BSP vs. Liboon

10/10/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 775
G.R. No. 173864. November 23, 2015.*

BANGKO SENTRAL NG PILIPINAS, petitioner, vs. AGUSTIN
LIBO-ON, respondent.
Civil Law; Assignment of Credit; Words and Phrases; An assignment of

credit is an agreement by virtue of which the owner of a credit, known as the
assignor, by a legal cause, such as sale, dation in payment, exchange or
donation, and without the consent of the debtor, transfers his credit and
accessory rights to another, known as the assignee, who acquires the power
to enforce it to the same extent
_______________
* THIRD DIVISION.

134
134 SUPREME COURT REPORTS ANNOTATED

Bangko Sentral ng Pilipinas vs. Libo-on
as the assignor could enforce it against the debtor.—“An assignment

of credit is an agreement by virtue of which the owner of a credit, known as
the assignor, by a legal cause, such as sale, dation in payment, exchange or
donation, and without the consent of the debtor, transfers his credit and
accessory rights to another, known as the assignee, who acquires the power
to enforce it to the same extent as the assignor could enforce it against the
debtor. It may be in the form of sale, but at times it may constitute a dation
in payment, such as when a debtor, in order to obtain a release from his
debt, assigns to his creditor a credit he has against a third person.” As a
dation in payment, the assignment of credit operates as a mode of
extinguishing the obligation; the delivery and transmission of ownership of
a thing (in this case, the credit due from a third person) by the debtor to the
creditor is accepted as the equivalent of the performance of the obligation.
Same; Same; Mortgages; A mortgage credit is a real right, thus, the
formality required by law for its transfer or assignment, i.e., it must be in a
public instrument and must be registered and should be complied with in
central.com.ph/sfsreader/session/000001751197b13766b06506003600fb002c009e/t/?o=False 1/14
order to bind third person.—BSP is persistent in claiming that there was a

valid assignment of credit by virtue of the promissory note with trust receipt
issued by the Rural Bank of Hinigaran in its favor. However, other than
BSP’s allegation of assignment of credit, there was no document
denominated as deed of assignment of credit/mortgage ever presented to
show that the Rural Bank of Hinigaran has indeed transferred its rights to
BSP. Even if we follow BSP’s argument that the promissory note with trust
receipt was actually an assignment of credit, the same will still not hold as
BSP failed to comply with the formalities required by law for a valid
assignment of credit involving real property. Indeed, a mortgage credit is a
real right, thus, the formality required by law for its transfer or assignment,
i.e., it must be in a public instrument and must be registered and should be
complied with in order to bind third person.
Same; Pledge; Requisites of a Valid Contract of Pledge.—It must be
stressed that for a contract of pledge to be valid, it is necessary that: (1) the
pledge is constituted to secure the fulfillment of a principal obligation; (2)
the pledgor be the absolute owner of the thing pledged; and (3) the person
constituting the pledge has the free

135
VOL. 775, NOVEMBER 23, 2015 135

disposal of his property, and in the absence thereof, that he be legally

authorized for the purpose.
Same; Trust Receipts; In a trust receipt transaction, the entrustee has
the obligation to deliver to the entruster the price of the sale, or if the
merchandise is not sold, to return the merchandise to the entruster.—Suffice
it to say that in a trust receipt transaction, the entrustee has the obligation to
deliver to the entruster the price of the sale, or if the merchandise is not sold,
to return the merchandise to the entruster. There are, therefore, two
obligations in a trust receipt transaction: the first refers to money received
under the obligation involving the duty to turn it over to the owner of the
merchandise sold, while the second refers to the merchandise received under
the obligation to “return” it to the owner. Clearly, this concept of trust
receipt is inconsistent with that of an assignment of credit where there is an
absolute conveyance of title that would have in effect given authority to
BSP to foreclose the subject mortgage. Without a valid assignment of credit,
as in this case, BSP has no authority to foreclose the mortgaged property of
the Spouses Libo-on to the Rural Bank of Hinigaran. More so, BSP could
not possibly sell the subject property without violating the prohibition
against pactum commissorium since without a valid assignment of credit,
BSP cannot ipso facto appropriate to itself the Spouses Libo-on’s mortgaged
property to the Rural Bank of Hinigaran.
Same; Assignment of Credit; A deed of assignment usually contains
language which suggests that the parties intended to effect a complete
alienation of title to and rights over the receivables which are the subject of
the assignment.—It is true that the character of the transactions between the
parties is not only determined by the language used in the document but by
their intention. It must be stressed, however, that the intent of the parties to
the transaction is to be determined in the first instance, by the very language
which they used. A deed of assignment usually contains language which
suggests that the parties intended to effect a complete alienation of title to
and rights over the receivables which are the subject of the assignment. This
language is comprised of works like “remise,” “release and quitclaim” and
clauses like “the title and right of possession to said accounts receivable is
to remain in said assignee” who “shall have the right to collect directly from
the debtor.” The same intent is also suggested by the use of the words “agent
and represen-

