Course Code: BAM 128

Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

Lesson Title: DIFFERENT KINDS OF OBLIGATION Part 2 – Materials:

Lesson Objectives: Student Activity Sheet
At the end of this module, I can:
1. Define obligation with a term or period, alternative obligation References:
and facultative obligation. Law on Obligations and
2. State the rules on loss, deterioration or improvement of thing Contract by WIN LU BALLADA
before the arrival of the period.
3. Understand pertinent laws regarding obligation with a term or
period, alternative obligation and facultative obligation.

Productivity Tip:
We all have different preferences when it comes to studying. Some prefers a very quiet
surrounding, some can study while having background music on and amazingly, some can
study even when there is so much noise around. But there is one thing we can all agree on,
we can do all things humanly possible for something that we want so badly! You may not be in
you most ideal study place, but whatever it takes, please keep fighting!

A. LESSON PREVIEW/REVIEW

1) Introduction (2 mins)

You have learned from our last module that we have at least ten primary kinds of obligation.

1. Pure Obligation
2. Conditional Obligation
3. Obligation with a Term or Period
4. Alternative Obligation
5. Facultative Obligation
6. Joint Obligation
7. Solidary Obligation
8. Divisible Obligation
9. Indivisible Obligation
10. Obligation with a Penal Clause

I have already discussed with you the pure obligation, which is an obligation not subject to any terms or
condition. Conditional obligation, which is an obligation subject to either suspensive or resolutory condition
was also discussed.

In this module, be prepared to learn obligation with a term or period, alternative obligation and facultative
obligation. Let’s go!

1
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

2) Activity 1: What I Know Chart, part 1 (3 mins)

Try answering the questions below by writing your ideas under the first column What I Know.

What I Know Questions: What I Learned

1. What is an obligation with a
period?

2. Who has the right to choose

object or prestation in an
alternative obligation? Explain.

3. Distinguish between alternative

obligation and facultative
obligation.

B. MAIN LESSON

1) Activity 2: Pre-Printed Content Notes (13 mins)

OBLIGATION WITH A PERIOD:

It is one whose effects or consequences are subjected in one way or another to the expiration or
arrival of said period or term.

To help you understand the meaning of obligation with a period better, let us define first what is meant by period.
Period – is a future and certain event the arrival of which shall give rise or extinguish and obligation.

2
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

I will not be surprised if the meaning of period sounds familiar to you. Recall that condition means a future and
uncertain event the happening of which will give rise or extinguish an obligation.

In one sense, one obvious difference between condition and period is that:

Condition is future and uncertain event

While.. Period is future and certain event

The similarity does not end there. Just like condition, period can also be suspensive and resolutory!

Example of suspensive condition: I will give you my 24k gold ring if you pass the CPA board exam.
Example of suspensive period (ex die): I will give you my 24k gold ring this coming Christmas.

We are not sure if you will pass the CPA board exam that is why it is considered a condition. It is future and
uncertain, meaning not sure if will happen. On the other hand, Christmas is sure to come no matter what. Even
if the exact date was not given, we know for sure that it is every December 25th of each year.

Example of resolutory condition: I will give you Php25,000 until you graduate from college.
Example of resolutory period (in diem): I will give you Php25,000 until March 30, 2025.

The happening of the resolutory condition and resolutory period will extinguish my obligation to give you
Php25,000. The only question here is WHEN will it end?

In a conditional obligation, the day is uncertain. We do not know for sure when my obligation to give you money
will stop. But in obligation with a term or period, we both know for sure that come March 30, 2025, my obligation
to you will come to an end.

RULES ON LOSS, DETERIORATION OR IMPROVEMENT OF THING BEFOR THE ARRIVAL OF THE

PERIOD:

The rules applicable with the conditional obligation also applies to an obligation with a period. To recall, here is
are rules:

Loss:
a. Without the fault of the debtor – the obligation shall be extinguished
b. With the fault of the debtor – he shall be obliged to pay damages

Deterioration:
a. Without the fault of the debtor – the impairment is to be borne or shouldered by the creditor
b. With the fault of the debtor – the creditor may choose between rescission (cancellation or revocation) of the
obligation or fulfillment of the obligation, with indemnity in either case.

