CONVENTIONAL REDEMPTION

LEGASPI VS CA
FACTS:
Bernardo B. Legaspi sold to his son-in-law, Leonardo B. Salcedo, on October 15, 1965 for the sum of
P25,000.00 with the right to repurchase the same within five years from the execution of the deed of sale.
Before the expiry date of the repurchase period which was on October 15, 1970, Legaspi offered and tendered
the P25,000 but was refused by Salcedo without just cause. On October 15, 1970, Legaspi deposited in the
Office of the Clerk of Court of First Instance of Cavite City the amount of P25,125.00. Despite earnest efforts
towards a compromise after consignation of the repurchase money had been made, Salcedo refused to
reconvey the properties in question.
Petitioner filed a civil case for reconveyance to enforce his right to repurchase two parcels of land. The lower
court ordered Salcedo to deliver these two lots to the petitioner.
On appeal, the Court of Appeals reversed the decision and dismissed the complaint holding that: [T]he
appellee never made a valid tender of payment that amounted to a lawful exercise of the right to repurchase
the property involved in the instant case. Neither was a valid consignation made seasonably in court of the
amount of P25,000.00 with which to make the repurchase.

ISSUES:
Whether or not the petitioner validly exercised his right to repurchase the properties within the five-year
period as stipulated in the sale with pacto de retro entered into between the petitioner as vendor a retro and
private respondent as vendee a retro.

HELD: YES.
The records clearly manifest that the petitioner was able to make a valid tender of payment on the 14th of
October 1970 by offering personally the amount of P25,000.00 to the private respondent who refused to
accept it claiming that the money was devalued. Thereafter, the petitioner informed the private respondent
that he would be depositing the same amount with the proper court. The trial court correctly ruled that there
was proper exercise of the right to repurchase within the five-year period not for the reason that the deposit
of the repurchase money amounted to a tender of payment but for what the evidence submitted before it
proved.

EQUITABLE MORTGAGE
CAMUS VS CA
FACTS:
On May 20, 1986, Lea Camus as vendor and David Motors and Marketing Corporation (DMMC, for brevity)
through its representative, Conrado S. David, executed a "Deed of Absolute Sale of Real Property" over a
parcel of land including all improvements thereon, situated in the barrio of Hen. T. de Leon, Municipality of
Valenzuela, Metro Manila, containing an area of Six Hundred Thirty One (631) square meters, more or less for
P150,000.00.

On November 27, 1987, Camus filed the instant complaint, praying for the annulment of the subject deed of
absolute sale and consequent cancellation of the certificate of title obtained by DMMC by virtue thereof; the
interpretation and declaration of the subject deed of absolute sale as an equitable mortgage; and for a writ of
preliminary injunction.
DMMC contended that the subject encumbrance was one of absolute sale. After trial on the merits, the lower
court rendered the impugned decision.
According to petitioner, she previously mortgaged the same parcel of land on July 23, 1985 to Mrs. Macaria
Dimafelis. Before the mortgage matured, she had to look for other sources from whom she can borrow money
to liquidate the mortgage and this financial constraint led to her being introduced to Conrado S. David, herein
private respondent, through one Natividad de Gula. It was in the office of private respondent where petitioner
impressed that idea of utilizing the mortgaged lot as collateral for the loan which she wanted to obtain from
private respondent.
In response to the request, private respondent allegedly agreed to extend the loan subject to the following
terms:
a) the gross principal amount of the indebtedness shall be P150,000.00;
b) repayment period will be two years with an automatic grace period of one month;
c) interest shall ten percent a month payable monthly;
d) the transaction shall be denominated as an absolute sale instead of a real estate mortgage; and that
e) out of the proceeds of the loan, P40,000.00 will be retained by private respondent as payment for a
two months advance interest (P30,000.00 at P15,000.00 interest a month) and the remaining sum of
P10,000.00 will be for documentation expense.
Petitioner claims that she was initially reluctant to express her conformity but she nonetheless agreed to the
conditions after she was supposedly assured by private respondent that the nomenclature attached to their
transaction was a mere formality and that petitioner had no reason to be apprehensive inasmuch as private
respondent will register the deed of conveyance only if petitioner does not pay the monthly interest.
Petitioner signed the "Deed of Absolute Sale" and surrendered the owner's duplicate copy of the certificate of
title after private respondent issued a check in the amount of P109,000.00 to Mrs. Dimafelis as full settlement
of petitioner's previous indebtedness. For her part, petitioner received P1,000.00 in cash and was made to
sign a cash voucher to show that she received P150,000.00. Further, payment of the interest for four months
was allegedly made to private respondent, who did not issue any receipt therefor, until petitioner discovered,
to her dismay, that the instrument was registered which triggered the issuance of a new certificate of title in
the name of respondent corporation.
The trial court was far from convinced by petitioner's disquisition and neither was respondent court which
concurred with the factual observation of the court of origin that gross inadequacy of price had not been
sufficiently demonstrated.

