deed of assignment in the philippines

Deed of Assignment and Transfer of Rights [Parts and Template]

A Deed of Assignment and Transfer of Rights is a legal document used when a person or a company who originally was a party to a contract (also known as the assignor or transferor) transfers his or its rights under the contract to another party (the assignee or transferee).

Accordingly, when the Deed of Assignment and Transfer of Rights has been drafted on the basis that in the original contract there is no prohibition to or restriction on assignment, and hence signed by both parties, it can be consequently assigned without the other contracting party’s consent.

In this article, I’ll try to dissect a sample Deed of Assignment and Transfer of Rights of a St. Peter Life Plan and provide descriptions of its fundamental elements or parts. As drafting a deed requires abundant caution, presence of mind, and knowledge of property and other allied laws, I highly advise that you seek help from experts and experienced in legal transactions.

Parts of a Deed of Assignment and Transfer of Rights

[1] Title of Deed . As implied above, deeds come in different forms and types. Check if the document and the first section displays the title – Deed of Assignment and Transfer of Rights. Conventionally, the first paragraph runs:

  KNOW ALL MEN BY THESE PRESENTS:

This deed, made and entered made and entered into this 13 rd day of January 2018 at the City of Manila, by and between:

[2] Parties Involved . A Deed of Assignment and Transfer of Rights must contain accurate information about the identities of the assigning and assigned parties. Other information such as age legality, citizenship, and postal address must be included, just as seen below:

Juan De la Cruz, Filipino citizen, of legal age, married to Josefina De la Cruz, and with residence and postal address at 123 Kasiglahan Street, Karangalan Village, Dela Paz, Pasig City, Philippines, hereinafter referred to as the “ASSIGNOR/TRANSFEROR”

Sebastian Maliksi, Filipino citizen, of legal age, single, and with residence and postal address at 456 Kasimanwa Street, Karangalan Village, Dela Paz, Pasig City, Philippines, hereinafter referred to as the “ASSIGNEE/TRANSFEREE”

[3] Contract Details . A Deed of Assignment and Transfer of Rights must contain a detailed description of the contract, hence in the context here – St. Peter Traditional Life Plan (St. Anne) contract and the Life Plan Agreement (LPA) Number:

WHEREAS, the ASSIGNOR/TRANSFEROR is the owner of life / memorial plan contract which is identified as St. Peter Traditional Life Plan (St. Anne), with Life Plan Agreement No. 123456;

[4] Contract Assignment and Transfer Agreement . As one of the most important and critical parts, this specifies the terms and conditions of the agreement. See sample below:

WHEREAS, for and in consideration of the value of the plan and out of accommodation and assistance for the ASSIGNEE/TRANSFEREE, the ASSIGNOR/TRANSFEROR is assigning and transferring all his/her rights and interests over the Life Plan mentioned in the immediately preceding paragraph to the ASSIGNEE/TRANSFEREE;

NOW, therefore for and in consideration of forgoing premises, the parties hereto have agreed on the following terms and conditions, to wit;

THE ASSIGNOR/TRANSFEROR, hereby waives all his / her rights and interests in the subject life plan in favor of the ASSIGNEE/TRANSFEREE. It is understood that when the Life Plan is assigned / availed of, then all obligations of St. Peter Life Plan, Inc. are fulfilled and discharged.

As a consequence of this assignment / transfer of rights, the ASSIGNEE/TRANSFEREE hereby assumes all the obligations and accountabilities of the ASSIGNOR/TRANSFEROR to St. Peter Life Plan, Inc. in connection with the life plan contract which it issued to the latter.

The ASSIGNEE/TRANSFEREE obligates and / or undertakes to comply with and abide by the requirements which St. Peter Life Plan Inc. may impose in connection with the purchase, possession, and use of the said Life Plan particularly the requirement that it should be fully paid before the memorial service could be availed of pursuant to the Life Plan.

[5] Execution . Once the Deed of Assignment and Transfer of Rights is drafted, the parties involved shall execute it by affixing their signatures. Other than the assigning and assigned parties, witnesses should also sign all the pages of the document. In addition, the deed shall be acknowledged and notarized by a legal practitioner.

IN WITNESS WHEREOF the parties have hereunto set their hands on the date and place first above written.