136

tative of the assignee” in referring to the assignor. This concept of

complete alienation of title and rights in an assignment of credit is lacking.
Thus, in the absence of such absolute conveyance of title to quality as an
assignment of credit, the subject promissory note with trust receipt
agreement should be interpreted as it is denominated. The contract being
that of a mere loan, and because there was no valid assignment of credit,
BSP’s authority to foreclose the subject property has no leg to stand on.
PETITION for review on certiorari of the decision and resolution of

the Court of Appeals-Cebu City.
The facts are stated in the opinion of the Court.
The General Counsel of the Bangko Sentral ng Pilipinas for
petitioner.
Pamplona, Genito & Valdezco for respondent.
PERALTA, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court seeking the reversal of the Decision1 dated March
21, 2006 and the Resolution2 dated July 18, 2006 of the Court of
Appeals-Cebu City in C.A.-G.R. CV No. 00098.
The facts of the case are as follows:
On August 29, 19973 and September 17, 1997,4 respondent

Agustin Libo-on, together with his wife, Mercedes Libo-on (Spouses
Libo-on), secured loans from the Rural Bank of Hinigaran, Inc., in
the amounts of P100,000.00 and P300,000.00, respectively. The
Spouses Libo-on executed promissory notes payable to the order of
the Rural Bank for a period of 360
_______________
1 Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Ramon

M. Bato, Jr. and Apolinario D. Bruselas, Jr., concurring; Rollo, pp. 32-40.
2 Id., at pp. 43-44.
3 Id., at p. 46.
4 Id., at p. 47.

137
VOL. 775, NOVEMBER 23, 2015 137

days or until August 24, 1998 and September 12, 1998,

respectively. As security for the loan, the Spouses Libo-on likewise
executed a Deed of Real Estate Mortgage5 over a parcel of land with
Transfer Certificate of Title No. T-67129 in favor of the Rural Bank
of Hinigaran.
Meanwhile, on September 19, 19976 and October 17, 1997,7 the
Rural Bank of Hinigaran, in turn, secured a loan with now petitioner,
Bangko Sentral ng Pilipinas (BSP) in the amount of P800,000.00
and P640,000.00, respectively. The Rural Bank of Hinigaran
executed a document denominated as “promissory note with trust
receipt agreement.”8 As a security for the loan, the Rural Bank of
Hinigaran pledged and deposited to BSP promissory notes with
supporting TCTs, including the promissory note and TCT of the
Spouses Libo-ons mortgaged with the former.9
On May 3, 2000, BSP demanded from the Spouses Libo-on the
payment of their outstanding loan with the Rural Bank of Hinigaran.
Despite BSP’s demand, the Spouses Libo-on failed to pay. The loan
obligation of the Rural Bank of Hinigaran with BSP likewise fell
due and demandable as the former failed to pay its loan from BSP.
As a result, BSP filed an application for extrajudicial foreclosure
against the mortgage security of the Spouses Libo-on with the Rural
Bank of Hinigaran. However, before BSP could complete the
auction sale, Agustin Libo-on filed an action against BSP for
damages with prayer for the issuance of a temporary restraining
order and a writ of preliminary injunction before the RTC of the 6th
Judicial Region in Negros Occidental. The case was docketed as

Civil Case No. 724 and was raffled to Branch 51 of the same court.10
_______________
5 Id., at pp. 48-49.

