Assignment and Delegation

1
Assignment and Delegation

• The Freedom to Assign a Creditors Right and its
  Limitation
• The Delegation for Contractual Duty and Security
  Interest

2
The Freedom of Assignment and Its Limitations

• A creditor may transfer a claim of an obligation
  to a third party, unless
• (1) The nature of the claim does not permit the
  transfer or
• (2) The parties have agreed that the claim shall
  not be transferred or
• (3) The claim is not subject to judicial
  attachment.
• The agreement mentioned in the second section of
  the preceding paragraph shall not be a valid
  defense against any bona fide third party.
  (Article 294)

3
Method of Assignment

• Assignment by Juristic Act
• Made by either oral or written contract
• A dispositive contract
• Notify the debtor
• The transfer of a claim will not be effective as
  against the debtor until the debtor has been
  notified of it by the transferor or by the
  transferee, unless otherwise provided by the act.
• The effect of tendering by the transferee to the
  debtor the deed of transfer executed by the
  transferor is equivalent to the effect of notice.
  (Article 297)

4
Effect of Assignment

• Constructive transfer of security interest and
  accessory rights
• When there is a claim being transferred, all the
  securities of the claim and other accessory
  rights are transferred together, except those
  rights which cannot be separated from the
  transferor.
• Interests in arrears are presumed to be
  transferred, together with the capital. (RCC
  Article 295)
• Duty to deliver document
• The transferor is bound to deliver to the
  transferee all documents which serve as evidence
  of the claim, and to give him all information
  necessary for the assertion of such claim. (RCC
  Article 296)

5
Effect of Assignment

• Right of Defense by the debtor
• When the transferor has notified the debtor that
  he has transferred the claim, the debtor may take
  all the defenses which he has against the
  transferee as the valid defenses against the
  transferor, even though the transfer is not
  executed or is invalid. (RCC Article 298I)
• The notice under the preceding paragraph shall
  not be revoked without the consent of the
  transferee. (RCC Article 298II)
• At the time of the debtor being notified, all of
  the valid defenses he has against the transferor
  may be taken against the transferee.At the time
  of the debtor being notified, if the debtor had
  the claim against the transferor, and if such
  claim matures before or at the same of the claim
  transferred does, he may claim for offset against
  the transferee. (RCC Article 299)

6
Delegation of obligation

• Type of delegation
• When a third party agrees with the creditor to
  assume the obligation of the debtor, the
  obligation is deemed to be transferred to the
  third party at the time of the constitution of
  the contract. (RCC Article 300)

7
Delegation of Contractual Duty

• Prerequisites of Delegation
• When a third party agrees with the debtor to
  assume the obligation of the debtor, it is not
  effective as against the creditor until the
  creditor has acknowledged. (RCC Article 301)

8
Delegation of Contractual Duty

• Effect of delegation
• The debtor or the person assuming the debt under
  the preceding article may fix a reasonable
  deadline and notify the creditor to reply
  definitely before such deadline whether he
  acknowledges the transfer or not. If the creditor
  does not give a definite reply before such
  period, he is deemed to have refused to
  acknowledge the said transfer.If the creditor
  refuses to acknowledge the transfer, the debtor
  or the person assuming the debt may revoke the
  contract concerning the assumption of the debt.
  (RCC Article 302)

9
Delegation of Contractual Duty

• The person assuming the debt may take the
  debtors valid defenses against the creditor on
  account of their legal relationship as his valid
  defenses against the creditor, unless he shall
  not offset a claim belonging to the debtor.The
  person assuming the debt shall not take his valid
  defenses against the debtor on account of the
  legal relationship arising from the assumption of
  the debt against the creditor.(RCC Article
  302)

10
Delegation of Contractual Duty

• The assumption of a debt does not affect the
  existence of the accessory rights of the claim,
  unless the accessory rights shall not be
  separated from the debtor.
• The securities given by a third party for the
  performance of the obligation are extinguished on
  account of the assumption of the debt, unless
  such third party has acknowledged the
  assumption.(RCC Article 304)

11
General Assumption

• In case of generally assuming all the assets and
  liabilities from the property or enterprise of a
  person, the assumption of the debts becomes
  effective from the moment the transfer has been
  published or has been notified to the
  creditor.In the case specified in the preceding
  paragraph, the original debtor remains jointly
  liable with the person assuming the debt for a
  period of two years from the date of notice or
  publication of the transfer for the obligations
  due, or from the date of maturity for the
  obligations which are not yet due. (RCC Article
  305)

12

• Article 306When one enterprise is amalgamated
  with other enterprises and they are assumed each
  others assets and liabilities, it is deemed as
  the general assumption in the preceding article.
  The new enterprise after the amalgamation shall
  be responsible for the obligation of each
  enterprise before the amalgamation.