1.

Payment or Performance
-Means not only the delivery or giving of money but the performance of the obligation in any
manner whatsoever. Hence, it is synonymous to "performance"
ILLUSTRATION: Miss Tina Guan owes Miss Lina P. Tan P500 due on March 29, 2022. If on March
29, 2022, instead of paying in money (P500), Miss Guan gave Miss Tan her watch worth P600,
the obligation to pay is extinguished by payment because payment has an extended meaning
and does not refer only to the giving of money.

2. Compensation
- This takes place when 2 persons. in their own right, are creditors and debtors
of each other, (Art.1278).
ILLUSTRATION: Miss Mau U. Tang owes Mr. Capalla P5,000 due on March 29, 2022. On
March 29, 2022. Miss Tang discovered that Mr. Capalla owes her also P5,000 due
January 29, 2023 which is not yet paid to her by Mr. Capalla. The obligation of
Miss Tang is extinguished by compensation.

3. Remission or Condonation
- It is an act of liberality where the creditor gives up his right against the debtor, either in whole
or in part, resulting in the extinguishment of the latter's obligation.
ILLUSTRATION: Mr. Yema owes Mr. Donut P200 due on March 29, 2022. On March 29, 2022,
Mr. Donut told Mr. Yema not to pay anymore the P200 and Mr. Yema replied Thank You. Mr.
Yema’s obligation is extinguished by remission or condonation.

4. Annulment
- It is a legal remedy the purpose of which is to make a voidable contract void
and thus, ineffective.
ILLUSTATION: Iska Mer Deceived Nilo Co. into buying a fake gold Necklace for P15,000. Should
Nilo discovered the fraud, he can have the contract of sale annulled.
Once annulled, whatever obligations created by the said contract of sale are
extinguished by annulment.
5. Novation
- The substitution or changes of an obligation by another, which extinguishes or
modifies the first, either changing its object or principal condition, or substituting another in
place of the debtor. or subrogating a third person in the rights of the creditor.
ILLUSTRATION: Mr. Bibi Lee called up Mr. Vinny Benta to deliver one sack of Rice. Later, after
20 minutes. Mr. Lee called up Mr. Benta again telling him not to deliver anymore one sack of
rice and to instead deliver to him one sack of Corn. The first obligation (to deliver 1 sack of Rice)
is extinguished by the second obligation (to deliver 1 sack of Corn) by novation in the form of
substitution.