6 Id., at p. 56.
7 Id., at p. 57.
8 Id., at pp. 56-57.
9 Id., at pp. 58-59.
10 Id., at pp. 69-73.

138

The Spouses Libo-on contested the extrajudicial foreclosure of

their property and the notice of extrajudicial sale pursuant thereto.
The Spouses Libo-on argued that there is no privity of contract
between him and BSP as the latter was not authorized by the Rural
Bank of Hinigaran to act on its behalf nor was the mortgage
assigned to it. They further claimed that the amount sought to be
satisfied by the foreclosure is way beyond what they had contracted
with Rural Bank.
BSP, however, denied the allegations in the complaint and prayed
that the same be dismissed for lack of merit.
On October 25, 2000, the court a quo issued an Order11 granting
the Spouses Libo-on’s application for issuance of a writ of
preliminary injunction.
During pretrial, both parties agreed that the only principal issue
to be resolved by the court a quo is whether or not defendant-
appellant BSP has the authority to foreclose the subject mortgage.
On February 25, 2004, the court a quo rendered a Decision12 in
favor of the Spouses Libo-on, the dispositive portion of which reads
as follows:
WHEREFORE, in view of the foregoing considerations,

judgment is hereby rendered:
a) Declaring the application/petition for an
extrajudicial foreclosure of mortgage, dated July 31,
2000, constituted on [L]ot [No.] 21630-A-4-A-1
covered TCT No. T-67129, per amendment of a Real
Estate Mortgage, dated October 28, 1997, filed by the
defendant BSP, as well as the notice of sale of public
auction dated September 30, 2000 by the Clerk of Court

and Ex-Officio Provincial Sheriff, to be irregular and
unlawful.
_______________
11 Id., at pp. 83-85.

12 Id., at pp. 98-111.

139
VOL. 775, NOVEMBER 23, 2015 139

b) Making the preliminary injunction issued last

October 25, 2000 in this case permanent.
c) Since the plaintiff was forced to defend his
rights, the defendant BSP is hereby ordered to pay the
[plaintiff] attorney’s fees in the amount of P40,000.00,
and P1,000.00 per court appearance of counsel, and an
additional litigation expenses in the amount of
P10,000.00. Moral damages cannot be awarded to the
plaintiff, there being no showing that the BSP acted in
reckless, wanton and abusive manner, but in an honest
belief, that it has the power to foreclose on the
mortgage.13

Aggrieved, BSP filed an appeal before the Court of Appeals. On
March 21, 2006, the appellate court denied the appeal and affirmed
the February 25, 2004 Decision of the court a quo.
Thus, the instant appeal raising the following issues:
I
THE ERRONEOUS AND REVERSIBLE
DECLARATION BY THE COURT OF APPEALS THAT
THE PETITIONER HAS NO RIGHT TO FORECLOSE THE
REAL ESTATE MORTGAGE CONSTITUTED BY
RESPONDENT AND HIS WIFE DUE TO THE ABSENCE
OF A NOTARIZED DEED OF ASSIGNMENT, SPECIAL
POWER OF ATTORNEY, OR ANY DOCUMENT OF
TRANSFER OF RIGHTS, EXECUTED BY THE
MORTGAGEE RURAL BANK OF HINIGARAN IN
FAVOR OF THE PETITIONER.
II
THE ERRONEOUS DECLARATION BY THE LOWER
COURT AND THE COURT OF APPEALS THAT THERE
WAS NO PRIVITY OF CONTRACT BETWEEN
_______________
13 Id., at p. 111.

140

RESPONDENT AND HIS WIFE ON ONE HAND, AND

PETITIONER BSP ON THE OTHER.

III
THE ERRONEOUS AND UNWARRANTED ACT OF
ORDERING PETITIONER TO PAY THE RESPONDENT
ATTORNEY’S FEES AND LITIGATION EXPENSES
WITHOUT LEGAL BASIS.14

In a nutshell, the pivotal issue is whether the BSP has the
authority to foreclose the subject mortgage.
BSP claimed that its authority to foreclose the subject mortgage
was by virtue of an alleged assignment of credit, i.e., “Promissory
Note with Trust Receipt Agreement” executed by the Rural Bank of
Hinigaran in their favor where the latter assigned, deposited and
pledged the promissory notes executed by the Spouses Libo-on
including the contract of real estate mortgage to it.
We are not convinced.
“An assignment of credit is an agreement by virtue of which the
owner of a credit, known as the assignor, by a legal cause, such as
sale, dation in payment, exchange or donation, and without the
consent of the debtor, transfers his credit and accessory rights to
another, known as the assignee, who acquires the power to enforce it
to the same extent as the assignor could enforce it against the debtor.
It may be in the form of sale, but at times it may constitute a dation
in payment, such as when a debtor, in order to obtain a release
from his debt, assigns to his creditor a credit he has against a
third person.” As a dation in payment, the assignment of credit
operates as a mode of extinguishing the obligation; the delivery
and transmission of ownership of a thing (in this case, the credit due
from a third person) by
_______________
14 Id., at pp. 11, 18 and 25.

