DIFFERENT KINDS OF OBLIGATIONS
Section 3. Alternative and Facultative Obligations
Concept. — When an obligation comprehends several objects or prestations it may be either conjunctive or distributive. It is conjunctive when all of the objects or prestations are demandable at the same time; it is distributive when only one is demandable.
The latter, in turn, may be either alternative or facultative. It is alternative when it comprehends several objects or prestations which are due, but it may be complied with by the delivery or performance of only one of them; it is facultative when it comprehends only one object or prestation which is due, but it may be complied with by the delivery of another object or the performance of another prestation in substitution.146
It is, therefore, clear that the characteristic feature of an alternative obligation is that various objects being due, the payment or performance of one of them, determined by the election which, as a general rule, pertains to the obligor or debtor, is suffi cient.147 The characteristic feature of a facultative obligation, on the other hand, is that only one object or prestation is due, but the obligor or debtor may deliver another object or perform another prestation in substitution.148
1468 Manresa, 5th Ed., Bk. 1, p. 393; 3 Castan, 7th Ed., pp. 75-76.
147Ibid.
148Art. 1206, Civil Code.
DIFFERENT KINDS OF OBLIGATIONS Art. 1198 Alternative and Facultative Obligations
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.149
Art. 1200. The right of choice belongs to the debtor, un-less it has been expressly granted to the creditor.
The debtor shall have no right to choose those presta-tions which are impossible, unlawful or which could not have been the object of the obligation.150
Right of Choice in Alternative Obligations. — In alterna-tive obligations, the general rule is that the right of choice belongs or pertains to the debtor.151 Thus, where the debtor borrowed a certain amount from the creditor, and in the promissory note which he had executed it is expressly stipulated that he can fulfi ll his obligation either by the payment of the amount of the indebtedness or by the delivery of a house and lot at an appraised valuation, it was held that such obligations are alternative in character.152 Consequently, upon the maturity of the note, the debtor can comply with the obli-gation by paying the agreed amount or by delivering the house and lot. Under the general rule stated in Art. 1200, he alone has the right to make the choice. Once he has made it, and such choice is duly communicated to the creditor, the obligation becomes simple.
There are, however, two exceptions to the general rule. They are: fi rst, when the right of choice has been expressly granted to the creditor;153 and second, when it has been expressly granted to a third person. Although the Code does not expressly recognize the second,there is no reason why it should not be allowed, since it is not contrary to law, morals, good customs, public order or public policy.
Idem; Limitations upon right of choice. — The limitations to the right of choice are given in the second paragraph of Art. 1200.
According to this provision, the debtor cannot choose those prestations or undertakings which are impossible, unlawful or which could not
149Art. 1131, Spanish Civil Code.
150Art. 1132, Spanish Civil Code.
151Art. 1200, Civil Code.
152Agoncillo and Marino vs. Javier, 38 Phil. 244.
153Art. 1200, par. 1, Civil Code.
Arts. 1199-1200
have been the object of the obligation. “Prestations which could not have been the object of the obligation” refer to those undertakings which are not included among those from which the obligor may select, or to those which are not yet due and demandable at the time the selection is made, or to those which, by reason of accident or some other cause, have acquired a new character distinct or different from that contemplated by the parties when the obligation was constituted.154 It must be noted that what is contemplated by the provision of the second paragraph of Art. 1200 is a case in which the right to choose or select is not lost or extinguished altogether, because there are still other objects or prestations from which the debtor can choose or select.
Art. 1201. The choice shall produce no effect except from the time it has been communicated.155
When Choice Takes Effect. — The rule stated in the above article is applicable whether the right of choice is exercised by the debtor, or by the creditor, or by a third person. No special form is required for the communication or notifi cation. Hence, any form may be employed provided that the other party is properly notifi ed of the selection. Nevertheless, considering the fact that the choice shall produce no effect except from the time the other party is notifi ed of the selection and the fact that the proof of such notifi cation is incumbent upon him who made the selection, it is always much better to make the notifi cation either in a notarized document or in any other authentic writing.156
Can the creditor to whom the selection had been duly communicated impugn such selection? In other words, before the choice or selection shall be binding upon the creditor, is it necessary that he must give his consent thereto? In a certain case, decided by the Supreme Court, where the alternative obligations of the obligor consisted of paying the insured value of the house or rebuilding it, and such obligor notifi ed the obligee that it shall rebuild the house, the court declared that the “object of the notice is to give the creditor or obligee opportunity to express his consent, or to
1548 Manresa, 5th Ed., Bk. 1, p. 398.
155Art. 1133, Spanish Civil Code.
