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.
Related provisions
- Article 1278 — Compensation Defined.
- Article 1280 — Guarantor's Right to Set Up Compensation.
Cases interpreting this article
- Authorities on this article will be added here as each is verified against primary sources.