Short answer. Yes. Article 1284 says that when one or both of the mutual debts are rescissible or voidable, they may still be compensated against each other before a court has rescinded or annulled them. Until a defective debt is judicially undone, it is treated as valid enough to be set off against the other.

What the law says

When one or both debts are rescissible or voidable, they may be compensated against each other before they are judicially rescinded or avoided.

Civil Code, Article 1284 — Rescissible or Voidable Debts. Read the full provision →

Compensation extinguishes mutual debts

Compensation, or set-off, is the way the law cancels out debts when two persons are each other's creditor and debtor, so that the smaller debt is wiped out and only the balance remains. It spares the parties the pointless exercise of paying each other in full. The question Article 1284 answers is what happens to this convenient mechanism when one of the two debts is not perfectly sound, being merely rescissible or voidable rather than clearly valid or clearly void.

A voidable debt is valid until annulled

The key to the rule is that rescissible and voidable obligations are not void from the start. They produce their normal effects and bind the parties unless and until a court sets them aside. Because such a debt genuinely exists in the meantime, it is real enough to take part in compensation. Article 1284 builds on this, providing that when one or both debts are rescissible or voidable, they may be compensated against each other before they are judicially rescinded or avoided. The defect does not, by itself, disqualify the debt from being set off.

Set-off before judicial avoidance

So the parties need not wait for a court to pass on the flawed debt before compensation can operate. While the rescissible or voidable obligation stands, it may be balanced against the other debt just as a fully valid one would be. The word before in the article matters: the compensation happens in the window before any judicial rescission or annulment. If a court later does undo the debt, the situation is adjusted accordingly, but until then, set-off is available and the mutual debts can extinguish each other up to the concurrent amount.

Why the rule is sensible

Treating a defective-but-not-yet-annulled debt as capable of compensation reflects how such obligations actually work: they are effective until challenged and set aside. It would be awkward to forbid set-off on a debt that everyone must otherwise honour simply because it might one day be annulled. Article 1284 keeps the ordinary machinery of compensation running on obligations that are, for the time being, in force, leaving any correction to follow if and when a court actually rescinds or avoids the debt.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.