his Monet painting to Manny as
payment for his island.

Effect of loss of objects of obligation

All of the objects are lost

1.) If all objects of alternative obligation have become impossible due to the fault of debtor, creditor
will be indemnified for damages.

2.) If the cause of impossibility is due to fortuitous event, the obligation is extinguished and the
debtor is not liable for damages, and released from responsibility, unless there is contrary
stipulation.
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Some of the objects are lost

3.) If there are several prestations due but became impossible due to fortuitous event, and the only
one left becomes impossible due to fault of debtor, Art. 1204 will apply. Debtor is liable for
damages.

4.) But if some of the prestations due became impossible due to fault of debtor, and the remaining
prestation becomes impossible due to fortuitous event, would this relieve debtor from any
liability?

PARAS: Obligation is extinguished and the debtor is relieved from liability.

Reason – Debtor is generally given the choice of how to meet the obligation in alternative
obligations. Thus, impossibility of prestations even by fault of debtor, converted the obligation
into simple obligation to perform the remaining prestation. If this in turn becomes impossible to
perform due to fortuitous event, then the obligation is extinguished.

TOLENTINO: Debtor may still be held liable, but the basis will be the value of the last thing or
object which disappeared, or the service that became impossible due to his fault (par.2). This is
more just.

Reason – the negligence or fault of the debtor has diminished the possibility of the performance
of the obligation. Debtor’s lack of diligence caused the first prestations to become impossible.
The obligation could have been complied with, even if later fortuitous event rendered one
prestation impossible.

The debtor should not be relieved from liability when his fault or negligence concurred with the
fortuitous event in making the performance impossible. This view is also shared by modern
authors like Pothier, Duranton and Demolombe.

Example:
S agreed to deliver item one or item two or item three.

If item one is lost through the fault of S, he can still select item two or item three. The
loss of item one and item two with or without the fault of S will reduce the obligation to
a simple one.

If all items are lost through his fault, liability will attach, if through a fortuitous event, the
obligation will be extinguished.

5.) Damages other than the value of the last thing or service may also be awarded if justified by facts
of case.
Article 1205
Choice Given to Creditor

Art. 1205. When the choice has been expressly given to the creditor, the obligation shall cease to be
alternative from the day when the selection has been communicated to the debtor.
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Until then the responsibility of the debtor shall be governed by the following rules:

1) If one of the things is lost through a fortuitous event, he shall perform the obligation by delivering
that which the creditor should choose from among the remainder, or that which remains if only
one subsists;
2) If the loss of one of the things occurs through the fault of the debtor, the creditor may claim any
of those subsisting, or the price of that which, through the fault of the former, has disappeared,
with a right to damages;
3) If all the things are lost through the fault of the debtor, the choice by the creditor shall fall upon
the price of any one of them, also with indemnity for damages.

The same rules shall be applied to obligations to do or not to do in case one, some or all of the prestations
should become impossible.

• This Article applies when it is the CREDITOR who has the right of choice.
• This is an exception to general rule in Art. 1200.
• The choice of creditor becomes effective from the time it is communicated to the debtor, either
expressly or tacitly. At this point, the obligation ceases to be alternative and is turned into a simple
one.

There is TACIT selection or choice exercised by Creditor if:

a.) Creditor accepts a prestation offered by debtor;
b.) Creditor brings an action to enforce one of the prestations.

In an alternative obligation where the Creditor is given the right of choice among the prestations, will
the Debtor incur in delay, if the creditor fails to make his choice within the period fixed for the
performance?

Effect of Creditor’s Delay

The Debtor will not incur delay in performance of obligation even if there is a period fixed for
performance.

Reason:
o Until the obligation becomes a simple obligation by creditor’s communication of his choice,
debtor would not know which of the prestations is he supposed to perform.
o Also, creditor, because of his inaction or own delay to act, is deemed to have waived the
period fixed in the obligation.
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SUMMARY – ALTERNATIVE OBLIGATIONS

❖ IF CHOICE BELONGS TO THE DEBTOR :

What are the rules in case of loss of the thing or object or prestation due?

1.) IF LOSS IS DUE TO FORTUITOUS EVENT without fault of debtor:

a. When through fortuitous event or through the debtor‘s acts, there is only ONE prestation left,
the obligation ceases to be alternative and is converted to a pure and simple obligation.
(Article 1202).

b. When ALL the things are lost due to a fortuitous event, without fault of the debtor, the
obligation is extinguished.

