G.R. No. 47696 August 29, 1989
JOSE Ma. ANSALDO, petitioner, vs. COURT OF APPEALS and PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, respondents.

FACTS

Transoceanic Factors Corporation (TFC) obtained loans from Philippine Commercial and Industrial Bank (PCIB), evidenced by six promissory notes. Separately, TFC extended loans to Jose Ma. Ansaldo and Teofilo Reyes Jr., each evidenced by a negotiable promissory note wherein the debtors waived demand, presentment, and protest. TFC later partially paid its obligation to PCIB and endorsed “for value” the promissory notes of Ansaldo and Reyes to PCIB. Upon maturity and alleged non-payment, PCIB filed a collection suit against TFC, Ansaldo, and Reyes.
The trial court ruled in favor of PCIB, ordering TFC, Ansaldo, and Reyes to pay their respective obligations. The court held the assignment of credit from TFC to PCIB valid, noting that a debtor’s consent is not required for an assignment, only notice, and that the requirement for a public instrument under Article 1625 of the Civil Code applies only against third persons, not the debtor himself. Ansaldo and Reyes appealed to the Court of Appeals, which affirmed the trial court’s decision. Only Ansaldo elevated the case to the Supreme Court.

ISSUE

The core issue is whether the assignment of Ansaldo’s promissory note from TFC to PCIB is valid and binding upon Ansaldo, thereby making him liable to pay PCIB.

RULING

The Supreme Court affirmed the Court of Appeals’ decision, ruling that the assignment was valid and Ansaldo is liable to PCIB. The legal logic is clear: an assignment of credit does not require the debtor’s consent to be effective. Under Article 1626 of the Civil Code, the debtor is bound by the assignment from the time he has knowledge thereof. Notice to the debtor, not his consent, is the crucial element. The Court found that Ansaldo had received notice of the assignment. The fact that PCIB, the assignee, gave the notice instead of TFC, the assignor, is immaterial; the law does not specify who must give the notice, only that it be given.
Furthermore, the requirement under Article 1625 that the assignment be in a public document is only for the purpose of making it effective against third persons. Ansaldo, as the debtor, is not a third person in relation to the assigned credit. His obligation remained unchanged by the assignment; he merely had to pay a different entity. His defenses regarding the alleged lack of authority of TFC’s president to execute the assignment and PCIB’s failure to exhibit the original note to him during demand were either raised improperly for the first time on appeal or were inconsequential. The latter was negated by his waiver of presentment and demand in the promissory note itself and his implicit admission of the note’s authenticity. Therefore, PCIB validly acquired the right to collect the debt from Ansaldo.