Kinds of compensation

The following are kinds of compensation:

1. As to extent:
a. Total - when both obligations are of the same amount and are entirely extinguished[1]; or
b. Partial - when the two obligations are of different amounts and a balance remains.[2]
2. As to cause:
a. Legal - takes place by operation of law from the moment all requisites are present even without the knowledge of both parties[3][4];
b. Voluntary - takes place when parties who are mutually creditors and debtors of each other agree to compensate their respective obligations even though one of the requisites of compensation may be lacking[5];
c. Judicial - by judicial decree[6]; and
d. Facultative - can only be set up at the option of a creditor, when legal compensation cannot take place because some legal requisites in favor of the creditor are lacking.

[1] Article 1281, Civil Code.

[2] Id.

[3] Article 1279, Civil Code.

[4] Article 1290, Civil Code.

[5] Article 1282, Civil Code.

[6] Article 1283, Civil Code.

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