EXTINGUISHMENT OF OBLIGATIONS

PA Payment or Performance
LO loss of the thing due
RE - remission or Condonation
ME merger or confusion
COM compensation
NOV novation
AN annulment
RE rescission
FUL fulfilment of a resolutory condition
PRE - prescription
Payment or Performance may consist of not only in the delivery of money but also the
giving of a thing, the doing of an act, or not doing an act.
When a thing is considered lost a thing is lost when it perishes, or goes out of
commerce or disappears in such way that its existence is unknown or it cannot be
recovered.
Condonation or remission is the gratuitous abandonment by the creditor of his right
against the debtor.
Confusion or merger is the meeting in one person of the qualities of creditor and debtor
with respect to the same obligation.
EX. D borrowed money from C. As security, D mortgage his land. Subsequently, D sold the
land to C.
Compensation is the extinguishment to the concurrent amount of debts of two persons
who, in their own right, are debtors and creditors of each other.
EX. A owes B the amount of 1,000. B owes A the amount of 1,000. In this case there is a
total compensation
Novation is the total or partial extinction of an obligation through the creation of a new
one which substitute it.
EX. S agreed to deliver to B a car. Late, they entered into another contract whereby, instead
of S delivering a car, he would deliver ten air conditioners.
Contracts one or more persons bind himself or themselves with respect to another or
others, or reciprocally, to the fulfilment of a prestation to give, to do, or not to do.

Limitations on contractual stipulations.

Law
Police power
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Contract must not be contrary to law- a rule of conduct, just, obligatory, promulgated by legitimate
authority, of common observance and benefit.
Contract must not be contrary to morals- deals with norms of good and right conduct evolved in a
community
Contract must not be contrary to good customs- expressly mentioned, although morals are already
specified.
Contract must not be contrary to public order refers principally to public safety although it has been
considered to mean also the public weal.
Contract must not be contrary to public policy- refer not only to public safety but also to
considerations which are moved by the common goods

Art. 1308 fundamental rule that no party can renounce or violate the law of the contract
without the consent of other
Persons affected by a contract- as a general rule, a partys rights and obligations derived
from a contract are transmissible to the successors.
How is the contract perfected.
Consensual contract- perfected by mere consent regarding the subject matter and the
cause of the contract.
Ex. Today S and B enter into a contract whereby S bind himself to sell his car to B for
200,000.
Real Contract perfected by the delivery of the thing subject matter of the contract

Ex. D borrowed from c 5,000. As security for the debt, D promised to pledge his diamond to
C. Before the delivery of the delivery of the ring to C, the contract is not yet perfected
Solemn contract a donation of real property cannot be perfected until it is embodied in a
public instrument.