An alternative obligation is one wherein the debtor is permitted to complete his obligation by performing either one of the different prestations which he is alternatively bound. The debtor’s choice produces legal effect reckoned from when the choice has been communicated to the creditor. The creditor cannot be required to receive partial performance of one undertaking and on another – i.e. the debtor must complete performance of either one of the alternative obligations.
Example: A realty company paid a construction firm to build either one of the following: a house, a bridge, or a tower. To comply with its obligation, the construction firm may choose to build a house. Once chosen, the construction firm is obligated to complete it.
By default, the debtor has the right of choice in selecting which obligation to perform unless otherwise stipulated. The debtor cannot select prestations that are: (a) impossible; (b) unlawful; or (c) which could not have been the object of the obligation. Further, the debtor’s right of choice ceases when only one remained practicable from the prestations whereby he could have been alternatively bound. If the debtor cannot make a choice according to the terms of the obligation due to the acts of the creditor, the debtor has the right to rescind the contract with damages.
On the other hand, if all of the alternative obligations have been lost or compliance becoming impossible due to the fault of the debtor, the creditor has the right to indemnity for damages against the debtor, including those other than the value of the last thing or service. The indemnity is based on the value of the last thing which disappeared, or that of the service which last became impossible.
If the right of choice is with the creditor, the obligation ceases to be alternative from the day when the selection has been communicated to the debtor. Until then, the debtor’s responsibility is governed by the following rules:
(1) If one of the things is lost through a fortuitous event, he is to 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 falls upon the price of any one of them, also with indemnity for damages.
A facultative obligation is one wherein the debtor is permitted to render a prestation in substitution of the only obligation agreed upon with the creditor.
The debtor is not liable for the loss or deterioration of the thing intended as a substitute even if the latter was the result of his negligence. However, the debtor is liable thereof once the substitution has been made and he is guilty of delay, negligence or fraud.