141
VOL. 775, NOVEMBER 23, 2015 141

the debtor to the creditor is accepted as the equivalent of the

performance of the obligation.15
BSP is persistent in claiming that there was a valid assignment of
credit by virtue of the promissory note with trust receipt issued by
the Rural Bank of Hinigaran in its favor. However, other than BSP’s
allegation of assignment of credit, there was no document
denominated as deed of assignment of credit/mortgage ever
presented to show that the Rural Bank of Hinigaran has indeed
transferred its rights to BSP.16 Even if we follow BSP’s argument
that the promissory note with trust receipt was actually an
assignment of credit, the same will still not hold as BSP failed to
comply with the formalities required by law for a valid assignment
of credit involving real property. Indeed, a mortgage credit is a real
right,17 thus, the formality required by law for its transfer or
assignment, i.e., it must be in a public instrument and must be
registered and should be complied with in order to bind third
person.18
The mere pledge and deposit of the mortgage contract, transfer
certificate of title and promissory note executed by the Rural Bank
of Hinigaran in favor of BSP, does not produce the effect of giving
BSP the authority to intervene with the transaction between the
Spouses Libo-on and the Rural Bank of Hinigaran, much less
foreclose the mortgaged property of the Spouses Libo-on. In the
absence of a notarized deed of assignment, BSP cannot be
considered as an assignee who can proceed against the Spouses
Libo-on’s property.
_______________
15 Serfino v. Far East Bank and Trust Company, Inc., G.R. No. 171845, October
10, 2012, 683 SCRA 380, 388.
16 Rollo, p. 83.
17 Garcia v. Villar, 689 Phil. 363, 375; 675 SCRA 80, 92 (2012).
18 Article 1625 of the Civil Code provides that [a]n assignment of a credit, right
or action shall produce no effect as against third person, unless it appears in a public
instrument, or the instrument is recorded in the Registry of Property in case the
assignment involves real property.

142

Moreover, the Rural Bank of Hinigaran in fact has no authority to

pledge the security documents to BSP during the term of the real
estate mortgage contract between the Rural Bank of Hinigaran and
the Spouses Libo-on because if it is within the term of the contract,
the mortgaged property remains to be the property of the latter.
It must be stressed that for a contract of pledge to be valid, it is
necessary that: (1) the pledge is constituted to secure the fulfillment
of a principal obligation; (2) the pledgor be the absolute owner of
the thing pledged; and (3) the person constituting the pledge has the
free disposal of his property, and in the absence thereof, that he be
legally authorized for the purpose.19
Here, the Rural Bank of Hinigaran was neither the absolute
owner of the subject property nor the security documents it had
pledged to BSP, since again, at the time of the transaction between
the Rural Bank of Hinigaran and BSP on September 19, 1997, there
is still an existing real estate mortgage contract between the Spouses
Libo-on and the Rural Bank of Hinigaran. The possession of the
security documents was given to the Rural Bank of Hinigaran
merely as security collateral in case of nonpayment of the loan. Its
only purpose is to guarantee the fulfillment of the Spouses Libo-on’s
obligation and, in case of default on the part of the latter, the Rural
Bank of Hinigaran as credit-mortgagee may execute the obligation
on the real property given as a mortgage by way of judicial or
extrajudicial foreclosure. Thus, unless the subject property is
foreclosed and there was subsequent consolidation of title, the
Spouses Libo-on remains to be the owner of the subject property.
Given these circumstances, the Rural Bank of Hinigaran could not
have constituted a valid pledge on the subject property’s TCT. That
the pledgor be the absolute
_______________
19 Calibo, Jr. v. Court of Appeals, 403 Phil. 340, 344; 350 SCRA 427, 431
(2001).

