Both parties must be mutually creditors and debtors

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Unformatted text preview: CONFUSION OR MERGER CONFUSION OR MERGER OF RIGHTS– character of debtor and creditor is merged in same person with respect to same obligation REQUISITES: a. It must take place between principal debtor and principal creditor only b. Merger must be clear and definite c. The obligation involved must be same and identical – one obligation only d. Revocable, if reason for confusion ceases, the obligation is revived 7. COMPENSATION COMPENSATION – Set off; it is a mode of extinguishment to the concurrent amount the obligation of persons who are in their own right reciprocally debtors or creditors REQUISITES: a. Both parties must be mutually creditors and debtors - in their own right and as principals b. Both debts must consist in sum of money or if consumable , of the same kind or quality c. Both debts are due d. Both debts are liquidated and demandable (determined) e. Neither debt must be retained in a rd controversy commenced by 3 person and communicated w/ debtor (neither debt is garnished) KINDS OF COMPENSATION a. Legal – by operation of law; as long as 5 requisites concur- even if unknown to parties and if payable in diff places; indemnity for expense of exchanges; even if not equal debts – only up to concurring amount b. Conventional – agreement of parties is enough, forget other requirement as long as both consented c. Facultative – one party has choice of claiming/opposing one who has benefit of period may choose to compensate: i. Not all requisites are present ii. Depositum; commodatum; criminal offense; claim for future support; taxes Page 118 of 297 Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 d. Judicial – set off; upon order of the court; needs pleading and proof; all requirements must concur except liquidation e. Total – when 2 debts are of the same amount f. Partial – when 2 debts are not of the same amount EFFECT OF ASSIGNMENT OF CREDIT TO 3RD PERSON; CAN THERE STILL BE COMPENSATION a. If made after compensation took place – no effect;...
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