ISSUES:
WON there was an absolute sale or an equitable mortgage only.

HELD:
There is no doubt that petitioner agreed to the execution of the so-called sale in favor of private respondent
because of the urgent necessity for money of the apparent vendor to liquidate her indebtedness to Mrs.
Dimafelis. This is another circumstance where it may be fairly inferred that the real intention of the parties is
for the transaction to secure the payment of a debt or the performance of any other obligation (Article 1602
(6), New Civil Code).
The decision of respondent court dated October 10, 1991 is hereby SET ASIDE. The deed of absolute sale
executed by Lea O. Camus in favor of Conrado S. David is hereby declared as an equitable mortgage and,
petitioner is declared entitled to redeem the property. Private respondent is hereby ordered to execute the
necessary deed of conveyance upon full payment of the total amount of P110,000.00 with legal interest from
May 20, 1986, the time the loan matured until it is fully satisfied.

DAPITON VS CA and MELJOHN DELA PEA

FACTS:
Sometime before May 5, 1967, Raymundo Dapiton who was then needing money, approached the private
respondent and requested for a loan of P400.00 offering to place as security of said loan his residential house
and lot located at Almeria, Leyte. The fair market value of the same is not less than P3,000.00 more or less; it
is the house where Dapiton has been living for thirty (30) years up to the present. Private respondent agreed
to the request and thereafter prepared the corresponding document and petitioner was made to sign the
same on the 5th day of May, 1967, before Notary Public, Dionisio R. dela Pea, father of herein defendant.'
Thus, the petitioners contend that the transaction between Raymundo Dapiton and the private respondent
was one of loan of P400.00 to be paid within one years (sic) time with the property subject of the question
deed as security for the payment of the said loan.
A Deed of Absolute Sale by deceased Dapiton as vendor and private respondent as vendee on May 6, 1967.
Two days later, or on May 8, 1967, private respondent at the instant of deceased Dapiton, and without any
consideration, made an annotation on the left-hand margin and at the back of the Deed of Absolute Sale to
the effect that the Dapiton was given an option to repurchase the land within one (1) year from the date of
the notations. This is the source of the controversy. Petitioners claim that the true intention of the parties was
one of venta con pacto de rectro while the private respondent claims that their true intention was one of
absolute sale and that the annotation was void for lack of consideration and, more importantly, because from
the beginning the parties did not intend it to be complied with but only to appease the children of Dapiton
who objected to the sale of the land by their late father.
The court a quo, confronted with all the aforementioned facts and herein parties respective claims, rendered
judgment in favor of private respondent and accordingly dismissed the complaint for annulment of deed of
sale filed by Dapiton, petitioners deceased father. The court a quo mainly found that the price of P400.00 was
adequate and conscionable and that the deed of sale in question is one of an absolute nature. At any rate, the
court a quo postulated that the redemption made by Dapiton was undertaken out of time and without
compliance with Articles 1601 and 1616 of the Civil Code.
The CA affirmed the said decision. The issue resolved by the CA was whether or not it novated the deed of
absolute sale into one of sale with a right to repurchase.
It did not. In conventional redemption, the right to redeem must be reserved or stipulated at the moment of
the perfection of the contract, and not afterwards (Article 1601, Civil Code of the Philippines). An agreement
granting such right to redeem subsequent to the perfection of the contract of sale is a mere promise to sell.
In the light of the above holding We feel constrained to reconsider Our conclusion that 'the subject annotation
is a contract to buy and sell' and 'is not an accepted unilateral promise to sell'

