1.

When the remission involves a real property, remission and acceptance should be in
the form of a public instrument to be valid.
2. When the remission involves a movable/personal property –
a. If the property’s value exceeds 5,000 pesos, remission and acceptance should
be in writing, whether in public or in private, to be valid.
b. If the property’s value does not exceed 5,000 pesos, remission and
acceptance can take any form.
Confusion or Merger
Confusion or Merger is the meeting in one person the characters of both the debtor and the
 creditor.

Example: Kent makes a promissory note payable to Karen or order. Karen indorses the note
to Sarj, Sarj to Neri, Neri to Rey, and back to Kent. The obligation is now extinguished as
Kent is now the creditor of himself.

What happens to Guarantors in Confusion?

1. If the principal debtor takes the place of both the debtor and the creditor, the
guarantor is benefited. Both the principal obligation and the guaranty are
extinguished.

2. If the guarantor takes the place of the creditor, the obligation subsists but the
guaranty is extinguished.
What happens if Merger takes place in a Joint Obligation? Only the share of the joint
debtor or the joint creditor, where both the characters of the creditor and debtor meet, will
be extinguished.
What happens if Merger takes place in a Solidary Obligation? The whole obligation is

extinguished. However, the solidary debtor, where both the characters of the debtor and the
creditor meet, is entitled to demand the shares of his co-debtors. In the case of a solidary
creditor, he shall be liable to the shares of his co-creditors.

Compensation
Compensation happens when two parties become debtor and creditor of each other.
Kinds of Compensation
1. As to amount or extent
a. Total – the obligations are of the same amounts

b. Partial – the obligations are of different amounts

2. As to origin

a. Legal – takes place by operation of law even though the debts are payable at different

places and the parties are not aware of the compensation.

1. That each of the parties is principal debtor and principal creditor of each other.
2. That both debts consist in a sum of money or if they are things, they must be of the
same kind, and also of the same quality if the latter has been stated.

3. That the two debts be due.

4. That both debts be liquidated and demandable.

5. That both of them have the free disposal of the things due.
b. Voluntary or Conventional – takes place by agreement of the parties.
 c. Judicial – as ordered by the court.
d. Facultative – compensation that may be claimed by one of the parties but not by both.

The following are instances of a facultative compensation:

1. When one of the debts arises from a deposit. A deposit is a contract where a person receives a thing from another for safe keeping
and of returning the same after the other party has demanded its return. The depositor may claim compensation but the depositary
cannot.

2. When one of the debts arises from commodatum. A commodatum is a contract whereby a person is given the right to use the
property of another but not the ownership. The lender may claim compensation but the borrower cannot.

3. When one of the debts arises from a claim of support for gratuitous title. The
support referred to here is the future support. The one entitled to receive support
can set up compensation but the one obliged to give cannot.

4. When one of the debts arises from civil liability of a criminal offense. The offended
party can claim compensation but not the offending party.
What if the debts are payable at different places? Legal compensation takes place but
there shall be indemnity for the differences of travel expenses between the two parties.
What if the credit has been assigned? Can the debtor claim compensation against
the assignee?
1. If with his consent – he cannot claim compensation unless he has reserved his right.
2. If he was notified but he did not give consent – he can claim compensation but only
those obligations due before the assignment.
3. If he was not notified – he can claim compensation of all debts maturing before he
has obtained knowledge of the assignment.
Novation
Novation happens when there is a modification in the elements of the obligation. The
original obligation, therefore, is extinguished and replaced by the new obligation.
However, for the Novation to take effect there must be a valid pre-existing obligation. If the
obligation is void, the Novation is also void.
Kinds of Novation

There is a novation wherein there is a change in the prestation or the condition (real or
objective novations). Novations may be express or implied, total or partial. But the most
important kinds of obligations are the ones wherein the debtors and creditors are modified.
These are called Personal Novations.

Kinds of Personal Novations

1. Substitution of the person of the debtor
a. Expromision – substitution of the debtor happens without the knowledge or against the