1568 Manresa, 5th Ed., Bk. 1, p. 399.
DIFFERENT KINDS OF OBLIGATIONS Art. 1201 Alternative and Facultative Obligations
OBLIGATIONS
impugn the election made by the debtor and only after said notice shall the election take legal effect when consented to by the creditor, or if impugned by the latter, when declared proper by a competent court.’’157 It is, however, submitted that this doctrine is not sound.
Consent or concurrence of the creditor to the choice or selection made by the debtor is not necessary before the choice or selection can produce effect. To hold otherwise would destroy the very nature of the right to select and the alternative character of the obligation for that matter. Thus, according to Dean Capistrano: “The law does not require the creditor’s concurrence to the choice; if it did, it would have destroyed the very nature of alternative obligations, which empowers the debtor to perform completely one of them.’’158
Idem; Effect upon obligation. — Once the choice is made by the debtor (or by the creditor or by a third person as the case may be), the obligation ceases to be alternative from the moment the selection has been communicated to the other party. From that moment, both debtor and creditor are bound by the selection.
In other words, the debtor can only comply with his obligation by performing the prestation which has been selected, while the creditor can only demand compliance in accordance there with. “An election once made is binding on the person who makes it, and he will not therefore be permitted to renounce his choice and take an alternative which was at fi rst opened to him.”159
Art. 1202. The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable.160
When Only One Prestation Is Practicable. — According to the above article, when among several prestations whereby the debtor is alternatively bound, only one prestation can be performed because all of the others are impracticable, the debtor loses his right of choice altogether. In other words, the obligation loses its alternative character; it becomes a simple obligation. The provision of the above article, however, must be distinguished from the provision of the
157Ong Guan Can vs. Century Insurance Co., 46 Phil. 592.
1583 Capistrano, Civil Code, 1950 Ed., p. 131. To the same effect — 4 Tolentino Civil Code, 1956 Ed., p. 196.
159Reyes vs. Martinez, 55 Phil. 492.
160Art. 1134, Spanish Civil Code.
Art. 1202
second paragraph of Art. 1200. Under the fi rst, there is only one prestation which can be performed; under the second, there are still two or more which can be performed. Under the fi rst, the obligation is converted into a simple one because the debtor loses his right of election; under the second, the obligation is still alternative because the debtor can still exercise his right of election.
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.161
When Choice Is Rendered Impossible. — The above article does not have any counterpart in the Spanish Civil Code. The rule, however, is logical. Since the debtor’s right of choice is rendered ineffective through the creditor’s fault, his only possible recourse will be to bring an action to rescind the contract with damages.
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 fi xed 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.162
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.
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
161New provision.
162Art. 1135, Spanish Civil Code, in modifi ed form.
DIFFERENT KINDS OF OBLIGATIONS Arts. 1203-1205 Alternative and Facultative Obligations
OBLIGATIONS
creditor should choose from among the remainder, or that which remains if one only 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.163
Effect of Loss of Objects of Obligation. — It is evident that Art. 1204 is applicable only to a case where the right of choice belongs to the debtor, while Art. 1205 is applicable only to a case where the right belongs to the creditor. In other words, the fi rst article is the general rule, while the second is the exception.
What is the effect upon the obligation if one or some or all of the things or prestations which are alternatively the object of the obligation have been lost or cannot be complied with? The answer to this question must depend upon two factors or circumstances
— fi rst, whether the right of choice belongs to the debtor or to the creditor, and second, whether the loss or impossibility was due to a fortuitous event or to the fault of the debtor.
Idem; If right of choice belongs to the debtor. — If the right of choice belongs to the debtor and the loss or impossibility is due to a fortuitous event, then the provisions of Arts. 1174, 1262 and 1266 of the Code are applicable. The debtor cannot be held liable for damages. Consequently, if one of the things is lost or one of the prestations cannot be performed by reason of a fortuitous event, the debtor must still comply with the obligation by delivering or performing that which he shall choose from among the remainder; if all of the things, except one, are lost, or all of the prestations, except one, cannot be performed by reason of a fortuitous event, the debtor must still comply with his obligation by delivering or performing
163Art. 1136, Spanish Civil Code, in modifi ed form.
Arts. 1203-1205
that which remains; and if all of the things are lost or all of the prestations cannot be performed by reason of a fortuitous event, the debtor is released from the obligation.