2.) IF LOSS IS DUE TO DEBTOR’S FAULT:

a. When some things are lost due to the debtor’s fault but there are still some things remaining,
then the debtor can choose from remains.

b. When ALL the things are lost due to the debtor’s fault, the creditor can sue for damages
(Article 1204)

3.) IF LOSS IS DUE TO A COMBINATION OF FORTUITOUS EVENT &/or DEBTOR‘S

FAULT:

a. When all but one of the things are lost due to a fortuitous event and the last object is lost through
the debtor’s fault, then the creditor can sue for damages.

b. When all but one of the things are lost through the debtor’s own acts or fault, and the last object is
lost through a fortuitous event, the obligation is extinguished. (Paras’ opinion)

OR – Debtor is liable for damages based on the value of the last prestation or object which
disappeared or became impossible through Debtor’s fault.
Reason: Debtor should not be relieved from his liability when his fault coincided with the
fortuitous event that made performance impossible. (Tolentino’s opinion)

4.) IF LOSS IS DUE TO CREDITOR‘S ACT OR FAULT:

a. When the choice of the debtor is limited due to the creditor‘s own acts, then the Debtor may
choose:
(i) to opt for the remaining object or prestation, or;
(ii) to avail of the remedy of resolution or rescission [Article 1191], plus damages
[Article 1203]
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❖ IF CHOICE BELONGS TO THE CREDITOR (Article 1205)

What are the rules in case of loss of the thing?

1.) If thing is LOST through a FORTUITOUS EVENT:

a. One or some of the things are lost - creditor can choose from the remainder, or that which
remains if only one subsists;
b. When ALL the things are lost due to a fortuitous event, the obligation is extinguished;

2.) If thing is LOST through the FAULT OF DEBTOR:

a. One or some of the things are lost - the creditor may

(i) choose from the remainder or that which subsists, plus damages; or
(ii) get the value of any of the object lost, plus damages.

Why should debtor still pay for damages if there are still remaining things from which
creditor may still choose?
A. Because through the fault of the debtor, he deprives creditor to include this thing from his
choices given him by the agreement and the law (Art. 1205).

c. When ALL of the things are lost - the creditor can get the value of any of the objects lost,
plus damages;

3.) If ALL of the things are lost due to the CREDITOR’S fault, the obligation is extinguished.

Article 1206
Facultative Obligations

Art. 1206. When only one prestation has been agreed upon, but the obligor may render another in
substitution, the obligation is called facultative.

The loss or deterioration of the thing intended as a substitute, through the negligence of the obligor, does
not render him liable. But once the substitution has been made, the obligor is liable for the loss of the
substitute on account of his delay, negligence or fraud.

What is a Facultative Obligation?

It is one where the parties to the obligation agreed that the debtor/obligor is required to perform only one
prestation, but he may perform or deliver another in substitution. Here, the option to perform the
substitute is dependent on the will of the Obligor or Debtor.
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Examples:
X and Z agreed in a contract that X will deliver to Z a new red Porsche Carrera sports car, with a
provision that if this is not immediately available within the period, X can replace it with a black
AUDI A4 car.

“I will give you my piano but I may give my LCD television set as a substitute.”
Here, only the piano is due. Hence, its lost through my fault would make me liable.

“I will mortgage my land to secure my debt which shall be payable within 90 days upon my
failure to pay my debt within 30 days.”
Here, I may mortgage my land in substitute of the obligation to make payment within 30 days.

What is the effect if the substitute is lost or has deteriorated, or becomes impossible due to the fault
of debtor?

Before substitution
The obligation is generally not affected. Debtor cannot be held liable for damages.
Reason: The substitute is not the prestation or object that is due. Only the principal is the one that is due
and enforceable by the creditor at this point, not the substitute.

Example:
S will give B item one or if S wants, item two.

➢ If item one is lost through a fortuitous event, the obligation of S is extinguished.

➢ If item one is lost through the fault of S, S is liable for damages.
➢ If item two is lost with or without the fault of S, S is still liable to deliver item one, he is not liable
for damages for the loss of item two as it is not due.

After substitution
Once the debtor communicates to the creditor his choice to perform or deliver the substitute, the substitute
becomes the principal and only prestation or object of the obligation that will be due. From this time, the
debtor may be liable for the loss or deterioration of the thing due to his delay, bad faith, negligence or
fraud, even in case of fortuitous event. Substitution becomes effective from the time it has been
communicated.

Example:
Based on the preceding example.

➢ If item one is lost with or without the fault of S, S is not liable for its loss since his obligation is to
deliver item two.
➢ If item two is lost through a fortuitous even, the obligation of S is extinguished.
➢ If item two is lost through the fault of S, S is liable for damages.
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Facultative vs. Alternative Obligations

i.) Right of Choice –

In Alternative obligations, the right of choice may be given to the debtor, creditor or third
person. But in Facultative obligation, the right of choice is always with the debtor..
Facultative obligations bear a resemblance to alternative obligations particularly when the
choice in an alternative obligation is with the debtor.
ii.) Number of Prestations –
In Alternative obligations, several prestations or due but compliance of one is sufficient,
while in facultative obligations, only one (1) prestation is due although the debtor is allowed
to substitute it.

iii.) Loss through a fortuitous event

In an alternative obligation, if one of the prestations disappears or becomes impossible, the
choice of prestation may still be made from the remaining objects or prestations. In a
facultative obligation, if the principal obligation becomes impossible, the obligation is
deemed annulled, even if the substitute may still be available.

