Maria Resper S. Lagas Obligations & Contracts – Atty.

Daryl Bretch Largo

JD-WT I EH 303

P R O B L E M:

D obliged himself to deliver to C on March 30, 2020 any of the following specific objects:

1. His car, 2. his house, 3. his gold wristwatch.

Before March 30, 2020:

A. D destroyed his car.

B. D destroyed his car and house.
C. D destroyed his car, house and wristwatch
D. A typhoon destroyed D’s car
E. An earthquake destroyed D’s car and house
F. C destroyed D’s car.
G. D instead obliged himself to deliver his only car and agreed to deliver as substitute his house. Later, D
burned his house.

Q: WHAT ARE THE RIGHTS AND OBLIGATIONS OF THE PARTIES, IF ANY, IN EACH OF THE ABOVE SITUATIONS?

YOU HAVE 24 HOURS WITHIN WHICH TO SUBMIT YOUR ANSWERS.

A N S W E R:

The case at bar is an example of an alternative obligation as espoused in Article 1199 and
1200 of the New Civil Code, which states that an obligation becomes alternative if there are
various prestations to which the debtor has the right of choice on which object he shall
perform or deliver to the creditor before March 30, 2020, in the absence of a stipulation
that such right is granted to the creditor.

However, in instances where:

A. D destroyed his car – In this case, D is still obliged to perform his obligation by delivering
any of the remainders: either the house or the gold wristwatch, depending upon D’s
discretion as stated in Article 1200, which states that the right of choice belongs to the
debtor, unless it has been expressly granted to the creditor.

C, as a creditor, is also cannot be compelled to receive part of one and part of undertaking, as
per the second paragraph of Article 1199 of the New Civil Code. He has every right to demand
the entirety of the object that D had chosen to deliver – may it be the house or the gold
wristwatch.

Under Article 1201 of the New Civil Code, once D had made his choice on what prestation he
shall deliver, he is obliged to communicate to C his choice either orally or in writing,
expressly or impliedly, as the law does not require any particular form of notice. It is, indeed,
C’s right to be notified of D’s choice. Once the notice of election had been given to C, the
obligation ceases to be alternative and becomes simple. Such choice once properly made and
communicated is irrevocable and cannot be renounced. The concurrence of C with regards
to D’s choice is also not required. If the choice was not communicated to the creditor, the
choice will produce no effect.

Once the chosen object, in its entirety, had been delivered by D, C is obliged to accept it.

B. D destroyed his car and house – In this case, D is left with only one choice which is to
deliver the gold wristwatch to C. The obligation had become a simple one, as supported by
Article 1202 of the New Civil Code, due to the loss of the right of D to choose which to deliver
because all of the prestations, except one, have become impossible or unlawful to deliver.

D, as the debtor, shall have no right to choose to deliver those prestations which are
impossible, unlawful or which could not have been the object of the obligation. The
destruction of both the car and the house made them impossible to be delivered to C.
However, C should be notified that the obligation had become a simple one to avoid
unfairness.

When the obligation matures on the stipulated time, March 30, 2020, D is obliged to deliver
the gold wristwatch, in its entirety, to C as the latter has the right to compel D to deliver its
entirety, as per the second paragraph of Article 1199 of the New Civil Code.

C. D destroyed his car, house and wristwatch – In this case, all the prestations to the
obligations were lost. However, this does not extinguish D’s obligation because C has the
right to indemnity for damages, as per the first paragraph of Article 1204 of the New Civil
Code, because the loss of the objects was because of D’s fault (D deliberately destroyed
them). The indemnity shall be fixed taking as a basis the value of the last thing which
disappeared. Damages other than the value of the last thing may also be awarded.

D, in this scenario, was rendered incapable of performing the obligation as he had

deliberately destroyed all the prestations. Thus, C can ask for damages through the value of
the last thing that was lost.

If, for instance, assuming the gold wristwatch was the last thing lost and it cost about
P100,000.00, C can collect the amount of P100,000.00 plus any damages C had incurred, as
stipulated in the second and third paragraphs of Article 1204 of the New Civil Code. Any
disagreement by C as to the value of the loss object will have to be proven by him.

D. A typhoon destroyed D’s car – In this case, D is still bound to deliver either the house or
the gold wristwatch. Even if the loss of one prestation is due to a fortuitous event, there are
still other prestations to which D can choose from on which to deliver.

