Notwithstanding the foregoing, it should be noted that there are cases in which compensation is not possible if the above conditions are met. We refer to those in which the parties have contractually excluded it (Principle of autonomy of the will 1,255 CC). And to those that are prohibited by law, which are reflected in Article 1,200 CC, which are summarized as follows: Arlyn is thanks to Bryan P500, 000.00. Bryan, in turn, owes To Arlyn P200, 00.00. Since both debts are already due and all other legal compensation requirements are met, both debts automatically expire up to P 200.00. Later, with Arlyn`s approval, Brian transferred his P500, 00.00 loan to Carmi. How successfully can Carmi collect from Arlyn? For the purposes of the claim for payment, Cezar Montanow is the debtor. He must tell Raffy Tofu which of the three debts to settle. If he does not inform Raffy Tofu, he should apply the compensation to Cezar Montanow`s second obligation, namely the obligation that bears the interest of 12%, because it is the heaviest obligation. Article 1289 If a person has several claims for compensation against him, the rules relating to the enforcement of payments apply to the compensation order. Article 1283 If one of the parties to a dispute has a claim for damages against the other because of an obligation, the latter may compensate the claim for such damages and its amount by proving its claim. The problem is that in practice it is difficult to determine this type of compensation by mutual agreement. Especially in cases where nothing is provided for in the Treaty.
This prompts the most favored party to take legal action to claim their debts. By privileged party, we refer to the one who has acknowledged the existence of a debt due and payable in his favor. But what if the other party is also a creditor, but their debts are not due and payable? Will it be able to defend itself by demanding compensation in the form of amounts? Article 1281 Compensation may be paid in whole or in part. If the two debts are equal, there is complete damage. Answer: P500,000.00, compensation was not paid after ordering before, so there would be no compensation here. Article 1288 No compensation shall be granted if one of the debts in civil liability consists of a criminal offence. Indemnification – This is a source of compensation for two obligations. It is the simultaneous extinction of the obligations of persons who are mutual debtors and mutual creditors. It takes place when two persons are creditors and debtors of each other. It seems that your bank is considering doing what is legally called compensation.
Indemnification is a type of avoidance of an obligation in which two persons, in their capacity as investors, are mutual debtors and creditors of each other in respect of equally liquidated and recoverable obligations, the retention or controversy of which has not been initiated in a timely manner and notified by third parties (Union Bank of the Philippines vs. Development Bank of the Philippines, G.R. No. 191555, 20 January 2014). Simply put, compensation means balancing the parties` obligations to each other. Article 1287 Compensation is not appropriate if one of the debts results from a deposit or from the obligations of a depositary or depositary. In your case, it seems that legal compensation may indeed occur. At this point, it should be noted that it is well regulated that the relationship between a depositor and a bank or similar institution is that of creditor-debtor, when the bank is the debtor who agrees to pay the deposit on appeal and the depositor is the creditor. Indeed, Article 1980 of the New Civil Code provides that fixed, savings and current deposits in banks and similar institutions are subject to the provisions relating to simple loans (Areza vs. Express Savings Bank, G.R. No.
176697, 10 September 2014). According to this rule, the bank owes you your deposit. In return, you are indebted to the bank for your credit card purchases. Therefore, you and the bank are mutual creditors and debtors of each other and meet the first legal compensation requirement. Article 1286 Compensation shall be effected ipso jure, even if the debts are due in different places, but there is compensation for the costs of replacement or transport to the place of payment. 1ª. That, although not expressly contained in Article 1195 of the Civil Code, so-called judicial compensation has been accepted in numerous judgments of this Court, in which it is regarded as `a type of compensation in which all the legal conditions for compensation laid down by the Code are not required and which is ordered by the Court in a judgment and following proceedings` (judgment of 17 July 2000 [ RJ 2000, 6803] ). It is therefore a judicial power that may arise if one of the legal conditions is lacking or if the hypotheses of voluntary compensation are not met, but the existence of simultaneous debts has been proved (judgments of 18 January 1999 [RJ 1999, 39], 8 June 1998 [RJ 1998, 4284]).
Article 1285 A debtor who has consented to the assignment of rights by a creditor to a third party may not provide for the compensation to which he would be entitled against the assignor against the assignor, unless the assignor has been informed by the debtor at the time of his consent that he reserves his right to compensation. For these purposes, THE STS (Supreme Court Resolution) No. 1254/2007 is very interesting, which considers that judicial compensation is appropriate: without prejudice to the provisions of Article 301, paragraph 2, no compensation may be received against a creditor who is entitled to assistance with unfounded securities. The debt of A is valid, but that of B is cancellable. Before B`s debt is declared null and void, the two debts can be set aside against each other if all legal compensation conditions are met. If the creditor has notified the creditor of the assignment but the debtor has not consented to it, the debtor may settle the debts before the assignment, but not the subsequent debts. If the assignment takes place without the debtor`s knowledge, the debtor may order the settlement of all loans before they are settled and also later until the assignment becomes aware. .