But if the loss or impossibility is due to the fault of the debtor, then the provisions of Art. 1204 are applicable. Consequently, if all of the things are lost or all of the prestations cannot be performed due to the fault of the debtor, the creditor shall have a right to indemnity for damages. Such indemnity shall be fi xed taking as a basis the value of the last thing to be lost or that of the service which last became impossible. However, if one, or more, but not all, of the things are lost or one or some, but not all, of the prestations cannot be performed due to the fault of the debtor, the creditor cannot hold the debtor liable for damages. This is so because the debtor can still comply with his obligation.
Idem; If right of choice belongs to creditor. — If the right of choice belongs to the creditor and the loss or impossibility is due to a fortuitous event, then the provisions of Arts. 1174, 1262 and 1266, which are reiterated in No. 1 of the second paragraph of Art. 1205, are applicable. The debtor cannot be held liable. Consequently, what had been stated in the preceding section can also be applied here.
But if the loss or impossibility is due to the fault of the debtor, then the provisions of Nos. 2 and 3 of the second paragraph of Art.
1205 are applicable. Consequently, if all of the things are lost or all of the prestations cannot be performed due to the fault of the debtor, the creditor may claim the price or value of any one of them with indemnity for damages. However, if one or some, but not all, of the things are lost, or one or some, but not all, of the prestations cannot be performed due to the fault of the debtor, the creditor may claim any of those subsisting without any liability on the part of the debtor for damages or the price or value of that, which through the fault of the former, was lost or could not be performed, with indemnity, for damages.
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
DIFFERENT KINDS OF OBLIGATIONS Art. 1206 Alternative and Facultative Obligations
OBLIGATIONS
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.164
Nature of Facultative Obligations. — According to the above article, a facultative obligation is defi ned as an obligation wherein only one object or prestation has been agreed upon by the parties to the obligation, but which may be complied with by the delivery of another object or the performance of another prestation in substitution. It is evident that the characteristic feature of this type of obligation is that only one object or prestation is due, but if the obligor fails to deliver such object or to perform such prestation, he can still comply with his obligation by delivering another object or performing another prestation in substitution. Thus, where the debtor executed a promissory note promising to pay his indebtedness to the creditor at a specifi ed date and in case of failure to do so, he shall execute a deed of mortgage over a certain property belonging to him in favor of the creditor, it was held that the obligation is facultative.165 Consequently, the provisions of Art. 1206 of the Civil Code may be applied.
Idem; Distinguished from alternative obligations. — Facultative obligations may be distinguished from alternative obli-gations in the following ways:
(1) As to objects due: In facultative obligations only one object is due, while in alternative obligations several objects are due.
(2) As to compliance: Facultative obligations may be complied with by the delivery of another object or by the performance of another prestation in substitution of that which is due, while alternative obligations may be complied with by the delivery of one of the objects or by the performance of one of the prestations which are alternatively due.
(3) As to choice: In the fi rst, the right of choice pertains only to the debtor, while in the second, the right of choice may pertain even to the creditor or to a third person.
(4) As to the effect of fortuitous loss: In the fi rst, the loss or impossibility of the object or prestation which is due without any
164New provision.
165Quizana vs. Redugerio, 50 Off. Gaz. 2444.
Art. 1206
fault of the debtor is suffi cient to extinguish the obligation, while in the second, the loss or impossibility of all of the objects or prestations which are due without any fault of the debtor is necessary to extinguish the obligation.
(5) As to effect of culpable loss: In the fi rst, the culpable loss of the object which the debtor may deliver in substitution before the substitution is effected does not give rise to any liability on the part of such debtor; in the second, the culpable loss of any of the objects which are alternatively due before the choice is made may give rise to a liability on the part of the debtor.
Idem; When substitution takes effect. — Although Art. 1206 is silent with respect to the time or moment when the substitution will take effect, it is clear that the provision of Art. 1201 can be applied by analogy. Of course, there is no question that the only one who is empowered to make the substitution is the debtor. In order that the creditor will be bound by the substitution, however, it is necessary that he must communicate such fact to the said
Idem; When substitution takes effect. — Although Art. 1206 is silent with respect to the time or moment when the substitution will take effect, it is clear that the provision of Art. 1201 can be applied by analogy. Of course, there is no question that the only one who is empowered to make the substitution is the debtor. In order that the creditor will be bound by the substitution, however, it is necessary that he must communicate such fact to the said