Page 41 - Obligations & Contracts Module 1-2

6. COMPENSATION – Set off; it is a mode of extinguishment to the concurrent amount the

obligation of persons who are in their own right reciprocally debtors or creditors

*REQUISITES:

a. Both parties must be mutually creditors and debtors - in their own right and as principals
b. Both debts must consist in sum of money or if consumable , of the same kind or quality

c. Both debts are due

d. Both debts are liquidated & demandable (determined)

e. Neither debt must be retained in a controversy commenced by 3rd person & communicated
w/ debtor (neither debt is garnished)

*KINDS:
a. legal – by operation of law; as long as 5 requisites concur- even if unknown to parties & if

payable in diff places; indemnity for expense of exchanges; even if not equal debts –

only up to concurring amount
b. conventional – agreement of parties is enough, as long as both consented

c. facultative – one party has choice of claiming/opposing – one who has benefit of period may

choose to compensate
- not all requisites are present

- depositum; commodatum; criminal offense; claim for future support; taxes

d. judicial – set off; upon order of the court; needs pleading & proof;

all requirements must concur except liquidation
e. total – when 2 debts are of the same amount

f. partial – when 2 debts are not of the same amount