[  Assignor/Transferor]                           [Assignee/Transferee]

SIGNED IN THE PRESENCE OF:

[Witness]                                                    [Witness]

Disclaimer: Although much effort has been exerted in the creation of this article, the author disclaims any legal expertise and does not guarantee the accuracy and legitimacy of any or all of the information. Hence, it is advised that you consult with professionals such as insurance brokers and lawyers before engaging in legal transactions.    

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Things you need to know about Deed of Assignment.

Last updated on 8 January 2024

1. What is a Deed of Assignment? 

A Deed of Assignment is a contract where the owner (the “assignor”) transfers ownership over property to another person (the “assignee”) by way of assignment. The assignee steps into the shoes of the assignor and assumes all the rights and obligations to the property.

If you will assign immovable property (e.g. land, house) then use this Deed of Assignment for Immovable Property instead.

2. When do you need a Deed of Assignment?

A Deed of Assignment is used when the owner wants to transfer ownership (and the rights and obligations) over property to another person.

3. What information do you need to create the Deed of Assignment?

To create your Deed of Assignment you’ll need the following minimum information:

• The type of assignor (e.g. individual or business) as well as name and details (e.g. nationality and address).
• The type of assignee (e.g. individual or business) as well as name and details (e.g. nationality and address).
• Brief description of the property to be assigned.

4.  How much is the document?

The document costs PHP 400 for a one-time purchase. Once purchased you have unlimited use and revisions of this type of document.

You can also avail of Premium subscription at PHP 1,000 and get (a) unlimited use of our growing  library  of documents (from affidavits to contracts); and (b) unlimited use of our “ Ask an Attorney ” service, which lets you consult an expert lawyer anytime for any legal concern you have.

Related Documents.

Activities that involve a Deed of Assignment sometimes use the following documents. You may be interested in them:

Deed of Assignment for Immovable Property

Assign your rights to immovable property (e.g. house, land) to another person

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DEED OF ASSIGNMENT: EVERYTHING YOU NEED TO KNOW.

A Deed of Assignment refers to a legal document in which an assignor states his willingness to assign the ownership of his property to the assignee. The Deed of Assignment is required to effect a transfer of property and to show the legal right to possess it. It is always a subject of debate whether Deed of Assignment is a contract; a Deed of Assignment is actually a contract where the owner (the “assignor”) transfers ownership over certain property to another person (the “assignee”) by way of assignment. As a result of the assignment, the assignee steps into the shoes of the assignor and assumes all the rights and obligations pertaining to the property.

In Nigeria, a Deed of Assignment is one of the legal documents that transfer authentic legal ownership in a property. There are several other documents like a deed of gifts, Assent, etc. However, this article focuses on the deed of assignment.

It is the written proof of ownership that stipulates the kind of rights or interests being transferred to the buyer which is a legal interest.

Read Also: DIFFERENCE BETWEEN TRANSFER OF PROPERTY THROUGH WILLS AND DEED OF GIFT

CONTENTS OF A DEED OF ASSIGNMENT

Content of a Deed of Assignment matters a lot to the transaction and special skill is needed for a hitch-free transaction. The contents of a deed of assignment can be divided into 3 namely; the introductory part, the second (usually the operative part), and the concluding part.

• THE INTRODUCTORY PART: This part enumerates the preliminary matters such as the commencement date, parties in the transaction, and recitals. The parties mentioned in the deed must be legal persons which can consist of natural persons and entities with corporate personality, the name, address, and status of the parties must be included. The proper descriptions of the parties are the assignor (seller) and assignee (buyer). The Recitals give the material facts constituting the background to the current transaction in chronological order.
• THE SECOND PART (USUALLY THE OPERATIVE PART): This is the part where the interest or title in the property is actually transferred from the assignor to the assignee. It is more like the engine room of the deed of assignment. The operative part usually starts with testatum and it provides for other important clauses such as the consideration (price) of the property, the accepted receipt by the assignor, the description of the property, and the terms and conditions of the transaction.
• The testimonium : this shows that all the parties are involved in the execution of the deed.
• Execution : this means signing. The capacity of the parties (either individual, corporate bodies, illiterates) is of great essence in the mode of execution.  It is important to note that the type of parties involved determines how they will sign. Example 2 directors or a director/secretary will sign if a company is involved. In the same way, if an association, couple, individual, illiterate, family land (omonile), firm, unregistered association, etc. is involved the format of signature would be different.
• Attestation : this refers to the witnessing of the execution of the deed by witnesses.

