Santos [OBLICON]
LEDONIO v. CAPITOL DEVELOPMENT CORP.
Topic: Kinds of Subrogation
VOCABULARY:
Assignment of credit an agreement by virtue of which the
owner of a credit (known as the assignor) by legal cause
such as sale, dation in payment or exchange or donation
and without need of the debtors consent, transfers that credit
and its accessory rights to another (known as the assignee),
who acquires the power to enforce it to the same extent as the
assignor could have enforced it against the debtor.
Subrogation is the transfer of all rights of the creditor to a
third person, who substitutes him in all rights It may be either
legal or conventional.
Legal Subrogation takes place without agreement but by
operation of law because of certain acts.
Conventional Subrogation which takes place by
agreement of parties.
DOCTRINE:
Distinction between an assignment of credit and a conventional
subrogation:
In an assignment of credit, the consent of the debtor is not necessary
in order that the assignment may fully produce the legal effects. What
the law requires in an assignment of credit is not the consent of the
debtor, but merely notice to him as the assignment takes effect only
from the time he has knowledge thereof. A creditor may, therefore,
validly assign his credit and its accessories without the debtor's
consent. On the other hand, conventional subrogation requires an
agreement among the parties concerned the original creditor, the
debtor, and the new creditor. It is a new contractual relation based on
the mutual agreement among all the necessary parties.
SHORT ANSWERS:
1. When did the problem start: When Ledonio failed and
refused to settle his indebtedness to Capitol Development
Corp.
2. Who was chasing who: Capitol Development Corp. was
chasing Ledonio
3. When did the obligation arise: When Ms. Picache executed
an assignment of credit in favor of Capitol Development Corp.
FACTS:
Petitioner obtained two loans totaling P60, 000.00 from
Ms. Picache, for which he executed promissory notes,
dated 9 November 1988 and 10 November 1988.
He failed to pay any of the said loans;
Ms. Picache executed on 1 April 1989 an Assignment of
Credit covering petitioner's loans in favor of respondent
for the consideration of P60,000.00;
Petitioner had knowledge of the assignment of credit;
Petitioner still failed to pay his indebtedness despite
repeated demands by respondent and its counsel.
The RTC ruled in favor of the respondent herein
The CA confirmed the ruling of the RTC
Petitioner argued that he never gave consent to such
assignment of credit and therefore it should have no
effect.
ISSUE: WON consent of the debtor is required in an assignment of
credit
HELD:
No
The Court herein ruled that in an assignment of credit, consent
is immaterial
Consent is not a requirement in assignment of credit in order
for the said assignment to have full legal effects
What the law requires is that the debtor would be duly
notified upon the issuance of an assignment of credit to a
third person
The said assignment of credit takes effect only from the time
he (the debtor) has knowledge thereof
In the case at bar, the petitioner cannot deny that he wasnt
notified by the respondent when the assignment of credit
happened. It can be reasonably presumed that when the
respondent, together with their counsel, sent demand letters
to the petitioner herein, the same had received them. The
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letters were sent through registered mail and the return cards
were signed by the petitioners agent.
Further, petitioner never questioned why it was respondent
seeking payment of the loans and not the original creditor.
Foregoing the said circumstances, it can be concluded that
the petitioner was duly notified and had knowledge of the
assignment of credit that took place between respondent
herein and Ms. Picache.