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Article 1199. A person alternatively bound by different (2)The debtor has no more right of choice when, among the
prestations shall completely perform one of them. The prestations whereby he is alternatively bound, only one is
creditor cannot be compelled to receive part of one and part practicable. (Art. 1202.) In this case, there is not only a
of the other undertaking. (1131) limitation but a loss of the right of choice belonging to the
Kinds of obligation according to object. debtor. The obligation becomes simple.
1. Simple obligation - one where there is only one Example:
prestation(obligation). D obliged himself to give C a particular horse or a stolen
Examples: cellphone or to cyberbully C’s former girlfriend. Here,
D obliged himself to deliver to C a the obligation becomes a simple obligation – to give a
cellphone. particular horse. D cannot choose to give C a stolen
D promised to repair the computer of cellphone or to cyberbully C’s former girlfriend because
C. both are unlawful.
2. Compound obligation - one where there are two or more Examples:
prestations. 1. Impossible. - D promised to give C P5,000, or a specific
a. Conjunctive obligation - one where there are several cellphone, or the galaxy. Here, D cannot choose to give the
prestations and all of them are due. galaxy because it is physically impossible.
b. Distributive obligation - one where two or more of the 2. Unlawful. - D obliged himself to deliver to C a marijuana
prestations is due. brick, or a car, or a cellphone, or to help C cheat in the exam.
1. Alternative obligation - several prestations are due D can choose only to deliver a car or cellphone.
but the performance of one is sufficient. The debtor cannot choose that which:
Example: 3. could not have been the object of the obligation - D
D obliged himself to give C a particular borrowed from C P10,000. It was agreed that D would give C
horse or a specific cellphone, or to teach C his cellphone, or P10,000, or his rubber shoes.
how to drive. Here, it is enough that D fully Suppose D has 2 cellphones – an old Nokia worth P1,000 and
performs one prestation. a new Samsung worth P10,000. D cannot choose the old
2. Facultative obligation - only one prestation is due, Nokia because it could not have been the object of the
but there is a substitute another. obligation.
Example: 4. only one prestation is practicable. – S will deliver to B his
D obliged himself to give C a particular horse, or his carabao, or his refregirator. The horse and the
horse, or as substitute to give a specific carabao were lost without the fault of S. S has no more choice.
cellphone or to teach C how to drive. He must deliver the refrigerator which is the only one
practicable.
Article 1200. The right of choice belongs to the debtor, unless
it has been expressly granted to the creditor. (3) The debtor cannot choose those prestations which are:
The debtor shall have no right to choose those prestations which - impossible;
are impossible, unlawful or which could not have been the - unlawful; or
object of the obligation. (1132) - which could not have been the object of the
General Rule: The right to choose which prestation to perform obligation.
belongs to the debtor.
Examples:
Article 1201. The choice shall produce no effect except from
D insured his house with C (Bayad Agad Insurance
the time it has been communicated. (1133)
Company). It is agreed that if the house is destroyed or
Communication of notice that choice has been made.
damaged, D may either (1) pay the damage or loss, or
1. Effect of notice - until the choice is made and communicated,
(2) restore or rebuild the house.
the obligation remains alternative.
* Since nothing is said in the contract as to who has the
- debtor’s choice once communicated is irrevocable and
right of choice, it belongs to C (debtor, Bayad Agad).
the obligation ceases to be alternative and becomes
S binds himself to deliver item one or item two to B on
simple.
Dec. 10 and to communicate his choice on or before
- the concurrence of the creditor to choice is not required
Dec. 5.
2. Proof and form of notice - The burden of proving that such
* If S delays in making his choice, B cannot exercise the
communication has been made is upon him who made the
right because it is not expressly granted to him.
choice.
Note: The debtor’s right of choice is not absolute.
- law is silent as to form of notice; notice of choice can be
Meaning to say:
expressly which can be orally/written/implied
The right of choice of the debtor is subject to limitations. Thus - Example:
(1)The debtor cannot choose those prestations which are: (a) S obliged himself to deliver to B his car, or his race
impossible, (b) unlawful, or (c) which could not have been the horse. S chose the car and properly informed B of his
object of the obligation. These prestations are void. However, choice.
their presence does not invalidate the obligation if it includes * The obligation becomes a simple obligation to deliver the
other undertakings otherwise free from such defects. car. As such, neither party can change the prestation
* the debtor’s right of choice is not extinguished altogether without the consent of the other. Of course, S or B may
but limited to remaining valid prestation. waive his right after a choice has been made. As general
Example: rule, all rights may be waived. (Art. 6)
D obliged himself to give C a particular horse or a stolen
cellphone or to create a website for C. Here, the
Article 1203. If through the creditor's acts, the debtor cannot In case of disagreement, the creditor must prove the value, or
make a choice according to the terms of the obligation, the latter which thing last disappeared or which service last became
may rescind (revoke) the contract with damages. (n) impossible.