As a general rule, loss of the object in an obligation by fortuitous event should extinguish
any liability. However, even if the car was lost due to a fortuitous event, there are still, as a
matter of fact, remaining prestations to which D can deliver. The right to choose which
object to deliver still rests upon D as there is no stipulation that says otherwise. It then
follows that D can either deliver the house or the gold wristwatch. C, in turn, has the right
to demand for the delivery of the entirety of the object chosen by the debtor, as per the
second paragraph of Article 1199 of the New Civil Code.

E. An earthquake destroyed D’s car and house – In this case, D still has one prestation left
to deliver as the obligation became a simple one, as per Article 1202 of the New Civil Code,
due to the fact that he lost the two other prestations due to a fortuitous event.

As a general rule, loss of the object in an obligation by fortuitous event should extinguish
any liability. However, it did not extinguish D’s obligation as he is still capable of delivering
the remaining object: the gold wristwatch and shall deliver it upon the maturity of the
obligation on March 30, 2020.

C has the right to be notified that the obligation transformed into a simple one to avoid
prejudice. C is also obliged to accept the remaining object which happened to be the gold
wristwatch and has the right to receive the gold wristwatch in its entirety, as per the second
paragraph of Article 1199 of the New Civil Code.

F. C destroyed D’s car – In this case, when C, the creditor, destroyed D’s car, D has the right
and option to either continue to enforce the contract or rescind the same due to the fact that
his right of choice as a debtor had been lost or impaired through C’s fault.

Article 1203 of the New Civil Code is clear when it stated that, 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.

The contract is not automatically rescinded; the law says that the debtor “may rescind,”
implying that he may allow it to remain in force insofar as the possible choice or choices are
involved.

D can choose to continue enforcing the contract by delivering either the house or the gold
wristwatch, with a right to recover the value of the car with damages from C. The delivery
of either the house or the gold wristwatch, upon the maturity of the contract, will then
extinguish D’s obligation. If, for instance, D chooses the car, his obligation is extinguished,
and C will not be held liable for damages.

However, if, for instance, D chooses to rescind the contract, there must be mutual
restitution. D must return whatever benefits he had received from C in relation to their
contract and C must, in turn, pay D the value of the item that he destroyed, along with the
sum of damages that D incurred. Mutual restitution is required in a rescission in order to
bring back the parties to their original situation prior to the inception of the contract.

G. D instead obliged himself to deliver his only car and agreed to deliver as substitute
his house. Later, D burned his house. – In this case, the obligation became a facultative
one.

Under the first paragraph of Article 1206 of the New Civil Code, when only one prestation
had been agreed upon, but the obligor may render another in substitution, the obligation is
called facultative. The right of choice in facultative obligations, that is, whether to make a
substitution or not, pertains to the debtor alone, the creditor is never given this right.

There are two components of a facultative obligation: (1) the object or prestation of the
obligation (principal) and (2) the substitute of the object or prestation (substitute). In this
case, the principal object was the car and the substitute object was the house.

D's agreement to substitute prestation, from delivering a car to delivering a house instead,
is a mere offer of substitution when he “agreed”, as the substitution by D did not produce
validity nor any effect because the same was not communicated with and to C or made
known to the latter. The substitution had no binding effect to the creditor as the given
situation does not expressly nor impliedly states any form of communication to C by the D
with regards to the substitution, in relation to Article 1201 and 1206 of the New Civil
Code. Any form of communication between C and D cannot be inferred from the facts
given. It follows, therefore, that C expects D to deliver the car and the car alone and D does
not have to communicate to C if he intends to deliver the principal and original prestation
(car). Consequently, and as a matter of fact, the burning of the house by D is an indication
that he does not intend to deliver the same to C.
The destruction of the house, through the negligence or fault of D, will not make him liable.
Under Article 1206 of the New Civil Code, the loss of the thing intended as a substitute, with
or without the fault of the debtor, does not render him liable because the thing intended
as a substitute is not due; the effect of loss is merely to extinguish facultative character of
the obligation, as supported by the first sentence of the second paragraph of Article 1206
of the New Civil Code.

What is to be delivered is the principal object (car) and not the substitute (house) because
the latter is not what is due and demandable. The loss of the substitute is immaterial.
Hence, it follows that despite the loss and the destruction of the house, D is still obliged to
deliver the principal prestation of the obligation, which is the car. It is, indeed, the
principle prestation, which is the car, that is due and demandable and not the house. C, in
turn, has the obligation to accept the principal prestation upon the maturity of the
contract on March 30, 2020. C also has the right to receive the car in its entirety, as per the
second paragraph of Article 1199 of the New Civil Code.