Article 1287

Compensation shall not be proper when one of the debts arises from a depositum or from the obligations of a depositary or of a bailee in commodatum.

Neither can compensation be set up against a creditor who has a claim for support due by gratuitous title, without prejudice to the provisions of paragraph 2 of Article 301. (1200a)

Ang kompensasyon ay hindi tama kung ang isa sa utang ay nagmula sa depositum o mula sa obligasyon ng depositarya o ng bailee sa commodatum.

Hindi rin maaari na ang kompensasyon ay ayusin laban sa isang inutangan na may karapatan para sa suportang angkop dahil sa gratuitous na titulo, nang walang pagkiling sa mga probisyon ng talata 2 ng Artikulo 301. (1200a)

Compensation not allowed by Law:

1. Depositum
2. Commodatum
3. Support
4. Civil liability arising from crime

Deposit is a special real contract whereby the depositor entrusts to the depository something for safe keeping. There is a bailment created which imposes upon the depository the duty to return the property. The depository does not even have the right to use it.

Commodatum is a gratuitous contract whereby one of the parties delivers to another something not consumable so that the latter may use the same for a certain time and return it.  The borrower cannot retain the thing loaned to offset something the lender may owe him even though this may be for expenses.

The right to receive support cannot be waived nor transferred because support is necessary for subsistence and the right is purely personal to the recipient.

Article 1287 uses the “depositum instead of “deposit” which is used for an ordinary bank deposit. Abank deposit is not a depositum as defined above. It is really a loan which creates the relationship of debtor and creditor.  A bank’s failure to honor adepositof money is failure to pay its obligationas debtor and not a breach of trust arising from depositary’s failure to return the thing deposited.

Example:

Ambot owes 10,000 to Malay. Ambot deposited a ring worth 10,000.00 to Malay. Malay failed to return the ring to Ambot. If Malay claims for compensation, there will be a breach of confidence.