Compensation of Debts Payable in Different Places (1268)

Two alternatives open to the debtor when the latter offers payment and the creditor refuses without
reason:

 To consign the thing and relieve himself from any further responsibility of such thing
 To keep the thing in his possession with the obligation to use due diligence subject to general
rules of obligations

Effect of Nullity of Debts to be Compensated (1284)

 The rescission or annulment of debt is retroactive, therefore, compensation must be considered

cancelled.
 The party whose obligation is annulled can recover because his credit was extinguished by the
compensation.

Effects of Assignment of Credit (1285)

 With consent of debtor – debtor waives compensation even of debts already due, unless he
makes a reservation
 With knowledge but without consent of debtor – when credit assigned to a third person
matures:
1) after that which pertains to the debtor, the latter may set up compensation when the
assignee attempts to enforce the assigned credit, provided that the credit of the debtor became
due before the assignment.
2) earlier than that of the debtor, assignee may immediately enforce it and debtor cannot setup
compensation
 Without knowledge of debtor – debtor may setup by way of compensation all credits maturing
before he is notified