Gacayan, Ryan Derrick T.

JD-4D
1. When a debt is assigned by a creditor in favor of a third person, may the debtor set up against the
assignee the compensation which has taken place? Example

a. Effect if the assignment is made after compensation.

When compensation takes effect by operation of law or automatically, the debts

are extinguished to the concurrent amount. If subsequently, the extinguished debt is
assigned by the creditor to a third person, the debtor can raise the defense of
compensation with respect to the debt. The remedy of the assignee is against the assignor.
The right to assignment may be waived by the debtor before or after the assignment.
Example:
Lucifer owes Amen P15,000 due yesterday
Amen owes Lucifer P3,000 also due yesterday
Both debts are extinguished up to the amount of P3,000 Lucifer still owes the
amount of P12,000 to Amen today.
If Amen assigns his right to Cloe, Cloe can only collect P12,000 from Lucifer.
But if Lucifer gave his consent to the assignment before it was made, Lucifer
loses the defense of compensation, thus, Cloe can collect P15,000 from Lucifer.
However, Lucifer can still collect the debt of Ice to him which is P2,000.

b. Effect if the assignment is made before compensation shall depend on the following:

a. When the debtor consented to the assignment. The debtor cannot use the
defense of compensation if he consented to it. However, he can set up
compensation as a defense if he notified the assignor that he reserves his
right to the compensation.

Example:
Ryan owes Dean P50,000 due on Jan. 5
Dean owes Ryan P20,000 due on Jan. 5
Dean assigned his right to Hazel on Jan. 1 with consent of A

On Jan. 5, Ryan cannot set up against Hazel the defense of compensation.

Ryan is liable to Hazel for P50,000 but he can still collect the debt of Dean
amounting to P20,000. If Ryan reserved his right to compensation, he is only
liable for P30,000 to Hazel.

b. Assignment with knowledge but without the consent of the debtor. If the
debtor has knowledge but did not gave his consent, he may set up the defense
of compensation of debts previous to the assignment but not of subsequent
ones provided that the credit of the debtor has become due and demandable
before the assignment.

Example:
A owes B P10,000 due on Dec 25
B owes A P20,000 due on Dec 27
A owed B P10,000 due on Dec 31

A assigned his right to C on Dec 29. A notified B but B did not gave his
consent to the assignment.
 B can set up the defense of compensation of debts on Dec 27 which was
before the cession on Dec 29. Thus, the assignment is valid only up to the
amount of P10,000. However, on Dec 29, B cannot set up the defense of
compensation of debts which is due on Dec. 31, he is liable to C for P10,000
on Feb. 25
c. Assignment without the knowledge of the debtor. The debtor can set up the
compensation of all credits prior to the assignment and also the later ones
until he had knowledge of the assignment. Provided that such credits have
become due and demandable prior to the notice of the assignment.

2. What is Expromision?
- It takes place when a 3rd person with his own initiative and against the will of the original
debtor assumes the original debtors obligation with the given consent of the creditor. This
requires the consent of the 3rd person.

3. What is Delegacion?
- Under Article 1293, Delegacion is that which takes place when the creditor accepts a third
person to take the place of the debtor at the instance of the latter.
4. When the new debtor becomes insolvent, does the old debtor’s obligations revived?

- No. It is subject to exceptions.

- In Delegacion, the insolvency of the new debtor, who has been proposed by the original
debtor and accepted by the creditor, shall not revive the action of the latter against the
original obligor, except when said insolvency already existed and of public knowledge, or
known to the debtor, when he delegated his debt.
- - If the substitution is without the knowledge or against the will of the debtor, the new
debtor’s insolvency shall not give rise to any liability on the part of the original debtor.