Audiobook Civil Law Sales

Law on Sales Audiobook #7 Assignment of Credits and Other Incorporeal Rights


Article 1624

An assignment of creditors and other incorporeal rights shall be perfected in accordance with the provisions of article 1475.

Article 1625

An assignment of a 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.

Article 1626

The debtor who, before having knowledge of the assignment, pays his creditor shall be released from the obligation.

Article 1627

The assignment of a credit includes all the accessory rights, such as a guaranty, 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 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.

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.

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.

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.

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.

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.

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.

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.


Article 1636

In the preceding articles in this Title governing the sale of goods, unless the context or subject matter otherwise requires:

(1) “Document of title to goods” includes any bill of lading, dock warrant, “quedan,” or warehouse receipt or order for the delivery of goods, or any other document used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive, either by indorsement or by delivery, goods represented by such document.

“Goods” includes all chattels personal but not things in action or money of legal tender in the Philippines. The term includes growing fruits or crops.

“Order” relating to documents of title means an order by endorsement on the documents.

“Quality of goods” includes their state or condition.

“Specific goods” means goods identified and agreed upon at the time a contract of sale is made.

An antecedent or pre-existing claim, whether for money or not, constitutes “value” where goods or documents of title are taken either in satisfaction thereof or as security therefor.

(2) A person is insolvent within the meaning of this Title who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due, whether insolvency proceedings have been commenced or not.

(3) Goods are in a “deliverable state” within the meaning of this Title when they are in such a state that the buyer would, under the contract, be bound to take delivery of them.

Article 1637

The provisions of this Title are subject to the rules laid down by the Mortgage Law and the Land Registration Law with regard to immovable property.

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