143
VOL. 775, NOVEMBER 23, 2015 143
owner of the thing pledged is an essential requisite of a contract

of pledge.20
He who is not the owner or proprietor of the property pledged or
mortgaged to guarantee the fulfillment of a principal obligation,
cannot legally constitute such a guaranty as may validly bind the
property in favor of his creditor, and the pledgee or mortgagee in
such a case acquires no right whatsoever in the property pledged or
mortgaged.21
Furthermore, a closer look at the subject promissory note with
trust receipt agreement does not show in any aspect that the Rural
Bank of Hinigaran intended to make an absolute conveyance of title
over the securities it had deposited with BSP. What was given to
BSP is lien for the payment of the note pledged. There is nothing in
the promissory note with trust receipt agreement which partakes the
nature of an assignment of credit. In fact, the provisions thereof was
even categorical in its use of terms, thus, suggesting that what the
Rural Bank of Hinigaran and BSP entered into was a contract of
loan where the promissory note and the TCT of the Spouses Libo-
on’s property were pledged as collateral, to wit:

PROMISSORY NOTE WITH TRUST RECEIPT
AGREEMENT
Within three hundred thirty (330) days after date, for value
received, the undersigned promises to pay to the order of
the Bangko Sentral ng Pilipinas x x x, having deposited
with and pledged to the said Bangko Sentral as collateral
security for the
_______________
20 Art. 2085. The following requisites are essential to the contracts of pledge
and mortgage:
x x x x
(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or
mortgaged.
21 Supra note 19 at p. 345; p. 431.

144

payment of this note and any other liability or

liabilities, whether direct or contingent, of the undersigned to
the said Bangko Sentral due or to become due or that may be
hereafter contracted, the securities described in the schedule
included in the application for loan dated October 13, 1997
accompanying this note. The said Bangko Sentral is hereby
given a lien for the payment of this note and any of the
said other liabilities upon all the property or securities
now or hereafter in the possession of said Bangko Sentral.
x x x
The said Bangko Sentral has the right to require to require
such additional security as it may deem proper, and, on failure
to respond forthwith to such requirement or on nonpayment of
this note or on the nonpayment of any other liability or
liabilities of the undersigned, the Bangko Sentral or any
holder hereof, is given full authority to sell, assign and deliver,
or collect the whole or any part of the above named
collaterals, or any substitute therefor, or any addition thereto
at any public or private sale at any time hereafter, without
demand, advertisement or notice; and upon such sale, the
Bangko Sentral or the holder thereof may become the
purchaser of the whole or any part of such collaterals. x x x22

Equally telling is the provision on the said promissory note with
trust receipt agreement which is inconsistent with the concept of
assignment of credit, to wit:

The undersigned acknowledges that the rediscounted notes
and all amounts due thereon belong to the Bangko Sentral
and, for this purpose, agrees to execute a trust receipt
agreement over all amounts due on said notes, whereby
the undersigned binds: (a) to collect all amounts due on
the rediscounted notes and hold such collections in trust
for the Bangko Sentral; and (b) to turn over and remit to
the
_______________
22 Rollo, pp. 56 and 57. (Emphasis ours)

145
VOL. 775, NOVEMBER 23, 2015 145

Bangko Sentral all amounts collected on such notes

within ten (10) days from date of collection. x x x23

Suffice it to say that in a trust receipt transaction, the entrustee
has the obligation to deliver to the entruster the price of the sale, or
if the merchandise is not sold, to return the merchandise to the
entruster. There are, therefore, two obligations in a trust receipt
transaction: the first refers to money received under the obligation
involving the duty to turn it over to the owner of the merchandise
sold, while the second refers to the merchandise received under the
obligation to “return” it to the owner. Clearly, this concept of trust
receipt is inconsistent with that of an assignment of credit where
there is an absolute conveyance of title that would have in effect
given authority to BSP to foreclose the subject mortgage.24 Without
a valid assignment of credit, as in this case, BSP has no authority to
foreclose the mortgaged property of the Spouses Libo-on to the
Rural Bank of Hinigaran. More so, BSP could not possibly sell the
subject property without violating the prohibition against pactum
commissorium25 since without a valid assignment of credit, BSP
cannot ipso facto appropriate to itself the Spouses Libo-on’s
mortgaged property to the Rural Bank of Hinigaran.
It is true that the character of the transactions between the parties
is not only determined by the language used in the document but by
their intention. It must be stressed, however, that the intent of the
parties to the transaction is to be determined in the first instance, by
the very language which
_______________
23 Id.
24 Id.
25 The prohibition on pactum commissorium stipulations is provided for by
Article 2088 of the Civil Code:
Art. 2088. The creditor cannot appropriate the things given by way of pledge or
mortgagee, or dispose of the same. Any stipulation to the contrary is null and void.

