CHAPTER 8

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. (n)

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. (1526)

Article 1626. The debtor who, before having knowledge of the assignment, pays his creditor shall be
released from the obligation. (1527)

Article 1627. The assignment of a credit includes all the accessory rights, such as a guaranty, mortgage,
pledge or preference. (1528)

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)

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. (1530a)

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)
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)

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)

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) 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)

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)
 CHAPTER 9
General Provisions

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 indorsement 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. (n)

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. (1537a)