- Rescission is not automatic, and the debtor may not Article 1205. When the choice has been expressly given to
rescind the contract and perform the other prestations the creditor, the obligation shall cease to be alternative from
(jurisdiction of the supreme court) the day when the selection has been communicated to the
When debtor may rescind contract. debtor.
If through the creditor’s fault, the debtor cannot make a choice Until then the responsibility of the debtor shall be governed by
according to the terms of the obligation, the debtor is given the the following rules:
right to rescind the contract and recover damages. (1) If one of the things is lost through a fortuitous event, he
Example: shall perform the obligation by delivering that which the creditor
D borrowed from C P10,000. It was agreed that instead should choose from among the remainder, or that which
of P10,000, D could deliver to C a specific cellphone, remains if only one subsists;
computer or tablet. (2) If the loss of one of the things occurs through the fault of
- If through C’s fault the cellphone is destroyed, then D the debtor, the creditor may claim any of those subsisting, or
can rescind the contract if he wants. In case of the price of that which, through the fault of the former, has
rescission, D must return the P10,000 plus interest. C, disappeared, with a right to damages;
in turn, must pay D the value of the cellphone plus (3) If all the things are lost through the fault of the debtor, the
damages. choice by the creditor shall fall upon the price of any one of
- However, instead of rescinding the contract, D may them, also with indemnity for damages.
choose the computer or tablet with a right to recover The same rules shall be applied to obligations to do or not to do
the value of the cellphone with damages. If D chooses in case one, some or all of the prestations should become
the cellphone, then his obligation to C is extinguished. impossible. (1136a)
On the other hand, C is not liable for damages. Rules in case of loss before creditor made a choice. (Here, the
choice belongs to the creditor.)
Article 1204. The creditor shall have a right to indemnity (1) When a thing is lost through a fortuitous event
(security) for damages when, through the fault of the debtor, all Example:
the things which are alternatively the object of the obligation S obliged himself to deliver to B a particular horse,
have been lost, or the compliance of the obligation has become cellphone, computer or tablet. If the horse is lost
impossible. through a fortuitous event, B can choose from
The indemnity shall be fixed taking as a basis the value among the remainder. If three of the items are lost,
of the last thing which disappeared, or that of the service which then B must give that which remains.
last became impossible. (2) When a thing is lost through debtor’s fault.
Damages other than the value of the last thing or Example:
service may also be awarded. (1135a) If the loss of the horse occurs through the fault of S, B
Effects of loss of objects of obligation. (The right of choice may claim item either the cellphone, computer or tablet
belongs to the debtor.) with a right to damages, or the price of lost horse also
1. Some of the objects - If some of the objects of the obligation with a right to damages.
have been lost or have become impossible even through the (3) When all the things are lost through debtor’s fault
debtor’s fault, then the debtor is not liable since he has the right Example:
of choice and the obligation can still be performed. If all the items are lost through the fault of S, then B
2. All of the objects - If all of them have been lost or have can demand the payment of the price of any one (not
become impossible through the debtor’s fault, the creditor shall necessarily the last object that was lost) of them with a
have the right to indemnity for damages (value of the last thing right to indemnity for damages.
that was lost + damages) since the obligation can no longer be (4) When all the things are lost through a fortuitous event
complied with. If the cause of the loss is fortuitous event, then Example:
the obligation is extinguished. The obligation of S shall be extinguished if all the items
-All except one is lost due to the fault of the debtor and the which are alternatively the object of the obligation are
remaining prestation was lost due to fortuitous event= lost through a fortuitous event. In this case, Article
extinguished 1174 shall apply.
-All except one is lost due to fortuitous event and the remaining
prestation was lost due to the debtor’s fault= payment for Article 1206. When only one prestation has been agreed
damages upon, but the obligor may render another in substitution, the
Example: obligation is called facultative.
