Short answer. Yes, unless your contract forbids it. Article 1178 provides that all rights acquired in virtue of an obligation are transmissible, subject to the laws, if there has been no stipulation to the contrary. The customer's consent is not required — but until he knows, paying you still discharges him.
What the law says
Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary.
Civil Code, Article 1178 — Transmissibility of Rights. Read the full provision →
Transmissible is the default
A receivable is property. You may sell it, pledge it, or hand it on to your heirs, and you do not need the debtor's permission because his obligation is unchanged — the same amount, on the same terms, only payable to somebody else. The article recognises two boundaries. Rights may be intransmissible by law or by their nature, which is why Article 1347 speaks of all rights which are not intransmissible as capable of being the object of a contract. And the parties may simply have agreed otherwise, so a non-assignment clause in your supply contract is effective against you.
Tell the customer, in writing
Consent is not needed but knowledge matters enormously, because of Article 1626: the debtor who, before having knowledge of the assignment, pays his creditor is released from the obligation. A customer who keeps paying the original supplier in good faith has validly paid, and the assignee's recourse is then against the assignor rather than the customer. So notice is not a courtesy — it is the step that makes the assignment collectible. Send it in writing, identify the invoices, and keep proof that it was received.
What travels with the credit
Article 1627 provides that the assignment of a credit includes all the accessory rights, such as a guaranty, mortgage, pledge or preference, so the security given for the debt passes with it and does not have to be separately transferred. Defences travel too, and one of them has its own rule: under Article 1285, a debtor who consented to the assignment cannot set up against the assignee the compensation that would have been available to him against the assignor, unless he told the assignor, at the time of consenting, that he reserved that right.
What the seller of a credit warrants
Selling a receivable is not selling the debtor's ability to pay. Article 1628 makes the assignor in good faith responsible for the existence and legality of the credit at the time of the sale, unless it was sold as doubtful, but not for the debtor's solvency — unless that was expressly stipulated, or the insolvency was prior to the sale and of common knowledge — and even then only for the price received and the expenses. Article 1629 adds that where solvency was warranted without an agreed duration, the liability lasts one year.
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.
- Carmelita Leaño, etc. vs. Court of Appeals, et al, G.R. No. 129018, November 15, 2001 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1178 — Transmissibility of Rights
- Civil Code, Article 1285 — Compensation and Assignment of Credit
- Civil Code, Article 1347 — Object of Contracts
- Civil Code, Article 1626 — Payment by the Debtor Before Notice
- Civil Code, Article 1627 — Assignment Includes Accessory Rights
- Civil Code, Article 1628 — Assignor's Warranty (Existence, Not Solvency)
- Civil Code, Article 1629 — Duration of Warranty of Solvency