146

they used. A deed of assignment usually contains language which

suggests that the parties intended to effect a complete alienation of
title to and rights over the receivables which are the subject of the
assignment. This language is comprised of works like “remise,”
“release and quitclaim” and clauses like “the title and right of
possession to said accounts receivable is to remain in said assignee”
who “shall have the right to collect directly from the debtor.” The
same intent is also suggested by the use of the words “agent and
representative of the assignee” in referring to the assignor. This
concept of complete alienation of title and rights in an assignment of
credit is lacking. Thus, in the absence of such absolute conveyance
of title to quality as an assignment of credit, the subject promissory
note with trust receipt agreement should be interpreted as it is
denominated. The contract being that of a mere loan, and because
there was no valid assignment of credit, BSP’s authority to foreclose
the subject property has no leg to stand on.
WHEREFORE, premises considered, the petition is DENIED.
The Decision dated March 21, 2006 and Resolution dated July 18,
2006 of the Court of Appeals-Cebu City in C.A.-G.R. CV No. 00098
are AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Bersamin,** Villarama, Jr. and

Reyes, JJ., concur.
Petition denied, judgment and resolution affirmed.
Notes.—Under the last paragraph of Article 1634, the debtor

may extinguish his or her debt within thirty (30) days from the date
the assignee demands payment. (Eagleridge Development
Corporation vs. Cameron Granville 3 Asset Management, Inc., 741
SCRA 557 [2014])
_______________
** Designated acting member, in lieu of Associate Justice Francis H. Jardeleza,

per Special Order No. 2289 dated November 16, 2015.

147
VOL. 775, NOVEMBER 23, 2015 147

An assignment of a credit “produce[s] no effect as against third

persons, unless it appears in a public instrument[.]” (Id.)

——o0o——

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10/10/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 775

G.R. No. 173864. November 23, 2015.*

Civil Law; Assignment of Credit; Words and Phrases; An assignment of

134 SUPREME COURT REPORTS ANNOTATED

as the assignor could enforce it against the debtor.—“An assignment

order to bind third person.—BSP is persistent in claiming that there was a

VOL. 775, NOVEMBER 23, 2015 135

disposal of his property, and in the absence thereof, that he be legally

136 SUPREME COURT REPORTS ANNOTATED

tative of the assignee” in referring to the assignor. This concept of

PETITION for review on certiorari of the decision and resolution of

On August 29, 19973 and September 17, 1997,4 respondent

1 Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Ramon

VOL. 775, NOVEMBER 23, 2015 137

days or until August 24, 1998 and September 12, 1998,

Judicial Region in Negros Occidental. The case was docketed as

5 Id., at pp. 48-49.

138 SUPREME COURT REPORTS ANNOTATED

The Spouses Libo-on contested the extrajudicial foreclosure of

WHEREFORE, in view of the foregoing considerations,

auction dated September 30, 2000 by the Clerk of Court

11 Id., at pp. 83-85.

VOL. 775, NOVEMBER 23, 2015 139

b) Making the preliminary injunction issued last

WAS NO PRIVITY OF CONTRACT BETWEEN

140 SUPREME COURT REPORTS ANNOTATED

RESPONDENT AND HIS WIFE ON ONE HAND, AND

14 Id., at pp. 11, 18 and 25.

VOL. 775, NOVEMBER 23, 2015 141

the debtor to the creditor is accepted as the equivalent of the

142 SUPREME COURT REPORTS ANNOTATED

Moreover, the Rural Bank of Hinigaran in fact has no authority to

VOL. 775, NOVEMBER 23, 2015 143

Bangko Sentral ng Pilipinas vs. Libo-on

owner of the thing pledged is an essential requisite of a contract

144 SUPREME COURT REPORTS ANNOTATED

payment of this note and any other liability or

22 Rollo, pp. 56 and 57. (Emphasis ours)

VOL. 775, NOVEMBER 23, 2015 145

Bangko Sentral all amounts collected on such notes

146 SUPREME COURT REPORTS ANNOTATED

they used. A deed of assignment usually contains language which

Velasco, Jr. (Chairperson), Bersamin,** Villarama, Jr. and

Petition denied, judgment and resolution afﬁrmed.

Notes.—Under the last paragraph of Article 1634, the debtor

** Designated acting member, in lieu of Associate Justice Francis H. Jardeleza,

VOL. 775, NOVEMBER 23, 2015 147

An assignment of a credit “produce[s] no effect as against third

© Copyright 2020 Central Book Supply, Inc. All rights reserved.

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