Short answer. Yes. The parties may agree upon the compensation of debts which are not yet due, meaning you and the other party can voluntarily offset what you owe each other even before either debt has matured, as long as you both actually agree to it.
What the law says
The parties may agree upon the compensation of debts which are not yet due.
Civil Code, Article 1282 — Voluntary Compensation. Read the full provision →
This article exists to cover a gap left by agreement
The article is short and direct: the parties may agree upon the compensation of debts which are not yet due. Compensation, in this context, means offsetting — extinguishing what you owe someone against what they owe you, up to the amount they have in common, so that only the balance remains. By specifically addressing debts that are not yet due, the article signals that maturity of the debt is ordinarily a relevant factor in offsetting, and it is carving out a route past that requirement when both sides consent.
Agreement is the operative word
Nothing in this article makes offsetting automatic. It depends on the parties choosing to agree to it — hence "voluntary" compensation, as distinct from an offsetting that might occur by operation of law once ordinary conditions are met. If you and the other party want to offset debts that have not yet matured, you need actual mutual agreement on that point; one side cannot unilaterally declare an early offset and expect the other to be bound by it under this article.
What to nail down if you want to rely on this
Because the article's protection is agreement-based, the substance of what you agree to matters. That includes which specific debts are being offset, the amounts involved, and the point at which the offset is meant to take effect. A vague or informal understanding is harder to enforce than a clear, documented agreement stating that both debts — even though not yet due — are being applied against each other by mutual consent.
Why this is worth getting in writing
Offsetting debts before they are due changes each party's practical position: one side may be giving up the benefit of the remaining time before their own debt would otherwise have to be paid. If a dispute later arises over whether an early offset actually happened, or on what terms, the strength of your position will depend heavily on whether the agreement was clearly documented at the time, rather than reconstructed afterward from memory or informal conversation.
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.
- Traders Royal Bank vs. Norberto Castañares and Milagros Castañares, G.R. No. 172020, December 6, 2010 — read the decision on LawPhil →