ISSUES:

HELD:
Essentially, respondent appellate court declared that the transaction entered into by Dapiton and private
respondent was an absolute sale of the formers house and lot to the latter, and that the two annotations
regarding Dapitons right to repurchase the subject house and lot, constituted a mere promise to sell which is
null and void, because there was no determinate purchase price indicated and there was no consideration
therefor.
Unable to accept the ultimate conclusion of respondent appellate court, petitioners resorted to the instant
petition to obtain a reversal of the aforegoing Court of Appeals decision. Petitioners now exhort us to declare
the transaction between their deceased father, Raymundo Dapiton, and private respondent, to be either a
loan, as claimed by Dapiton in the complaint for amendment of deed of sale which he filed in the court a quo,
or in the alternative, an equitable mortgage, in application of legal the presumption under Article 1602 of the
Civil Code.
Closely examining the facts of this case, we find that, contrary to the findings of the Court of Appeals, there
are numerous indications that the contract effected between the parties is actually an equitable mortgage
and not an absolute deed of sale.
Firstly, it is without dispute that private respondent Dela Pea made two (2) annotations on the deed of sale,
one at the left hand margin and another at the back of the page. These annotations grant Raymundo Dapiton
the right to repurchase his property within one year. This right of repurchase is a clear contravention of
private respondents claim that the deed of sale was meant to be absolute.
Secondly, it has been established that the deceased Dapiton habitually borrowed money from numerous
acquaintances, using the said property as security for the loan. The amount borrowed, amounting to Four
Hundred Pesos (P400.00), invariably remained the same. Although these loans were constantly denoted as
sale with right of repurchase, the deceased Dapiton continously remained in possession of the property despite
a succession of such loan transactions. Evidently, all these transactions were equitable mortgages.
Thirdly, we find it difficult to believe that the private respondent would tolerate the uninterrupted occupation
of the property by the Dapitons simply because he has no need for it just yet. In the light of the fact that the
private respondent has been in dispute with the Dapitons since 1968, and considering his claim of absolute
ownership, it is unthinkable for private respondent to let Dapiton and his heirs remain and make use of the
property for almost thirty (30) years. In addition, although the tax declarations for the property have been
transferred to private respondents name and he has been continously paying the realty taxes thereon, he has
made no move to oust the petitioners from their possession. This circumstance clearly falls with in the ambit
of Article 1602 as a badge of an equitable mortgage.
Fourthly, the private respondent is a member of the bar, well-versed in the intricacies of the law. We thus find
it improbable that he would agree to add the annotations pertaining to the deceased Dapitons right of
repurchase only to appease Dapitons children. If , as he claims, the sale was indeed absolute, the fact that he
would place such annotations as would put in question the absoluteness of the sale raises some doubt as to
the true nature of the transaction involved. After all, if the property is truly his by right, no amount of
objections raised by the children of the elder Dapiton would change the fact that the sale is already a fait
accompli. No vendee in his right mind would agree to any act which would weaken his absolute claim to a
property sold to him wthout any restraint or condition. If the sale was indeed absolute, why grant Dapiton a
right to repurchase at all?
Lastly, Article 1603 of the New Civil Code provides:
Article 1603. In case of doubt , a contract purporting to be a sale with right to repurchase shall be construed as
an equitable mortgage.
In the case at bar, the true nature of the contract between Dapiton and dela Pea is the crux of the issues
raised in this petition. Considering the circumstances of this case, we resolved the doubt in favor of the
petitioner. The actuations of the private respondent are highly suspect, if not downright dishonorable. AS A
JUDGE and member of the bar, he is charged with the duty to act fairly and equitably. He has not been fair,
nor has been forthright in his dealings with Raymundo Dapiton.
Consider this proven facts: the private respondent first tried to change the nature of the transaction by
preparing a contract which did not reflect the true intent of the parties. Next, caught in his duplicitousness, he
pretended to rectify his mistake by adding an annotation granting the elder Dapiton the right of repurchase.
Then, he deliberately evaded receiving payment from the elder Dapiton so that the one year period would
eventually lapse and the transfer of ownership to him would become absolute. And as if these were not
enough, he now seeks to convince this court that the annotation granting the elder Dapiton the right to
repurchase, which he himself prepared, is not valid for lack of consideration. This travesty must not be
permitted to go on. We now write this finis to the private respondents underhandedness.
LEGAL REDEMPTION

