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Chapter 8

RFLI BSA

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12 views

Chapter 8

RFLI BSA

Uploaded by

Renz Fiestada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER VIII

ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL


RIGHTS

Art.1624. An assignment of credits and other incorporeal rights


shall be perfected in accordance with provisions of Article 1475.

ASSIGNMENT ON CREDIT

An assignment on credit is an agreement by virtue which the owner


of a credit, known as the assignor, by a legal cause, such as sale, dacion en
pago, exchange or donation, and without consent of the debtor, transfer his
credit and accessory rights to another, known as the assignee, who acquires
the power to enforce to the same extent as the assignor could enforce it
against the debtor.

INCORPOREAL RIGHTS, MEANING

A right go intangible, rather than tangible, property. (ART.1475)

Thus, assignment of credits and other incorporeal rights are perfected


also at the moment there is the meeting of two minds.

Contract of sale - The object is property

It need not appear in a public instrument to affect third person

Assignment of credit - The object is credit incorporeal rights or rights of


action, it must appear in a public instrument to produce effect as against
third person.

Article 1625. An assignment of a credit right or action shall produce


no effect as against third person unless it appears in a public
instrument or the instrument is recorded in the registry of property
in case the assignment involves real property

Requirement to produce effect as against third person


1. If personal property is involved
2. If real property is involved

Note:

A gratuitous assignment is in essence a donation hence it must


comply with the formalities of a donation.

Article 1626. The debtor who, before having knowledge of the


assignment, pay his creditor shall be released from the obligation.

Article 1627. The assignment of a credit includes all the accessory


rights such as guarantee mortgage pledge or preference.

Article 1628. The vendor in good faith shall be responsible for the
existence and legality of the credit at the time of the sale, unless it
should have been sold as doubtful but not for the solvency of the
debtor unless it has been so expressly stipulated or unless the
insolvency was prior to the sale and of the common knowledge.

Even in these cases he shall only be liable for the price


received and for the expenses specified in No.1 of article 1616

The vendor in bad faith shall always be answerable for the payment
of all expenses, and for damages.

Warranties of the assignor of Credit

1. The existence of the credit At the time of assignment


2. The legality Of the credit at the time of the assignment unless the
assignor sold it as doubtful, and
3. If expressly stipulated or unless the insolvency was prior to the sale
and of common knowledge, the solvency of the debtor.

Liabilities for violation of warranties

1. Assignor in good faith


a. price receive;
b. Expenses of the contract; and
c. any other legitimate payments by reason of the assignment
2. A sign or in bad faith
a. The payment of the price;
b. all the expenses; and
c. Damages

Article 1629. In case the assignor in good faith should have made
himself responsible for the solvency of the debtor, and the
contracting parties should not have agreed upon the duration of the
liability, it shall last for one year only, from the time of the
assignment if the period had already expired.

If the credit should be payable within a term or period which


has not yet expired, the liability shall cease one year after the
maturity.

Duration of warranty as to debtor solvency

1. period stipulated;
2. If there is no stipulation;
a. If the period had already expired; One year from the time of
the assignment
b. if the period has not yet expired One year from maturity

Article 1630. One who sells an inheritance without enumerating the


things of which it is composed, shall only be answerable for his
character as an heir.

Note:

The above-stated article speaks of present inheritance which is valid


as long as the essential elements of a contract are present. It is the sale of
the future inheritance which is prohibited, as a rule

INHERITANCE
property received from an ancestor under the law of intestacy.

Article 1631. One who sells for a lump sum the whole of certain
rights, rents, or products, shall comply by answering for the
legitimacy of the whole in general; but he shall not be obliged to
warrant each of the various parts of which it may be composed,
except in the case of eviction from the whole or the part of greater
value

Note:

The warranty is on the legitimacy of the whole in general.

Article 1632. Should the vendor have profited by some of the fruits
or received anything from the inheritance sold, he shall pay the
vendee thereof, if the contrary has not been stipulated.

General Rule:

The vendor shall pay the vendor should he have profited by some of the
fruits or received anything from inheritance sold.

Exception:

The above liability is subject to contrary stipulation.

Article 1633 The vendee shall, on his part, reimbursed the vendor
for all that the latter may have paid for the debts of and charge on
the estate and satisfy the credits he may have against the same,
unless there is an agreement to the contrary.

General Rule:
The vendee shall, on his part, reimbursed the vendor for all that the
latter may have paid for the debts of and charge on the estate and satisfy
the credits he may have against the same.

Exception:

The above liability is subject to contraries stipulation

Article 1634. When a credit or other incorporeal right in litigation is


sold, the debtor shall have a right to extinguish it by reimbursing
the assignee for the price the latter paid therefor, the judicial cost
incurred by him, and the interest on the price from the day on which
the same was paid.

A credit or other incorporeal right shall be considered in litigation


from the time the complaint concerning the same is answered.

The debtor may exercise his right within 30 days from the date the
assignee demands payment from him.

Pendente lite, meaning

Latin “while the action is pending” during the proceeding or litigation in


a manner for contingent on the outcome of litigation.

REQUISITES:

The debtor to entitled to extinguish his credit by reimbursing the


assignee under article 1634, the following the following requisites must
concur:

a. There must be a credit or other incorporeal right;


b. the credit or other incorporeal right must be in litigation;
c. The credit or other incorporeal right must be sold to an assignee
pending litigation;
d. The assignee must have demanded payment from the debtor;
e. the debtor must reimburse the assignee for the price paid by the
latter the judicial cost incurred by the latter and the interest on
the price from the day on which was paid and;
f. the reimbursement must be done within 30 days from the date of
the assignees demand

Article 1635.From the provisions of the preceding article shall be


accepted the assignments or sales made:

1. ) To a co-heir or co-owner of the right assign;


2. ) To a creditor in payment of his credit;
3. ) To the possessor of a tenement or piece of land which is
subject to the right in litigation assigned

1. assignment or sales made to a co-heir or co owner of the right


assigned.

Example:

D owes X and Y. Thereafter, despite the demand by X, they did not


pay. Hence, X filed a complaint where D filed an answer. If during the
pendency of the litigation, X assigned or sold his credit to Y, D cannot
redeem.

2. assignment or sales made to a creditor in payment of his credit

Example:

D owes C. In another contract, C also owes X. Despite demand, D


failed to pay C; hence, the latter filed a complaint against the former. D
timely filed his answer. During the pendency of the litigation, C assigns
his credit in favor of X. In this case, D has no right of legal redemption.

3. Assignments or sales made to the possessor of a tenement or


piece of land which is subject to the right in litigation assigned

Example:

D owes C as evidenced by their contract of loan. Moreover, D executed


a contract of real estate mortgage as security to his loan. Upon demand by
C, D failed to pay. Thus, C filed a complaint and thereafter D also filed his
answer. Later, D sold the above stated parcel of land to X. During the
pendency of the litigation, C assigns his credit to X. In this case, D has no
right of legal redemption.

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