Practice question
Faye owes Elena a matured loan. Faye asserts an alleged damages claim against Elena, but liability and amount are genuinely disputed and have not been proved. Faye claims legal compensation automatically extinguished the loan. Assuming no other basis for compensation, what is correct?
- Every alleged damages claim is automatically liquidated.
- Faye’s allegation extinguishes the loan without proof.
- A claim is liquidated whenever the claimant writes an amount on paper.
- The unliquidated disputed damages claim does not establish automatic legal compensation; Article 1283 permits judicial setoff upon proving the right and amount.
- Damages can never be set off even after proof.
Legal references
- https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html — Civil Code, articles 1278–1290.
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