Short answer. No, not if those debts arose after the notification of the assignment. Under the Civil Code, when you were notified of the assignment but did not consent, you may only set off debts that existed before the assignment was communicated to you — not debts that arose afterward.
What the law says
If the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the compensation of debts previous to the cession, but not of subsequent ones.
Civil Code, Article 1285 — Compensation and Assignment of Credit. Read the full provision →
How notification without consent affects your right to set off
Article 1285 of the Civil Code draws an important line based on whether you consented to the assignment and when you learned of it. The middle scenario — you were notified but did not consent — puts you in a limited position. You may invoke compensation (set-off) only for debts the assignor owed you that already existed at the time of the cession. Debts that came into being after you received notice of the assignment are walled off: the assignee takes over clean, without being exposed to cross-claims you might later develop against the original creditor.
Why the date of notification is the dividing line
The logic reflects fairness to the new creditor. When an assignee purchases a debt, he expects to receive the amount owed. If every obligation the original creditor incurred after the sale could be thrown up as a set-off by the debtor, the assignee's purchase would be far riskier than it appears. The notification date acts as a cutoff: from that point forward, the debtor knows there is a new creditor, and obligations arising after that point cannot be used to reduce what is owed to the assignee. The debtor's remedy for debts the original creditor later incurs lies against that original creditor personally, not against the assignee.
What you can still set off
Your right to set off is not extinguished entirely. If the assignor owed you money — on a loan, a contract, an unpaid service — and that debt arose before the assignment was communicated to you, you may raise that as compensation against whatever you owe under the assigned obligation. The amount set off cannot exceed the amount of the assigned debt, and the debt you raise as compensation must itself be due and liquidated, among other requirements for legal compensation. But the key point for your situation is whether the debts you want to use arose before or after the notification date.
Compare this with the other two scenarios
Article 1285 handles three situations differently. First, if you consented to the assignment, you largely give up the right to set off unless you expressly reserved it at the time. Second — your situation — you were notified without consenting, so you can only set off pre-cession debts. Third, if the assignment was made without your knowledge, the law is most generous to you: you may set off all debts the assignor owed you prior to learning of the assignment, including debts that arose right up until you found out. The less informed you were, the broader your set-off right.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Unified Financing Corp., vs. Spouses Juan and Estelita G. Tolentino, and Spouses James and Liwayway G. Tolentino, G.R. No. 271304, February 24, 2025 — read the decision on LawPhil →