ALONZO VS IAC and TECLA PADUA

FACTS:
Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in 'the name of their
deceased parents. On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of the
herein petitioners for the sum of P550.00 by way of absolute sale. One year later, on April 22, 1964, Eustaquia
Padua, his sister, sold her own share to the same vendees, in an instrument denominated "Con Pacto de Retro
Sale," for the sum of P 440.00.
The petitioners occupied, after the said sales, an area corresponding to two-fifths of the said lot, representing
the portions sold to them. The vendees subsequently enclosed the same with a fence. In 1975, with their
consent, their son Eduardo Alonzo and his wife built a semi-concrete house on a part of the enclosed area.
On February 25, 1976, Mariano Padua, one of the five coheirs, sought to redeem the area sold to the spouses
Alonzo, but his complaint was dismissed when it appeared that he was an American citizen . On May 27, 1977,
however, Tecla Padua, another co-heir, filed her own complaint invoking the same right of redemption
claimed by her brother.
The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having been
exercised within thirty days from notice of the sales in 1963 and 1964. Although there was no written notice, it
was held that actual knowledge of the sales by the co-heirs satisfied the requirement of the law. The other co-
heirs, including Tecla Padua, lived on the same lot, which consisted of only 604 square meters, including the
portions sold to the petitioners . Eustaquia herself, who had sold her portion, was staying in the same house
with her sister Tecla, who later claimed redemption petition. Moreover, the petitioners and the private
respondents were close friends and neighbors whose children went to school together.
It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they
alleged, that the area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In
the circumstances just narrated, it was impossible for Tecla not to know that the area occupied by the
petitioners had been purchased by them from the other. co-heirs. Especially significant was the erection
thereon of the permanent semi-concrete structure by the petitioners' son, which was done without objection
on her part or of any of the other co-heirs.
In reversing the trial court, the respondent court ** declared that the notice required by the said article was
written notice and that actual notice would not suffice as a substitute. As "it is thus apparent that the
Philippine legislature in Article 1623 deliberately selected a particular method of giving notice, and that notice
must be deemed exclusive," the Court held that notice given by the vendees and not the vendor would not
toll the running of the 30-day period.

ISSUES: Was there Notice? Yes.

When did the 30-day period of redemption begin?

HELD:
While we do not here declare that this period started from the dates of such sales in 1963 and 1964, we do
say that sometime between those years and 1976, when the first complaint for redemption was filed, the
other co-heirs were actually informed of the sale and that thereafter the 30-day period started running and
ultimately expired. This could have happened any time during the interval of thirteen years, when none of the
co-heirs made a move to redeem the properties sold. By 1977, in other words, when Tecla Padua filed her
complaint, the right of redemption had already been extinguished because the period for its exercise had
already expired.
The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them.
And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in
question and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of
redemption. These are the justifications for this exception.