Note:
In theory, it is easy to distinguish a facultative obligation from an alternative obligation. But in practice,
it can be difficult since the wording of contracts may be ambiguous or not clear enough.

Example:
I promise to deliver my Honda Accord, but I reserve my right to replace this with my Ford Pick-up. In
this case, is the obligation Alternative or Facultative?

Here, one must look at the circumstances of the obligation and intention of contracting parties. If it is
impossible to determine which one, then the doubt should be resolved in the favor of an Alternative
Obligation since its effects are less radical than Facultative obligation.

In an alternative obligation, if one of the prestations disappears or becomes impossible, the choice of
prestation may still be made from the remaining objects or prestations. In a facultative obligation, if the
principal obligation becomes impossible, the obligation is deemed annulled, even if the substitute may
still be available.

Review Questions
1. What are the limitations on the right of choice of the debtor in alternative obligations?
2. State the legal effects in case:
a. Some of the objects of the obligation are lost through the fault of the debtor who has the
right of choice;
b. All are lost through his fault.
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Name: Score:
Block: Date:

Exercise 1. Multiple Choice. Read and analyze each items carefully. Write the letter of your which
corresponds to your choice on the space before the number.

1. Diaz is under the obligation to give Cruz at Diaz’option a car a pick up or a van.
Statement 1: If the car and he pick-up were destroyed by Diaz’ own fault and later Diaz
communicated to Cruz to deliver the van, but got lost by a fortuitous even, Diaz should not be
held liable.

Statement 2: If the car and the pick-up were destroyed by a fortuitous even and later the van was
lost by Diaz’ fault, Diaz should be held liable.

a. True, False
b. False, True
c. Both True
d. Both False

2. Dante is bound to give Crystal one (1) gram of shabu, or a particular sign pen or bottle of cow’s
milk taken from a carabao or a both which sank somewhere in the Pacific Ocean 100 years ago.
Which object can Dante choose?
a. Object No. 1
b. Object No. 2
c. Object No. 3
d. Object No. 4

3. For P20,000, Diana promised to buy for Charmaine one set of computer or to teach her how to
use it from April to August 2013. If on March 2013 Charmaine goes to Zimbabwe, which of the
following statements is correct?
a. Diana may teach Charmaine how to use the computer.
b. Diana is required to rescind the contract with the right to recover damages.
c. Diana may still buy one set of computer.
d. None of the above.

4. Facultative as distinguished from alternative obligation.

a. The right of choice is given only to the debtor
b. Various things are due, but giving one is sufficient.
c. If one of the prestations is illegal, the others may be valid and the obligation remains.
d. If it is impossible to give all except one, the last one must still be given.

5. In facultative obligation
a. If before selection, one prestation is lost through fortuitous even, the creditor may select
from the remaining prestations or the debtor may deliver the only remaining practicable
prestation.
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b. If before selection, all the prestations are lost through debtor’s fault, the creditor may
demand the value of any of the things lost plus damages.
c. There is only one principal prestation in the obligation but the debtor may give or do
another thing as a substitute.
d. If the right of selection is given to the creditor, he must notify the debtor of what he has
chosen to be delivered by the debtor.

6. In an obligation where only on prestation has been agreed upon, but to extinguish the obligation,
the debtor is allowed and does render another substitute, the obligation is
a. Facultative obligation
b. Simple obligation
c. Alternative obligation
d. Conjunctive obligation
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Name: Score:
Block: Date:

Exercise 2. Problems. Explain or state briefly the rule or reason for your answer.

1. D (debtor) borrowed P10,000 from C (creditor). It was agreed that D could pay P10,000 or
deliver his piano on August 22. On August 20, D informed C that the former would deliver his
piano. Can D still change his period considering that he was given the right of choice?

2. Under a contract, X (obligor) promised to deliver to Y (oblige) item one, or item two, or item
three. Y was given the right of choice. What is the liability of X, through his fault:
a. Item two is lost or destroyed;
b. All the items are lost or destroyed?

3. S (seller) sold his TV set to B (buyer) who gave S the option to deliver instead his refrigerator. Is
S liable to B in case the TV is lost through S’s fault?

References:

De Leon, H. S. (2014). The Law on Obligations and Contracts. Manila: REX Book Store.

Suarez, C. B and Suarez, A. Q. (2006). The Law on Obligations and Contracts. Davao City: GIC
Enterprises & Co., Inc.

Sta. Maria Jr., M. S(2003). Obligations and Contracts, Text and Cases. Manila: REX Book Store.