S agreed to deliver item one, two, or item three. The loss or deterioration of the thing intended as a substitute,
* If item one is lost through the fault of S, he can still select through the negligence of the obligor, does not render him
either item two or item three. The loss of item one and two liable. But once the substitution has been made, the obligor is
with or without the fault of S will reduce the obligation to a liable for the loss of the substitute on account of his delay,
simple one. negligence or fraud. (n)
* If all items are lost through his fault, liability will attach; if *Article 1206 deals with facultative obligation.
through a fortuitous event, the obligation will be Meaning of facultative obligation.
extinguished. A facultative obligation is one where only one prestation has
been agreed upon but the obligor may render another in
Basis of indemnity. substitution.
The value of the last thing which disappeared (obligation to give) Example:
or the value of the service that last became impossible “I will give you my cellphone but I may give my tablet as
(obligation to do). a substitute.”
* In this obligation, only the cellphone is due. Hence, its loss 4. Each debtor is liable only for the proportionate part of the
through my fault will make me liable. debt.
Effects of Loss. 5. Each creditor is entitled only to a proportionate part of the
(1) Before substitution - If the principal thing is lost through a credit.
fortuitous event, the obligation is extinguished. If the 6. In a joint obligation, the rule is “to each his own”.
principal thing is lost through the debtor’s fault, he should
be liable for damages. Illustration 1: D1 and D2 borrowed P10,000 from C.
If the substitute is lost due to fortuitous event or debtor’s fault, 1. How much can C collect from D1?
there is no additional obligation because it is not yet due. Answer: P5,000.00. There as a many debts as there are debtors.
2. Suppose D2 is insolvent or has passed away, how much can C
(2) After substitution - If the principal thing is lost, the debtor collect from D1?
is not liable whatever may be the cause of the loss, because Answer: P5,000. D2’s debt is distinct and separate from D1’s
it is no longer due. debt. Hence, D1 is not bound to shoulder D2’s debt.
If the substitute is lost, the liability of the debtor depends upon 3. Suppose D1 paid C P5,000, can D1 ask a share or
whether the loss is due to his fault. (Fortuitous event= reimbursement from D2?
extinguished; Debtor’s fault= pay for damages) Answer: No, because D1’s debt is distinct and separate from
Alternative and Facultative Obligations Distinguished D2’s debt.
Illustration 2: D borrowed P10,000 from C1 and C2.
1. How much can C1 collect from D?
Answer: P5,000.00. There as a many credits as there are
creditors.
2. Suppose C1 is able to collect P5,000 from D, how much, if any,
should C1 share with C2?
Answer: None, because C1’s credit is distinct and separate from
C2’s credit.
*Take Note: If the obligation is silent or does not
specify whether the debtors are joint or solidary, they
are presumed to be joint only.
(2) By its cause or origin: (5) No retention or controversy has been commenced by a third
(a) Legal. — when it takes place by operation of law when person. (negative requisite)
all the requisites are present even without the knowledge - retention= the credit of one of the parties is subject to the
of the parties (Arts. 1279, 1290.); satisfaction of the claims of a third person
-controversy= if when a third person claims he is a
Requisites (ART. 1279): creditor of one of the parties
-either of them, any of them of the two obligations= The
(1) The parties are principal creditors and principal debtors of retention or controversy commenced by a third person must be
each other. communicated “in due time’’ to the debtor.
-each one of the obligors be bound principally and at the same
time be a principal creditor of the other. EXAMPLE:
(d) Facultative. — when it can be set up only by one of the
(1) A owes B P10,000.00. B owes A P10,000.00. B also owes C parties. (see Arts. 1287, par. 1; 1288.)
P10,000.00. C causes the garnishment of the credit of B against A - one of the parties can set up or has the right to claim or
and notifies A not to pay B P10,000.00 as C has a better right to oppose compensation
the said amount.
XXX Art. 1285
B may not owe C but the latter claims that he and not B is the Where Compensation has Taken Place After Assignment
creditor of A. In this case, compensation cannot take place - Identify if the compensation has happened/took place
between A and in view of a controversy commenced by C, a third before the assignment
person. ASSIGNMENT
- assignment of credits; a contract whereby a person
In the meantime, the compensation is suspended. If C loses the (assignor) transfers his right/credit/actions against a third person
case, compensation shall be deemed to have taken place as of to another
the date the requisites for legal compensation concurred. person (assignee), certain in money or its equivalent/gratuitous
EXAMPLE: EXAMPLE:
(1) A owes B, 50,000. B sued A for collection. One week A owes B 3,000 due yesterday. B owes A 1,000 due also
after A was sued, B through negligence rammed his jeep in the yesterday. Both debts are extinguished up to the amount of
parked car of A which caused scratches. A can claim damages for 1,000. Hence, A still owes B 2,000 today. If B assigns his right to
the scratches in his car. A pleads damage in counterclaim and can C, the latter can collect only 2,000 from A.
prove that it was due to the wrongful act of B and the amount
thereof. The court may order the offsetting of the amount of A’s However, if A gave his consent to the assignment before it was
debt to B. made or subsequently, A loses the right to set up the defense of
compensation.
