Activity 1: What I Know Chart, Part 1
What I Know
At the moment there is a
meeting of minds upon the
object of the contract.
a. The existence of the
credit at the time of
assignment
b. The legality of the
credit at the time of
the assignment unless
the assignor sold it as
doubtful
c. If expressly stipulated
or unless the
insolvency was prior
to the sale and of
common knowledge,
the solvency of the
debtor.
Includes not only the credit
itself but also all rights
accessory thereto.
Activity 2: Pre-Printed Content Notes
Activity 3: Skill-building Activities
Exercise 1
1. Is the consent of the debtor to assignment required? Explain.
Questions: What I Learned (Activity 4)
1. How is the contract Under Art. 1624, an
for assignment of assignment of creditors and
credit perfected? other incorporeal rights shall
be perfected in accordance
with the provisions of Article
1475. Where Article 1475
states that the contract of
sale is perfected at the
moment there is a meeting of
minds upon the thing which
is the object of the contract
and upon the price.
2. What are the Under Article 1628, there are
warranties of the three warranties of the
assignor of credit? assignor of credit, namely:
a. The existence of the
credit at the time of
assignment;
b. The legality of the
credit at the time of
the assignment unless
the assignor sold it as
doubtful; and
c. If expressly stipulated
or unless the
insolvency was prior
to the sale and of
common knowledge,
the solvency of the
debtor.
3. What is the extent of Under Article 1627, the
the assignment of assignment of credit includes
credit? Explain. all accessory rights.
The consent of the debtor is not essential in order that it may produce legal effects. The law
speaks not of consent but of notice to the debtor. Therefore, the consent of debtor to
assignment is not required.

2. What is the binding effect of an assignment if the same is not notarized?

Under Article 1625, an assignment of credit, right or action shall produce no effect as against
third person if not notarized. Hence, it will only be binding as between the parties.

3. What does an assignor of credit warrant and what liabilities will he incur in case of
violation thereof?

Under Article 1628, these are the warranties and liabilities of the assignor of credit:

Warranties of the Assignor of Credit:

a. The existence of the credit at the time of assignment;

b. The legality of the credit at the time of the assignment unless the assignor sold it as
doubtful; and
c. 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 received;
b. Expenses of the contract; and
c. Any other legitimate payments by reason of the assignment
2. Assignor in Bad Faith
a. Payment of the price;
b. All the expenses; and
c. Damages

Activity 4: What I Know Chart, Part 2

Activity 5: Check for Understanding

Exercise 1: TRUE or FALSE

TRUE 1.The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.

TRUE 2. Assignment of credits and other incorporeal rights are perfected also at the
moment there is a meeting of minds.

TRUE 3. An assignment of a credit, right or action shall produce no effect as against

third person, unless it appears in a public instrument.
FALSE 4. The assignment of a credit excludes all the accessory rights, such as a
guaranty, mortgage, pledge or preference.

TRUE 5. Only notice to the debtor of the assignment of credit is required. His consent
is not required.

FALSE 6. The vendor in good faith shall be responsible for the existence, legality and
solvency of the debtor the time of sale.

TRUE 7. In assignment of credit, the object is credit, incorporeal rights or rights of

action.

TRUE 8. In a contract of sale, the object is property.

FALSE 9. In a contract of sale, it need not appear in a public instrument to affect a third
person.

TRUE 10. In assignment of credit, it must appear in a public instrument to produce

effect as against third person.