For a Deed of Assignment to be effective, it must include a column for the Governor of the state or a representative of the Government where the property is, to sign/consent to the transaction. By virtue of Sec. 22 of the Land Use Act, and Sec. 10 Land Instrument Registration Law, the Governor must consent to the transaction.

Do you have any further questions? feel free to call Ibejulekkilawyer on 08034869295 or send a mail to [email protected] and we shall respond accordingly.

Disclaimer: The above is for information purposes only and should not be construed as legal advice. Ibejulekkilawyer.com (blog) shall not be liable to any person(s) for any damage or liability arising whatsoever following the reliance of the information contained herein. Consult us or your legal practitioner for legal advice.

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Deed of Assignment: Everything You Need to Know

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. 3 min read updated on January 01, 2024

Updated October 8,2020:

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. It states that a specific piece of property will belong to the assignee and no longer belong to the assignor starting from a specified date. In order to be valid, a deed of assignment must contain certain types of information and meet a number of requirements.

What Is an Assignment?

An assignment is similar to an outright transfer, but it is slightly different. It takes place when one of two parties who have entered into a contract decides to transfer all of his or her rights and obligations to a third party and completely remove himself or herself from the contract.

Also called the assignee, the third party effectively replaces the former contracting party and consequently assumes all of his or her rights and obligations. Unless it is stated in the original contract, both parties to the initial contract are typically required to express approval of an assignment before it can occur. When you sell a piece of property, you are making an assignment of it to the buyer through the paperwork you sign at closing.

What Is a Deed of Assignment?

A deed of assignment refers to a legal document that facilitates the legal transfer of ownership of real estate property. It is an important document that must be securely stored at all times, especially in the case of real estate.

In general, this document can be described as a document that is drafted and signed to promise or guarantee the transfer of ownership of a real estate property on a specified date. In other words, it serves as the evidence of the transfer of ownership of the property, with the stipulation that there is a certain timeframe in which actual ownership will begin.

The deed of assignment is the main document between the seller and buyer that proves ownership in favor of the seller. The party who is transferring his or her rights to the property is known as the “assignor,” while the party who is receiving the rights is called the “assignee.”

A deed of assignment is required in many different situations, the most common of which is the transfer of ownership of a property. For example, a developer of a new house has to sign a deed of assignment with a buyer, stating that the house will belong to him or her on a certain date. Nevertheless, the buyer may want to sell the house to someone else in the future, which will also require the signing of a deed of assignment.

This document is necessary because it serves as a temporary title deed in the event that the actual title deed for the house has not been issued. For every piece of property that will be sold before the issuance of a title deed, a deed of assignment will be required.

Requirements for a Deed of Assignment

In order to be legally enforceable, an absolute sale deed must provide a clear description of the property being transferred, such as its address or other information that distinguishes it from other properties. In addition, it must clearly identify the buyer and seller and state the date when the transfer will become legally effective, the purchase price, and other relevant information.

In today's real estate transactions, contracting parties usually use an ancillary real estate sale contract in an attempt to cram all the required information into a deed. Nonetheless, the information found in the contract must be referenced by the deed.

Information to Include in a Deed of Assignment

• Names of parties to the agreement
• Addresses of the parties and how they are binding on the parties' successors, friends, and other people who represent them in any capacity
• History of the property being transferred, from the time it was first acquired to the time it is about to be sold
• Agreed price of the property
• Size and description of the property
• Promises or covenants the parties will undertake to execute the deed
• Signatures of the parties
• Section for the Governors Consent or Commissioner of Oaths to sign and verify the agreement

If you need help understanding, drafting, or signing a deed of assignment, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Content Approved by UpCounsel

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• Assignment Law
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The foregoing document was signed by two witnesses and duly acknowledged by Ms. Picache before a Notary Public also on 1 April 1989.

