Assignment of Credit vs.

Subrogation (1993) Peter Co, a trader from Manila, has dealt business with Allied Commoditie s in Hongkong for five years. All through the years, Peter Co accumulated an indebtedness of P500,000.00 with Allied Commodities. Upon demand by its agent in Manila, Peter Co paid Allied Commodities by check the amount owed. Upon depo sit in the payee s account in Manila, the check was dishonored for insufficiency o f funds. For and in consideration of P1.00, Allied Commodities assigned the cred it to Hadji Butu who brought suit against Peter Co in the RTC of Manila for reco very of the amount owed. Peter Co moved to dismiss the complaint against him on the ground that Hadji Butu was not a real party in interest and, ther efore, without legal capacity to sue and that he had not agreed to a subrogation of creditor. Will Peter Co s defense of absence of agreement to a subrogation of credi tor prosper? SUGGESTED ANSWER: No, Co s defense will not prosper. This is not a case of subrogation, but an assig nment of credit. ASSIGNMENT OF CREDIT is the process of transferring the right o f the assignor to the assignee. The assignment may be done either gratuitously o r onerously, in which case, the assignment has an effect similar to that of a sa le (Nyco Sales Corp. v.BA Finance Corp. G.R No.71694. Aug.16, 1991 200 SCRA 637) . As a result of the assignment, the plaintiff acquired all the rights of the assignor including the right to sue in his own name as the legal assignee . In assignment, the debtor sconsent is not essential for the validity of the assi gnment