Short answer. No. Article 1288 of the Civil Code expressly prohibits compensation when one of the debts consists in civil liability arising from a penal offense. You cannot offset your civil indemnity against what the other person owes you, no matter how much that debt is or whether other conditions for compensation are met.
What the law says
Neither shall there be compensation if one of the debts consists in civil liability arising from a penal offense.
Civil Code, Article 1288 — Civil Liability From a Crime. Read the full provision →
What compensation means in Philippine law
Legal compensation — sometimes called offset or set-off — is the automatic or judicial extinguishment of two debts when the same persons owe each other money and both debts are due, liquidated, and demandable. In ordinary commercial disputes, this rule is a convenient way to avoid redundant payments: if A owes B ten thousand pesos and B owes A eight thousand, the law treats them as settling eight thousand automatically and leaving only a balance of two thousand for A to pay. It operates by law and, in some cases, does not even require a court order. Article 1288 carves out a firm exception to this convenience.
Why civil liability from crime is excluded
Civil liability arising from a penal offense — indemnity ordered because you committed estafa, physical injuries, theft, or any other crime — carries a public dimension that ordinary debts do not. The victim's right to receive it is not simply a contractual entitlement; it flows from a finding that a wrong was committed against them. Allowing you to cancel it through offset with an unrelated commercial debt would effectively reduce the consequence of the offense by an amount the victim is owed on a completely separate basis. Article 1288 prevents that outcome by treating the criminal indemnity as ineligible for compensation, even when every other legal requirement for offset is satisfied.
What this means for you in practice
If a court has ordered you to pay civil indemnity as part of a criminal case — for actual damages, moral damages, or restitution — that obligation stands on its own. A separate debt the complainant owes you from a business deal, a loan, or any other civil transaction cannot be used to reduce or extinguish what you owe under the criminal judgment. You must pay the indemnity as ordered. Your remedy for what is owed to you from the other side is a separate civil action on that independent claim, pursued through its own process, with its own outcome. The two do not merge under Article 1288.
The position of the creditor-victim
From the victim's perspective, this rule is a protection. It means that even if they owe the person who harmed them money — from a previous loan, a business arrangement, or any other cause — that debt cannot be used by the offender as a shield against paying civil indemnity. The victim receives what the court awarded without having it eaten away by a claim in the offender's favor. If the victim wants to enforce their own obligation to the other side, they can do so separately, but they cannot be compelled to see their indemnity reduced by it. The rule keeps the civil consequence of a crime intact and undiluted.
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.
- Metropolitan Bank and Trust Company vs. Joaquin Tonda and Ma. Cristina Tonda, G.R. No. 134436, August 16, 2000 — read the decision on LawPhil →
- Amado F. Cabaero and Carmen C. Perez vs. Hon. Alfredo C. Cantos, et al, G.R. No. 102942, April 18, 1997 — read the decision on LawPhil →