CASE DIGEST: Licaros v. Gatmaitan

 


ABELARDO B. LICAROS, petitioner, vs. ANTONIO P. GATMAITAN, respondent
G.R. No. 142838    |          August 9, 2001

FACTS:

Enticed by the lucrative prospects of doing business with AngloAsean, Abelardo Licaros, a Filipino businessman, decided to make a fund placement with said bank sometime in the 1980’s. Licaros, after having invested in Anglo-Asean, encountered tremendous and unexplained difficulties in retrieving, not only the interest or profits, but even the very investments he had put in Anglo-Asean.

Confronted with the dire prospect of not getting back any of his investments, Licaros then decided to seek the counsel of Antonio P. Gatmaitan, a reputable banker and investment manager. Gatmaitan voluntarily offered to assume the payment of Anglo-Asean’s indebtedness to Licaros subject to certain terms and conditions. In order to effectuate and formalize the parties’ respective commitments, the two executed a notarized MEMORANDUM OF AGREEMENT on July 29, 1988.

Conformably with his undertaking under paragraph 1 of the aforequoted agreement, Gatmaitan executed in favor of Licaros a NON-NEGOTIABLE PROMISSORY NOTE WITH ASSIGNMENT OF CASH DIVIDENDS.

Thereafter, Gatmaitan presented to Anglo-Asean the Memorandum of Agreement earlier executed by him and Licaros for the purpose of collecting the letter’s placement thereat of U.S.$150,000.00. Albeit the officers of Anglo-Asean allegedly committed themselves to “look into this matter”, no formal response was ever made by said bank to either Licaros or Gatmaitan.

Because of his inability to collect from Anglo-Asean, Gatmaitan did not bother anymore to make good his promise to pay Licaros the amount stated in his promissory note. Licaros, however, felt that he had a right to collect on the basis of the promissory note regardless of the outcome of Gatmaitan’s recovery efforts. Thus, in July 1996, Licaros, thru counsel, addressed successive demand letters to Gatmaitan, demanding payment of the latter’s obligations under the promissory note. Gatmaitan, however, did not accede to these demands.

Hence, Licaros filed a complaint against Gatmaitan with the RTC of Makati on August 1, 1996.

The trial court ruled in favor of Licaros and found respondent Gatmaitan liable under the Memorandum of Agreement and Promissory Note.

The appellate court reversed the decision of the trial court and held that respondent Gatmaitan did not at any point become obligated to pay to petitioner Licaros the amount stated in the promissory note.

 

ISSUE:

Whether the Memorandum of Agreement between petitioner and respondent is one of assignment of credit or one of conventional subrogation

 

RULING:

An assignment of credit has been defined as the process of transferring the right of the assignor to the assignee who would then have the right to proceed against the debtor. The assignment may be done gratuitously or onerously, in which case, the assignment has an effect similar to that of a sale.

On the other hand, subrogation has been defined as the transfer of all the rights of the creditor to a third person, who substitutes him in all his rights. It may either be legal or conventional. Legal subrogation is that which takes place without agreement but by operation of law because of certain acts. Conventional subrogation is that which takes place by agreement of parties.

“Under our Code, conventional subrogation is not identical to assignment of credit. In the former, the debtor’s consent is necessary; in the latter it is not required. Subrogation extinguishes the obligation and gives rise to a new one; assignment refers to the same right which passes from one person to another. The nullity of an old obligation may be cured by subrogation, such that a new obligation will be perfectly valid; but the nullity of an obligation is not remedied by the assignment of the creditor’s right to another.”

The crucial distinction deals with the necessity of the consent of the debtor in the original transaction. In an assignment of credit, the consent of the debtor is not necessary in order that the assignment may fully produce 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 three 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.


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