PRIMARY STRUCTURES CORP. vs SPS VALENCIA

ISSUES:
Petitioner is a private corporation based in Cebu City and the registered owner of Lot 4523 (LOT A) situated in
Liloan, Cebu, with an area of 22,214 square meters. Adjacent to the lot of petitioner are parcels of land,
identified to be Lot 4527 (LOT B), Lot 4528 (LOT C), and Lot 4529 (LOT D) with a total combined area of 3,751
square meters. The three lots, aforenumbered, have been sold by Hermogenes Mendoza (owner of adjacent
lots) to respondent spouses (buyer) sometime in December 1994. Petitioner learned of the sale of the lots
only in January, 1996, when Hermogenes Mendoza sold to petitioner Lot No. 4820 (LOT E), a parcel also
adjacent to Lot 4523 belonging to the latter. Forthwith, it sent a letter to respondents, on 30 January 1996,
signifying its intention to redeem the three lots. On 30 May 1996, petitioner sent another letter to
respondents tendering payment of the price paid to Mendoza by respondents for the lots. Respondents, in
response, informed petitioner that they had no intention of selling the parcels. Thereupon, invoking the
provisions of Articles 1621 and 1623, petitioner filed an action against respondents to compel the latter to
allow the legal redemption. Petitioner claimed that neither Mendoza, the previous owner, nor respondents
gave formal or even just a verbal notice of the sale of the lots as so required by Article 1623 of the Civil Code.
After trial, the Regional Trial Court of Cebu dismissed petitioners complaint and respondents' counterclaim;
both parties appealed the decision of the trial court to the Court of Appeals. The appellate court affirmed the
assailed decision.

ISSUE:
(1) WON the lands in question are rural lands. Yes.
(2) WON there was a valid notice to the petitioners. None

HELD:
(1) Article 1621 of the Civil Code expresses that the right of redemption it grants to an adjoining owner of the
property conveyed may be defeated if it can be shown that the buyer or grantee does not own any other rural
land. The appellate court, sustaining the trial court, has said that there has been no evidence proffered to
show that respondents are not themselves owners of rural lands for the exclusionary clause of the law to
apply.
(2) Respondents, like the appellate court, overlook the fact that petitioner is not a party to the deed of sale
between respondents and Mendoza and has had no hand in the preparation and execution of the deed of
sale. It could not thus be considered a binding equivalent of the obligatory written notice prescribed by the
Code.
The written notice of sale is mandatory. This Court has long established the rule that notwithstanding actual
knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to
remove all uncertainties about the sale, its terms and conditions, as well as its efficacy and status.
Petitioner is hereby given a period of thirty days from finality of this decision within which to exercise its right
of legal redemption.

LEE CHUY REALTY CORPORATION vs CA and MARC REALTY AND DEVELOPMENT CORPORATION
FACTS:
Originally the property was co-owned by Ruben Jacinto to the extent of one-sixth and Dominador, Arsenio,
Liwayway, all surnamed Bascara, and Ernesto Jacinto who collectively owned the remaining five-sixths.
On 4 February 1981 Ruben Jacinto sold his one-sixth pro-indiviso share to LEE CHUY REALTY. The sale was
registered on 30 April 1981. On 5 May 1989 the Bascaras and Ernesto Jacinto also sold their share to MARC
REALTY. The sale was registered on 16 October 1989.
LEE CHUY REALTY claims that it was never informed of the existence of the sale between MARC REALTY on one
hand and the Bascaras and Jacinto on the other, and that on the contrary it was only upon inquiry from the
Register of Deeds of Bulacan that the sale was brought to its attention. MARC REALTY contends otherwise. It
insists that LEE CHUY REALTY was verbally notified of the sale and was in fact given a copy of the deed of sale.
On 13 November 1989 LEE CHUY REALTY filed a complaint for legal redemption against MARC REALTY1 and
consigned in court a manager's check for 614,400. In its Amended Answer with Counterclaim with Motion to
Dismiss, MARC REALTY insisted that the complaint be dismissed for failure to state a cause of action there
being no allegation of prior valid tender of payment nor a prior valid notice of consignation.
On 26 December 1990 the trial court ruled in favor of LEE CHUY REALTY holding that there was a prior valid
tender of payment and consignation. It further decreed that "(n)either a separate offer to redeem nor a
formal notice of consignation are (sic) necessary for the reason that the filing of the action itself, within the
period of redemption, is equivalent to a formal offer to redeem."
On 22 November 1991 the Court of Appeals rendered a decision reversing that of the lower court and ruling
that "a prior tender or offer of redemption is a prerequisite or precondition to the filing of an action for legal
redemption." It further ruled that "there must be tender of the redemption price within the required period . .
. because the policy of the law is not to leave the purchaser's title in uncertainty beyond the established 30-
day period." LEE CHUY REALTY filed a motion for reconsideration but it was denied hence the present petition.
MARC REALTY contends that prior tender of payment is a condition precedent to the filing of an action in court
in order to validly exercise the right of legal redemption. LEE CHUY REALTY however argues that the filing of
the action itself is equivalent to a formal offer to redeem, which is a condition precedent to the valid exercise
of the right of legal redemption.

