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 after alleged demands, PCIB filed a collection suit against TFC, Ansaldo, and Reyes.
The trial court ruled in favor of PCIB, ordering TFC to pay its balance and Ansaldo and Reyes to pay their respective notes to PCIB as assignee. The court held that an assignment of credit does not require debtor consent, only notice, and that the notes, being negotiable, could be transferred by endorsement. 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 issues are: (1) whether the assignment of the credit by TFC to PCIB was valid and binding on Ansaldo; (2) whether the assignment needed to be in a public document; and (3) whether PCIB’s failure to exhibit the original promissory note to Ansaldo upon demand vitiated the claim.

RULING

The Supreme Court affirmed the Court of Appeals’ decision, ruling against Ansaldo. On the validity of the assignment, the Court upheld that a creditor may freely assign its credit to a third party under Articles 1625, 1626, and 1627 of the Civil Code. The debtor’s consent is not a requisite for the assignment’s validity; only notice to the debtor is required to bind him to the assignee. The Court found that Ansaldo received such notice. The fact that the assignee (PCIB) itself gave the notice, rather than the assignor (TFC), is immaterial, as the law does not specify who must give the notice, only that it be given.
Regarding the form of the assignment, the Court ruled that a public document is required only to make the assignment effective against third parties, as explicitly stated in Article 1625. Ansaldo, as the debtor of the assigned credit, is not a “third person” in this context; he is a party to the original obligation. Therefore, the absence of a public document does not invalidate the assignment as against him. Furthermore, the Court rejected Ansaldo’s new argument regarding the alleged lack of authority of TFC’s president to execute the assignment, as it was raised for the first time on appeal.
Finally, the Court dismissed Ansaldo’s claim that PCIB failed to exhibit the original note upon demand, invoking Section 74 of the Negotiable Instruments Law. This issue was not raised in the lower courts and cannot be raised for the first time before the Supreme Court. In any event, the Court found the argument unmeritorious because Ansaldo had expressly waived “demand, presentment, protest and notice of protest and non-payment” in the promissory note itself. This waiver rendered unnecessary the formal exhibition of the instrument. The petition was denied, and the appealed decision was affirmed.