On April 28, 2026, the First Chamber of the Supreme Court rejected the appeal on the merits filed by BCI Factoring S.A. in case docket No. 5,540-2025, confirming that the defense of absolute nullity of the obligation for lack of cause has a real nature and may be asserted against the assignee of an invoice, even if that invoice has been irrevocably accepted under Law No. 19,983. If your company operates in the factoring market—whether as assignor, assignee, or as the assigned debtor—this ruling draws a boundary that was not clear until now: irrevocable acceptance does not cure defects in the underlying obligation.
What happened
Construcción Viviana Castillo Magnan E.I.R.L. issued electronic invoice No. 79, dated November 29, 2017, for $27,632,243 against Carabineros de Chile, Welfare Directorate, in the context of a construction contract with partial payments based on progress. The invoice was assigned to BCI Factoring S.A. and was neither returned nor challenged within the statutory period, becoming irrevocably accepted. BCI Factoring filed an enforcement action for collection. Carabineros raised the defense of absolute nullity of the obligation for lack of cause and unlawful object: it argued that the contract price had already been paid through other invoices and that No. 79 had been issued before the work began, in violation of art. 55 of Decree Law No. 825. The courts of first and second instance upheld the defense. The Supreme Court, by majority, rejected the appeal. The ruling’s central argument: Law No. 19,983 only bars personal defenses and those based on the non-delivery of goods or provision of services. The invoice is a causally grounded instrument—linked to the transaction that gives rise to its issuance—and nullity for lack of cause or unlawful object concerns the obligation itself, regardless of who entered into it. Therefore, pursuant to art. 2354 of the Civil Code, it constitutes a real defense: enforceable against anyone seeking to collect that obligation, including the assignee. The Court rejected that argument. Irrevocable acceptance does not erase the nonexistence of the obligation.
What this may mean for your company
The factoring market rests on an operational premise: once the debtor accepts the invoice and the deadline to challenge it expires, the assignee has a clean instrument. This ruling refines that premise. It does not eliminate it, but it sets a ceiling on it. The distinction drawn by the Court is precise. There are two types of defenses: Personal defenses are those arising from the specific relationship between assignor and debtor—set-off, merger, remission—and cannot be asserted against the assignee. Up to that point, Law No. 19,983 protects factoring. Real defenses are those that affect the obligation itself, regardless of the parties. Absolute nullity for lack of cause or unlawful object falls into this category. And against those, the assignee has no protection. What this means in practice: if the assigned invoice does not have a real obligation behind it—because the price has already been paid, because the service was never rendered, or because the invoice was issued in contravention of tax law—the assignee may lose the ability to collect by enforcement even if it acquired the instrument in good faith and paid for it. There is another angle. The ruling also exposes assignors. A company that assigns an invoice without support in a real service or performance not only risks invalidation of the collection; it also remains exposed to liability to the assignee for the assignment of a nonexistent credit. The gray area is in the dissenting opinions. Justice Jorge Zepeda A. and Associate Justice Raúl Patricio Fuentes M. held that when the invoice was issued within the framework of a prior contractual relationship, the failure to timely object consolidates the cause of the obligation and operates as preclusion. Under that reading, the defense of nullity would apply only when the invoice lacks any basis in a prior legal transaction—not when the debtor merely alleges that the contract had already been paid. The majority did not accept that distinction, but its presence in the ruling shows that the debate is not closed. For factoring companies, the most immediate impact is on the due diligence of the portfolios they acquire. The price they pay for an assigned credit can no longer rely solely on proof of irrevocable acceptance.
What you can do
If your company participates in factoring transactions—as factor, assignor, or company whose credits have been assigned—the ruling triggers at least three actions:
- Review the documentary verification protocol before acquiring portfolios. Before discounting an invoice, confirm that the underlying obligation has effective support: purchase orders, conforming receipts, confirmation emails. Irrevocable acceptance is no longer sufficient as the sole diligence.
- Audit the representations and warranties clauses in assignment agreements. If you are the assignee, make sure the assignor expressly declares that the obligation is real, valid, and enforceable, and that it will be liable for damages if not. If you are the assignor, understand the scope of those representations before signing.
- Assess ongoing transactions where the assigned debtor could raise defenses of this nature. If you hold portfolios acquired under contracts with a history of payment disputes, a preventive review of exposure is warranted before reaching the enforcement stage.
If you need to review your due diligence protocol in factoring transactions, audit the content of your credit assignment agreements, or assess the impact of this ruling on a specific portfolio, schedule a meeting with our team at https://calendar.app.google/f13cTubrP12uveuBA. This content is for informational purposes only and does not constitute legal advice for a specific case. Source: Supreme Court, First Chamber, Docket No. 5,540-2025, April 28, 2026.