Since petitioner did not pay any of the loans covered by the promissory notes when they became due, respondent -- through its Vice President Nina P. King and its counsel King, Capuchino, Banico & Associates -- sent petitioner several demand letters. 8 Despite receiving the said demand letters, petitioner still failed and refused to settle his indebtedness, thus, prompting respondent to file the Complaint with the RTC, docketed as Civil Case No. Q-90-5247.

In his Answer filed with the RTC, petitioner sought the dismissal of the Complaint averring that respondent had no cause of action against him. He denied obtaining any loan from Ms. Picache and questioned the genuineness and due execution of the promissory notes, for they were the result of intimidation and fraud; hence, void. He asserted that there had been no transaction or privity of contract between him, on one hand, and Ms. Picache and respondent, on the other. The assignment by Ms. Picache of the promissory notes to respondent was a mere ploy and simulation to effect the unjust enforcement of the invalid promissory notes and to insulate Ms. Picache from any direct counterclaims, and he never consented or agreed to the said assignment.

Petitioner then presented his own narration of events leading to the filing of Civil Case No. Q-90-5247. According to him, on 24 February 1988, he entered into a Contract of Lease 9 of real property located in Quezon City with Mission Realty & Management Corporation (MRMC), of which Ms. Picache is an incorporator and member of the Board of Directors. 10 Petitioner relocated the plant and machines used in his garments business to the leased property. After a month or two, a foreign investor was interested in doing business with him and sent a representative to conduct an ocular inspection of petitioner's plant at the leased property. During the inspection, a group of Meralco employees entered the leased property to cut off the electric power connections of the plant. The event gave an unfavorable impression to the foreign investor who desisted from further transacting with petitioner. Upon verification with Meralco, petitioner discovered that there were unpaid electric bills on the leased property amounting to hundreds of thousands of pesos. These electric bills were supposedly due to the surreptitious electrical connections to the leased property. Petitioner claimed that he was never informed or advised by MRMC of the existence of said unpaid electric bills. It took Meralco considerable time to restore electric power to the leased property and only after petitioner pleaded that he was not responsible for the illegal electrical connections and/or the unpaid electric bills, for he was only a recent lessee of the leased property. Because of the work stoppage and loss of business opportunities resulting from the foregoing incident, petitioner purportedly suffered damages amounting to United States $60,000.00, for which petitioner verbally attempted to recover compensation from MRMC.

Having failed to obtain compensation from MRMC, petitioner decided to vacate and pull out his machines from the leased property but he can only do so, unhampered and uninterrupted by MRMC security personnel, if he signed, as he did, blank promissory note forms. Petitioner alleged that when he signed the promissory note forms, the allotted spaces for the principal amount of the loans, interest rates, and names of the promisee/s were in blank; and that Ms. Picache took advantage of petitioner's signatures on the blank promissory note forms by filling up the blanks.

To raise even more suspicions of fraud and spuriousness of the promissory notes and their subsequent assignment to respondent, petitioner called attention to the fact that Ms. Picache is an incorporator and member of the Board of Directors of both MRMC and respondent. 11

After the pre-trial conference and the trial proper, the RTC rendered a Decision 12 on 6 August 1993, ruling in favor of respondent. The RTC gave more credence to respondent's version of the facts, finding that –

[Herein petitioner]'s disclaimer of the promissory note[s] does not inspire belief. He is a holder of a degree in Bachelor of Science in Chemical Engineering and has been a manufacturer of garments since 1979. As a matter of fact, [petitioner]'s testimony that he was made to sign blank sheets of paper is contrary to his admission in paragraphs 12 and 13 of his Answer that as a condition to his removal of his machines [from] the leased premises, he was made to sign blank promissory note forms with respect to the amount, interest and promisee. It thus appears incredulous that a businessman like [petitioner] would simply sign blank sheets of paper or blank promissory notes just [to] be able to vacate the leased premises.

