Practice question
A bank owes a depositor P600,000 on an ordinary deposit, and the depositor owes the bank P400,000. Both are principal, monetary, due, liquidated and demandable, with no relevant third-party retention, controversy or other bar. Which is correct under the stipulated legal-compensation rules?
- The bank extinguishes the entire P600,000 debt
- The depositor still owes the full P400,000 after compensation
- Compensation extinguishes P400,000 concurrently, leaving P200,000 of the deposit debt.
- No amount can ever be compensated because the word deposit appears
- The depositor acquires ownership of the bank’s building
Legal references
- Civil Code, Articles 1278-1279, 1290, 1953 and 1980: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
Answer this question in flashcards to review your response and continue practicing.