ISSUES:
WON the filing of an action is equivalent to a formal offer to redeem. YES

HELD:
We held that for the legal and effective exercise of the right of legal redemption one must make the offer
within the period set in Art. 1623. In other words, if no claim or offer is made within thirty (30) days from
written notice, no action may be allowed to enforce the right of redemption.
We also adopted the view that a formal offer to redeem, accompanied by a bona fide tender of the
redemption price, is not essential where the right to redeem is exercised through a judicial action within the
redemption period and simultaneously depositing the redemption price. The formal offer to redeem
accompanied by a bona fide tender of the redemption price prescribed by law is only essential to preserve the
right of redemption for future enforcement even beyond the period of redemption. The filing of the action
itself within the period of redemption is equivalent to a formal offer to redeem.
In sum, the formal offer to redeem is not a distinct step or condition sine qua non to the filing of the action in
Court for the valid exercise of the right of legal redemption. What constitutes a condition precedent is either a
formal offer to redeem or the filing of an action in court together with the consignation of the redemption
price within the reglementary period.

ASSIGNMENT OF CREDITS
C & C COMMERCIAL CORPORATION vs PHILIPPINE NATIONAL BANK, NATIONAL INVESTMENT DEVELOPMENT
CORPORATION, PROVINCIAL SHERIFF OF RIZAL, CITY SHERIFF OF MANILA and THE HON. JUDGE AUGUSTO
VALENCIA, Presiding Judge, Quezon City

FACTS:
On the period between February 27, 1957 and December 20, 1960 when petitioner C & C Commercial
Corporation (now Asbestos Cements Products Phil. Inc., hereinafter referred to as ACPPI) opened seven
letters of credit with the respondent Philippine National Bank (hereinafter referred to as PNB) to import
machines and equipment for its plant. Since petitioner's obligations under the said letters of credit totalling
five million four hundred fifty-one thousand eight hundred fifty-one pesos and eighty-three centavos
(P5,451,851.83) as of January 31, 1968 were not paid, PNB instituted on March 13, 1968 a collection suit with
a prayer for preliminary attachment against ACPPI, impleading Clara Reyes Pastor as party defendant in her
capacity as joint and solidary debtor and controlling stockholder.

However, instead of proceeding with the collection suit, PNB agreed, at the behest of Mrs. Pastor, as majority
stockholder of ACPPI, to enter into a Voting Trust Agreement on March 5, 1969 to protect PNB's interests in
ACPPI. The collection suit was therefore dismissed without prejudice.
During the time that the Voting Trust Agreement was in force, ACPPI executed a chattel mortgage dated
September 6, 1971 over its personal properties in favor of NIDC as security for the loan of seven hundred
thousand pesos (P700,000.00).