(2) A owes B, 50,000. When B went to the house of A, A was
hesitant to pay his obligation. Out of anger, B threw in front of So, A will be liable to C for 3,000 but can still collect 1,000 owed
the face A, the most precious antique jars in the house of A, by B. In other words, the compensation shall be deemed not to
which cost 50,000. A sued B for damages aside from criminal have taken place.
action. The amount of loan and amount of damages which
respect to the jar is the same.
(2) Assignment with the consent of debtor.
The court can order the offsetting of the amount of debt of A to B - if the debtor reserved his right to compensation=
with respect to the amount of damages which A is claiming compensation will take place
against B with virtue of the antique jar. - the debtor consents= no compensation EXAMPLE:
A owes B P3,000.00 due November 15. B owes A P1,000.00 due - Apply in cases whereby only one party has the right to
November 15. B assigned his right to C on November 1 with the claim or oppose the compensation (facultative compensation;
consent of A. takes because legal compensation
cannot take place)
On November 15, A cannot set up against C, the assignee, the
compensation which would pertain to him against B, the 1. Where one of the debts arises from a depositum.
assignor.
DEPOSIT- a person receives a thing belonging to another with the
In other words, A is liable to C for P3,000.00 but he can still obligation of safely keeping and returning the same
collect the P1,000.00 debt of B.
• A bank deposit is not a depositum as defined above. It is
However, if A, while consenting to the assignment, reserved his really a loan contract which creates the relationship of debtor
right to the compensation, he would be liable only for P2,000.00 and creditor.
to C • Legal compensation can take place.
• Money is not kept safely by the bank (safekeeping) but
(2) Assignment with the knowledge but without the consent of used in other purposes, and so it is not the money that you
debtor deposited that the bank would return later.
- without his consent= compensation • The bank is not obliged to keep the money safely and
- not yet due/demandable/ not matured= no give the same money which you deposited (not the same serial
compensation number).
• As a general rule, a bank has a right of set-off of the
EXAMPLE: deposits in its hands for the payment of any indebtedness to it
on the part of a depositor.
A owes B P1,000.00 due November 1. B owes A P2,000.00 • Similarly, a depositor has every right to set-off his
due November 10. A owes B P1,000.00 due November 15 (not money deposit with a bank against the loans he had obtained
yet due, cannot be compensation). A assigned his right to C on from said bank.
November 12. A notified B but the latter did not give his consent
to the assignment. EXAMPLE:
How much can C collect from B? A deposited his money in a bank, 100,000. A contract of loan is
B can set up the compensation of debts on November 10 made and legal compensation can take place because it is not a
which was before the cession on November 12. (par. 2.) There contract of deposit.
being partial compensation, the assignment is valid only up to
the amount of P1,000.00. A has a loan, the bank can claim compensation and has the right
to set-off deposits that you have in the bank against
But B cannot raise the defense of compensation with respect to loan/indebtness which you owe the bank.
the debt of A due on November 15 which has not yet matured.
So, on November 12, B is liable to C for P1,000.00. Come A can also claim compensation, by saying, “I have a deposit in
November 15, A will be liable for his debt of P1,000.00 to B. your bank, and I have a loan, so we can have compensation
and you can set off it to my loans in your bank”
(3) Assignment without the knowledge of the debtor. - without
the knowledge= compensation before and after the assignment EXAMPLE:
Neither can compensation be set up against a creditor who has a Can B demand the delivery of the rice which A owes him and
claim for support due by gratuitous title, without prejudice to the after which, A may claim compensation?
provisions of paragraph 2 of Article 301. - Depositor can claim for compensation
(4) Where one of the debts consists in civil liability arising from a
penal offense
EXAMPLE: - offender is not allowed to claim compensation, but the
A is obliged to give B a specific cellphone. Later, B borrowed from offended party can claim/oppose compensation.
A the same cellphone, that A is obliged to give to B. If A demands
the return of the cellphone that B borrowed. REASON: satisfaction of such obligation is imperative
W filed for annulment against H, and after trial and hearing, and
H was ordered by the court to give monthly support of 50,000
payable every first day of the month to W.