Text of the provision
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.
(1196)
Civil Code of the Philippines, Republic Act No. 386, approved June 18, 1949, effective August 30, 1950. Reproduced in full; verified verbatim against the LawPhil and ChanRobles official-text renderings.
What this article means
For legal compensation, all must concur: each party is principally bound and a principal creditor of the other; both debts are money or fungibles of the same kind/quality; both are due, liquidated, and demandable; and there is no retention or controversy by a third person. Miss any one and legal compensation fails.
Questions about this provision
Related provisions
- Article 1278 — Compensation Defined.
- Article 1280 — Guarantor's Right to Set Up Compensation.
Cases citing this article
- Banco De Oro Unibank, Inc. vs. Edgardo C. Ypil, Sr., et al, G.R. No. 212024, October 12, 2020 — read the decision on LawPhil →
- Union Bank of the Philippines vs. Development Bank of the Philippines, G.R. No. 191555, January 20, 2014 — read the decision on LawPhil →
- Philippine National Bank vs. Court of Appeals, et al, G.R. No. 108052, July 24, 1996 — read the decision on LawPhil →
- United Planters Sugar Milling Co., Inc. vs. The Hon. Court of Appeals, et al, G.R. No. 126890, July 11, 2007 — read the decision on LawPhil →
- PNB Madecor vs. Gerardo C. Uy, G.R. No. 129598, August 15, 2001 — read the decision on LawPhil →
Compiled automatically from Supreme Court decisions published on LawPhil that expressly cite this article, most frequently cited first. A listing means the decision cites the provision — it is not a statement that the case is the leading authority, and it does not show whether a ruling has since been modified or abandoned. Always read the decision itself.