If the assignment takes place without the debtor`s knowledge, the debtor may pay all credit before the assignment and also later until the debtor becomes aware of the assignment. In contractual relations, it is very common for the parties to intend to compensate for non-compliance and non-performance. Or at least that one of them, faced with a breach by the other, intends to conclude a compensation agreement by reducing the agreed price. The only conditions are as follows: (1) each of the parties has the right to dispose of the credit it wishes to pay and (2) it agrees to the mutual cancellation of its credits. (CKH Industrial & Development Corp. vs. Court of Appeals, 272 SCRA 333 [1997], citing IV Tolentino, Civil Code of the Phils., 1985 Ed., at p. 368; United Planters Sugar Milling Co., Inc. v. Court of Appeal, 527 SCRA 336 [2007].) Article 1281 Compensation may be paid in whole or in part.
If both debts have the same amount, there is full compensation. Article 1270 lists the conditions or conditions of judicial compensation as follows: compensation is assimilated to payment. If a debtor has different claims for which compensation is entitled, he must inform the creditor of those claims to be compensated. If he fails to do so, the indemnity is charged against the most onerous obligation. Admittedly, judicial redress requires that the reciprocal credits and securities be identical and that the parties are themselves creditors and debtors (judgment of 26 March 2001 [RJ 2001, 4761, citing many others), although it is not necessary that all the conditions of the Civil Code be fulfilled for legal set-off to take place, including that the debts are liquid ( judgment of 18 January 1999 [ RL 1999, 39] ). (…)” If the creditor has notified the creditor of the assignment but the debtor has not consented to it, the debtor may order compensation for debts arising prior to the assignment but not for subsequent debts. Banco Rote intercepted funds routed through it in order to transfer them to another bank and eventually deposit them into the account of Jose Pyudal, who owes a sum of money to Banco Rote. The Court of Appeal ordered Banco Rote to reimburse the intercepted amount to Jose Pyudal, who in turn was found guilty by the court. X seeks statutory damages. It is the one that results from the will of the parties, without the need for the legal requirements set out in the previous point.
However, it cannot be valid if there is a legal provision that excludes it in all cases. It is the one dictated by a judge at the request of one of the parties. This occurs in cases where the legal conditions for compensation were not met at the time the judgment was rendered. That is, amounts that were not liquid, due and payable. And what the judge does is decide that the loan (or part of it) will be offset by that of the accused. Its treatment is contained in article 408.1.3 LEC: consent of parties who are not legally bound to compensation. Answer: Carmi can recover Arlyn`s entire P500,000.00. Arlyn cannot raise P200,000.00`s indemnification objection with respect to its consent to the assignment. However, Arlyn had reserved the right to compensation to give Arlyn only 250,000.00 pesos.
Effect: The debtor may arrange compensation to defend against all debts before becoming aware of the assignment, not before or after the assignment. In addition, as is apparent from the judgment under appeal, the objectives pursued by compensation, namely `the convenience of simplifying the performance` of the obligation, are attained and where, in view of the allegation of different obligations by the parties to the dispute, a judgment must contain different sentences, it is therefore technically necessary to adopt a single sentence relating to balance. This will of course be possible, provided that the interests of both parties are not prejudiced (Article 13.102 of the Principles of European Contract Law), which was not the case in the present dispute. (…)” If A claims compensation, B must compensate A for the amount of EUR 5,000 for transport costs. For compensation to be applicable, it is necessary that: Judgment: Banco Rote`s petition is a “clever trick to use this court (Supreme Court) to validate or legalize an inappropriate act.
