Articles 1624 - 1635

of
z
Assignment
Credits
z
Article 1624

An assignment of credits and

other incorporated rights shall
be perfected in accordance
with the provisions of Article
1475. (n)
Assignment of Credit defined:

Assignment of credit is a contract by

which one person transfers to another his
rights and actions against a third person
in consideration of a price certain money
or its equivalent. (see Art. 1485.) It is a
consensual, bilateral, onerous, and
commutative or aleatory contract.
 z
Article 1625

An assignment of credit, right or action

shall produce no effect as against third
persons, unless it appears in a public
instrument, or the instrument is
recorded in the Registry of Property in
case the assignment involves real
property. (1526)
 Binding effect of assignment.
A.) As between the parties, the assignment is valid
although it appears only in private document so long as
the law does not require a specific form of its validity.

B.) To affect third persons, the assignment must appear

in a public instrument, and in case it involves real
property, it is indispensable that it be recorded in the
Registry of Property.

C.) The assignee merely steps into the shoes of the

assignor, the former acquiring the credit subject to
defenses available to the debtor against the assignor.
z
Article 1626

The debtor who, before having

knowledge of the assignment,
pays his creditor shall be released
from the obligation. (1527)
- In an assignment of credit, the consent
of the debtor is not essential in order
that it may produce legal effects.
z
Article 1627

The assignment of a credit includes

all the accessory rights, such as a
guaranty, mortgage, pledge or
preference. (1528)
- The assignment of credit includes not
only the credit itself but also all rights
accessory thereto. This follows the
familiar rule that the accessory follows
the principal.
 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 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. (1529)
- The assignor in good faith shall be
responsible for the existence and legality
of the credit. An assignment credit which
is in the nature of sale of personal
property produces the effects of a dation
in payment which may extinguish the
obligation.
Liabilities of the assignor of credit.
1.) For violation of the above warranties, the liability
of the assignor in good faith is limited only to the
price received and to the expenses of the contract,
and any other legitimate payments by reason of the
assignment.
2.) But the assignor in bad faith is liable not only for
the payment of the price and all expenses, but also
for damages. As assignor in bad faith is one who
has knowledge of any of the circumstances
mentioned above while an assignor in good faith is
one who is ignorant of them.
 z
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 after the maturity
(1530a).
- In case the assignor has expressly warranted the
solvency of the debtor, the duration of the
assignor’s liability shall be as follows:

(1)If there is a stipulation, then for the term or

period fixed;

(2) If there is no stipulation:

(a) for one year from the assignment of the
credit when the period for payment of the credit has
expired; or
(b) for one year after its maturity, when such
period for payment has not yet expired.
z
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. (1531)
 - This article refers to the sale of
successional right or the right to an
inheritance before partition.

Sale of Present Inheritance:

1.) Warranty of person selling an existing or present

inheritance.
2.) Liabilities of vendor of inheritance sold
3.) Liabilities of vendee of inheritance
 z
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. (1532a)
- The vendor warrants the legitimacy of
the whole in general, and shall not be
obliged to warrant each of the various
parts of which it may be composed,
except when he is evicted:

1.) For the whole of the things;

2.) From the part of the greater value.
 z
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.
(1533)
- Unless otherwise stipulated, the
fruits of an inheritance are included
in the sale thereof.
 z
Article 1633

The vendee shall, on his part, reimburse

the vendor for all that the latter may
have paid for the debts of and charges
on the estate and satisfy the credits he
may have against the same, unless
there is an agreement to the contrary.
(1534)
- The vendee is required to reimburse
the vendor for whatever the latter has
paid for the debts of and charges on
the estate.
 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 costs 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 thirty
days from the date the assignee demands payment
from him. (1535)
- Requisites of Legal Redemption in sale of credit or
other incorporeal rights.

1. There must be a sale or assignment of credit

2. There must be a pending litigation at the time of
the assignment
3. The debtor must pay the assignee:
a. price paid by him
b. judicial cost incurred by him; and
c. interest on the price from the date of payment
4. The right must be exercised by the debtor within
30 days from the date the assignee demands
(judicially or extra-judicially) payment from him.
 z Article 1635
From the provisions of the preceding
article shall be excepted the assignments
or sales made:
(1)To a co-heir or co-owner of the right
assigned;

(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. (1536)
- Under both Articles 1634 and 1635, the
debtor cannot redeem if the credit or
other incorporeal right is not in litigation
when the same is sold.
z
THANK YOU !!