3
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

Improvement:
a. Improved by its nature or by time – improvement shall inure to the benefit of the creditor.
b. Improved at the expense of the debtor – he shall have no other right than that granted to the usufructuary
(right to use someone else’s property).

EFFECT OF PAYMENT BEFORE THE ARRIVAL OF THE PERIOD:

Article 1195. Anything paid or delivered before the arrival of the period, the obligor
being unaware of the period or believing that the obligation has become due and
demandable, may be recovered, with the fruits and interest.

The debtor may have the right to recover what he has paid or delivered with fruits
and interest before the arrival of the period but he needs to prove that he is indeed
unaware of the period or mistakenly believed that the obligation has become due
and demandable. This is because,

GENERAL RULE: The debtor is presumed aware of the period.

COMPUTATION OF TERM or PERIOD (Legal Periods):

Year - 12 calendar months (according to Administrative Code, the number of days is irrelevant)
Month - 30 days, unless it refers to a specific calendar month in which case it shall be computed
according to the number of days the specific month contains
Day - 24 hours
Night - from sunset to sunrise

RULES ON FIXING OF PERIOD:

Freedom to enter into a contract is a right guaranteed by our Constitution. For as long as the parties agreed on
the terms and conditions of the contract and it is in accordance with law, morals, good customs, public order
and public policy and government has no right to interfere. Even the court has generally no power to fix a
period of a contract. However, Article 1197 provides for the exceptions where the court may fix the duration of
the contract.

1. If the obligation does not fix but from its nature and the circumstances it can be inferred
that a period was intended.

Example:
A bought 50 sacks of rice from B on credit. The period for payment in the receipt is left
blank. It can be inferred that a period is intended. If they failed to agree on the period, the
court may interfere and fix the duration of the period.

4
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

2. If the duration of the period depends upon the will of the debtor.

Example:
I will pay you my loan as soon as possible. Here, we can never know for sure when is the “as soon is possible”
that is why when the parties failed to set the period, the court may interfere and fix the duration of the period.

WHEN OBLIGATION CAN BE DEMANDED BEFORE LAPSE OF PERIOD:

You have learned a while back that if the debtor made payment or delivered the thing before the due date, he
may ask that the same be returned to him with fruits and interest after proving that he was not aware of the
period or committed a mistake.

However, there are instances where the debtor loses every right to make use of the period. In other words, the
creditor may demand for the payment or fulfillment of the obligation even before the lapse of term or period.
(Article 1198)

1. When debtor becomes insolvent, unless he gives a guaranty or security for the debt.
2. When the debtor does not furnish to the creditor the guaranties or securities which he has promised.
3. When the guaranties or securities given have been impaired or have disappeared because of his own acts or
because of fortuitous event, unless he immediately gives new ones equally satisfactory.
4. When the debtor violates any undertaking, in consideration of which the creditor agreed to the period.
5. When the debtor attempts to abscond (flee)

ALTERNATIVE OBLIGATION:
It is an obligation wherein various prestations are due but the performance of one of them is sufficient as
determined by the choice which, as a general rule, belongs to the debtor. (Article 1200)

Example:
A borrowed Php25,000 from B. It was agreed that A may pay B by giving Php25,000, an HP computer set or by
painting the portrait of B. The delivery of Php25,000 or HP computer set or the painting of portrait of B is
sufficient to pay the obligation.

RIGHT TO CHOOSE PRESTATION:

Note that the right of choice belongs to the debtor. Even if the debtor can make his
choice without consent of the creditor, he must give notice of his choice which may be
made orally or in writing, expressly or impliedly. His choice shall produce no effect until
he communicated it to the creditor.

EFFECT WHEN ONLY ONE PRESTATION IS PRACTICABLE”

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

If only one is practicable, the obligation ceases to be an alternative obligation but is converted into a pure
obligation.
5
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

WHEN DEBTOR MAY RESCIND THE CONTRACT:

Rescission is the cancellation or revocation of the contract. It creates an obligation to return the things which
were the object of the contract together with their fruits and the price with its interest. (Article 1385)

Article 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.

WHEN RIGHT OF CHOICE BELONGS TO CREDITOR:

The general rule is that the right of choice belongs to the debtor. But the debtor may expressly give the right of
choice to the creditor. (Article 1200)

If the right of choice belongs to the debtor and one or more things but not all were lost, whether because of his
fault or through fortuitous event, there is no much effect because the debtor still has something to deliver to the
creditor.

