Practice Set Five

Compensation

True / False

1) Compensation shall take place when two persons, in their own right, are
creditors and debtors of each other.
2) Ms. Marmalady loaned P1,000 from Cricket. She then issued a promissory
note to Cricket for the sum of P1,000 promising to pay her obligation on
December 2, 2020. Before the obligation became due, Cricket needed
money and assigned or “sold” the promissory note to Spork for P900. On
December 2, Spork bought a dozen cupcakes from Ms. Marmalady worth
P1,000 and offered the promissory note to her as payment, which Ms.
Marmalady accepted. In such case, the obligation of Ms. Marmalady to
Cricket was extinguished through confusion and not compensation.
3) Ms. Marmalady loaned P1,000 from Cricket. She then issued a promissory
note to Cricket for the sum of P1,000 promising to pay her obligation on
December 2, 2020. Before the obligation became due, Cricket needed
money and assigned or “sold” the promissory note to Spork for P900. On
December 2, Spork bought a dozen cupcakes from Ms. Marmalady worth
P1,000 and offered the promissory note to her as payment, which Ms.
Marmalady accepted. In such case, the obligation of Ms. Marmalady to
Cricket was extinguished through confusion and not compensation but
only to the extent of P900.
4) Cricket owes Ms. Marmalady a dozen apples worth P1,000. Ms.
Marmalady also owes Cricket a dozen star apples worth P1,000. In such
case, the obligations of the parties as to each other will be automatically
extinguished through compensation.
5) Spork owes Cricket the sum of P1,000 which will become due on
November 15, 2020. Cricket owes Spork the sum of P1,000 which will
become due on November 20, 2020. On November 25, 2020, the two
obligations were already extinguished through compensation.
6) Spork owes Cricket the sum of P1,000 which will become due on
November 15, 2020. Cricket owes Spork the sum of P1,000 which will
become due on November 20, 2020. On November 18, 2020, the two
 obligations can already be extinguished if there is consent by the parties to
that effect.
7) Ms. Marmalady borrowed from Cricket a beautiful red pair of shoes worth
P2,000. Cricket, meanwhile, has a monetary obligation to Ms. Marmalady
for P2,000. In this case, Ms. Marmalady can choose not to return the red
shoes and just claim compensation as regards the sum of money that
Cricket owed her.
8) Ms. Marmalady obliges herself to immediately deliver a dozen ballpens to
Cricket. Cricket on the other hand also has the obligation to deliver a
dozen ballpens to Ms. Marmalady, which oblgiation had already become
due. The ballpens are exactly the same and of the same kind and quaity.
In such case, there can be no compensation since the two obligations are
not monetary in nature.
9) Compensation can take place automatically or by operation of law.
10) If a person should have against him several debts which are
susceptible of compensation, the pertinent provisions on the application of
payments shall apply in case of compensation.
 Answers

1. True
2. True
3. False
4. False
5. True
6. True
7. False
8. False
9. True
10. True