Short answer. Generally no. When you consented to the assignment, you lost the right to use debts owed by the original creditor as a set-off against the new creditor — unless you specifically reserved that right at the time you gave your consent. Your silence on that point forfeits the compensation.
What the law says
The debtor who has consented to the assignment of rights made by a creditor in favor of a third person, cannot set up against the assignee the compensation which would pertain to him against the assignor, unless the assignor was notified by the debtor at the time he gave his consent, that he reserved his right to the compensation.
Civil Code, Article 1285 — Compensation and Assignment of Credit. Read the full provision →
What compensation means in this context
Compensation, in contract law, is the legal mechanism by which two debts owed between the same parties cancel each other out. If your creditor owed you money and you owed them money, those obligations would ordinarily extinguish each other up to the concurrent amount. The problem with an assignment is that it splits that relationship: a new party steps into the creditor's shoes, and the debt they owe you is still owed by the original creditor — not by the new assignee — so the debts are no longer between the same parties.
Consent without reservation surrenders the right
Article 1285 is direct: if you consented to the assignment without telling the original creditor that you were preserving your compensation rights, you cannot invoke those rights against the assignee later. The law treats your unconditional consent as a waiver. The window to preserve the right was narrow: at the time you gave your consent, you had to notify the assignor that you were reserving it. After-the-fact assertions will not revive what the unconditional consent extinguished.
How the rule differs when you did not consent
The Civil Code draws an important distinction based on how much you knew. If the creditor merely notified you of the assignment but you did not consent, you can still set up compensation for debts that existed before the cession — but not for debts that arose afterward. If the assignment happened entirely without your knowledge, the law gives you the broadest protection: you can invoke compensation for all credits prior to the assignment and even for credits that arose after it, right up until you actually learned of the cession.
What this means if you already consented
If you have already given unconditional consent and the original creditor still owes you money, your remedy is against the original creditor directly, not against the assignee. The debt the original creditor owes you did not disappear — it simply cannot be used to reduce what you owe the assignee. You may need to pursue the original creditor separately through a demand letter or civil action. A lawyer can help you assess whether your particular consent was truly unconditional, and whether any reservation, even informal, was communicated at the time.
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 →