But the story will be different when the right of choice belongs to the creditor.

RULES IN CASE OF LOSS OF THING BEFORE THE CREDITOR HAS MADE A CHOICE:

1. When a thing is lost through a fortuitous event:

Effect: The creditor can choose from among the remainder of the items.

2. When all the things are lost through a fortuitous event:

Effect: The obligation is extinguished

2. When a thing is lost through debtor’s fault:

Effect: The creditor can choose from among the remainder of the items with right to damages OR the price of
the lost item with right to damages

3. When all the things are lost through debtor’s fault:

Effect: The creditor can demand the price of any one of the objects with right to indemnity for damages.

FACULTATIVE OBLIGATION:
Article 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 mad, the obligor is liable for the loss of the substitute on
account of his delay, negligence or fraud.

It is important to note the difference between facultative and alternative obligation.

1. As to the number of object or prestation:
Alternative – several prestations are due but fulfillment of one is sufficient
Facultative - only one prestation is due although the debtor is allowed to substitute it
6
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

2. As to the right of choice:

Alternative – the right of choice belongs to the debtor but may be given to the creditor
Facultative – the right to make substitution is given only to the debtor

3. Loss through a fortuitous event:

Alternative – the loss of one or more but not all does not extinguish the obligation
Facultative – the loss of the thing extinguishes the obligation

4. Loss through fault of the debtor:

Alternative – the loss of one or more but not all does not render him liable (because he has the
right to choose which one to give, he may choose to give what is left)
Facultative – The loss of the thing due through the debtor’s fault makes him liable.

2) Activity 3: Skill-building Activities (with answer key) (18 mins + 2 mins checking)

Exercise I

1. Distinguish between period and condition.

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________.

2. Give 2 examples/illustration of a.) Obligation with a resolutory period and b.) Obligation with a suspensive
period

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________

3. Give 2 examples/illustration of a.) alternative obligation and b.) facultative obligation

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
7
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

3) Activity 4: What I Know Chart, part 2 (2 mins)

It’s time to answer the questions in the What I know chart in Activity 1. Log in your answers in the table.

4) Activity 5: Check for Understanding (5 mins)

Exercise I. TRUE or FALSE

__________1. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only
when that day comes.

__________2. Obligation with a resolutory period take effect at once, but terminate upon arrival of the
day certain.

__________3. A day certain is understood to be that which must not necessarily come.

__________4. If the uncertainty consists in whether the day will come or not, the obligation is an
obligation with a period.

__________5. The debtor cannot be presumed as aware of the period.

__________6. The court is strictly forbidden to fix the duration of the period of any contracts.

__________7. When the debtor violates any undertaking in consideration of which the creditor agreed to
the period, the debtor shall lose every right to make use of the period.

__________8. A person alternatively bound by different prestations shall completely perform one of them.

__________9. Prestation also means object.

__________10. The creditor may be compelled to receive part of one and part of the other undertaking.

A. LESSON WRAP-UP

Activity 6: Thinking about Learning

Congratulations for finishing this module! Shade the number of the module that you finished

8
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

Did you have challenges learning the concepts in this module? If none, which parts of the module helped you
learn the concepts?
________________________________________________________________________________________
________________________________________________________________________________________
______________________________.

Some question/s I want to ask my teacher about this module is/are:

________________________________________________________________________________________
________________________________________________________________________________________
______________________________.

Learning Scores Action Plan

Date
Target/Topic

What module# did you What contributed to the quality of your

What were your
What’s the do? What were the performance today? What will you do next
scores in the
date today? learning targets? What session to maintain your performance or
activities?
activities did you do? improve it?

9
FLM 1.0
 Course Code: BAM 128
Module #5

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

FAQs

Whenever in an obligation a period is designated, it is presumed to have been established for the benefit
of both the creditor and the debtor, unless it should appear that the period has been established in favor
of one or of the other.
But if it was the intention of the parties that the term is for the benefit of the debtor alone, he cannot be
compelled to pay prematurely, but he still can pay if he wants to.
If the intention of the parties is the term is for the benefit of the creditor, the creditor may demand fulfillment
even before the arrival of the term but the debtor cannot require him to accept payment before the
expiration of the agreed period.

10
FLM 1.0