ON 1973, petitioners ACPPI (then C & C Commercial Corporation), Clara Reyes Pastor and other stockholders
of ACPPI similarly situated filed a complaint on October 16, 1973 in the Quezon City Branch of the Court of
First Instance of Rizal for the termination of the Voting Trust Agreement with a prayer for an award of
damages in the sum of about twenty-seven million pesos (P 27 M) alleging, inter alia, that by reason of the
grossly negligent or incompetent management of ACPPI by private respondents, the corporation suffered
huge losses.

In the meantime, on December 19,1973, Development Bank of the Philippines (hereinafter referred to as
DBP) executed a deed of assignment in favor of PNB whereby the former assigned to the latter its rights and
interests under the promissory notes and deeds of real estate mortgages executed on May 16, 1960 and May
8, 1961 by ACPPI in favor of DBP for the principal amounts of four hundred ninety thousand pesos
(P490,000.00) and seven hundred ninety-six thousand pesos (P796,000.00), respectively.

A foreclosure sale was thus sought to satisfy ACCPI's total indebtedness to PNB in the amount of fourteen
million five hundred seventy-one thousand seven hundred thirty-six pesos and eighty-seven centavos
(Pl4,571,736.87) as of January 31, 1974.

On September 22,1975, a suit for nullification of the extrajudicial foreclosure proceedings with prayer for a
writ of injunction, was filed by ACPPI against PNB and the Provincial Sheriff of Rizal in the Pasig Branch of the
Court of First Instance of Rizal, contesting PNB's foreclosure of the mortgage and the auction sale scheduled
for September 30, 1975.
Meanwhile, NIDC foreclosed the chattel mortgage executed by ACPPI on September 6, 1971 and filed with the
Sheriff of the City of Manila a petition for the auction sale of "all the finished products in inventory located at
the MORTGAGOR's (ACPPI) plant at Barrio Napindan, Taguig, Rizal . . ." in order to satisfy an alleged total
indebtedness of ACPPI to NIDC amounting to one million eight hundred forty-five thousand one hundred nine
pesos and twenty-two centavos (Pl,845,109.22).

ISSUES:
WON the assigned credits may be foreclosed. Yes.

HELD:
As to the DBP-assigned credits, there is no doubt that foreclosure can proceed as these were secured by
appropriate mortgages. Moreover, contrary to petitioner's pretensions, the validity of the assignment of the
mortgage credit by DBP to PNB is beyond question. Article 1624 of the Civil Code provides that "an assignment
of credits and other incorporeal rights shall be perfected in accordance with the provisions of Article 1475"
which in turn states that "the contract of sale is perfected at the moment there is a meeting of the minds upon
the thing which is the object of the contract and upon the price." The meeting of the minds contemplated
here is that between the assignor of the credit and his assignee, there being no necessity for the consent of
the debtor, contrary to petitioner's claim. It is sufficient that the assignment be brought to his knowledge in
order to be binding upon him. This may be inferred from Article 1626 of the Civil Code which declares that
"the debtor who, before having knowledge of the assignment, pays his creditor shall be released from the
obligation." This view of Manresa was already quoted with approval by this Tribunal. Thus:
xxx
The above-mentioned article (Article 1527 of the Old Civil Code) states that a debtor who, before having
knowledge of the assignment, should pay the creditor shall be released from the obligation.
In the first place, the necessity for the notice to the debtor in order that the assignment may fully produce its
legal effects may be inferred from the above. It refers to a notice and not to a petition for the consent which is
not necessary. We say that the notice is not necessary in order that the legal effects may be fully produced,
because if it should be omitted, such omission will not imply that the assignment will not exist legally, but that
its effects will be limited to the parties thereto; at least, they will not reach the debtor [Sison v. Yap Tico, 37
Phil. 584, 587 (1918); Emphasis supplied].
As the petitioner does not claim absence of any notice of the assignment but only lack of its consent thereto,
the validity of DBP's assignment of the mortgage credit as well as the right of PNB as assignee, to foreclose the
assigned mortgage, cannot be doubted.