Moreover, the credibility of [petitioner]'s testimony leaves much to be desired. He contradicted his earlier testimony that he only met Patrocinio Picache once, which took place in the office of Mission Realty and Management Corporation, by stating that he saw Patrocinio Picache a second time when she went to his house. Likewise, his claim that the electric power in the leased premises was cut off only two months after he occupied the same is belied by his own evidence. The contract of lease submitted by [petitioner] is dated February 24, 1988 and took effect on March 1, 1988. His letter to Mission Realty and Management Corporation dated September 21, 1988, complained of the electric power disconnection that took place on September 6, 1988, that is, six (6) months after he had occupied the leased premises, and did not even give a hint of his intention to vacate the premises because of said incident. It appears that [petitioner] was already advised to pay his rental arrearages in a letter dated August 9, 1988 (Exh. "2") and was notified of the termination of the lease contract in a letter dated September 19, 1988 (Exh. "4"). However, in a letter dated September 26, 1988, [petitioner] requested for time to look for a place to transfer.

The RTC also sustained the validity and enforceability of the Assignment of Credit executed by Ms. Picache in favor of respondent, even in the absence of petitioner's consent to the said assignment, based on the following reasoning –

The promissory notes (Exhs. "A" and "B") were assigned by Ms. Patrocinio Picache to [herein respondent] by virtue of a notarized Assignment of Credit dated April 1, 1989 for a consideration of P 60,000.00 (Exh. "C"). The fact that the assignment of credit does not bear the conformity of [herein petitioner] is of no moment. In C & C Commercial Corporation vs. Philippine National Bank, 175 SCRA 1, 11, the Supreme Court held thus:

"x x x Article 1624 of the Civil Code provides that 'an assignment of credits and other incorporeal rights shall be perfected in accordance with the provisions of Article 1475' which in turn states that 'the contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price.' The meeting of the minds contemplated here is that between the assignor of the credit and his assignee, there being no necessity for the consent of the debtor, contrary to petitioner's claim. It is sufficient that the assignment be brought to his knowledge in order to be binding upon him. This may be inferred from Article 1626 of the Civil Code which declares that 'the debtor who, before having knowledge of the assignment, pays his creditor shall be released from the obligation.'"

[Petitioner] does not deny having been notified of the assignment of credit by Patrocinio Picache to the [respondent]. Thus, [respondent] sent several demand letters to the [petitioner] in connection with the loan[s] (Exhs. "D", "E", "F" and "G"). [Petitioner] acknowledged receipt of [respondent]'s letter of demand dated June 13, 1989 (Exh. "F") and assured [respondent] that he would settle his account, as per their telephone conversation (Exhs. "H" and "9"). Such communications between [respondent] and [petitioner] show that the latter had been duly notified of the said assignment of credit. x x x.

Given its aforequoted findings, the RTC proceeded to a determination of petitioner's liabilities to respondent, taking into account the provisions of the promissory notes, thus –

x x x Consequently, [herein respondent] is entitled to recover from [herein petitioner] the principal amount of P 30,000.00 for the promissory note dated November 9, 1988. As said note did not provide for any interest, [respondent] may only recover interest at the legal rate of 12% per annum from April 18, 1990, the date of the filing of the complaint. With respect to the promissory note dated November 10, 1988, the same provided for interest at 36% per annum and that interest not paid when due shall be added to and shall become part of the principal and shall bear the same rate of interest as the principal. Likewise, both promissory notes provided for a penalty of 20% of the total outstanding balance thereon and attorney's fees equivalent to 20% of the sum sought to be recovered in case of litigation.

In Garcia vs. Court of Appeals, 167 SCRA 815, it was held that penalty interests are in the nature of liquidated damages and may be equitably reduced by the courts if they are iniquitous or unconscionable, pursuant to Articles 1229 and 2227 of the Civil Code. Considering that the promissory note dated November 10, 1988 already provided for interest at 36% per annum on the principal obligation, as well as for the capitalization of the unpaid interest, the penalty charge of 20% of the total outstanding balance of the obligation thus appears to be excessive and unconscionable. The interest charges are enough punishment for [petitioner]'s failure to comply with his obligation under the promissory note dated November 10, 1988.

With respect to the attorney's fees, the court is likewise empowered to reduce the same if they are unreasonable or unconscionable, notwithstanding the express contract therefor. (Insular Bank of Asia and America vs. Spouses Salazar, 159 SCRA 133, 139). Thus, an award of P 10,000.00 as and for attorney's fees appears to be enough.

Consequently, the fallo of the RTC Decision reads –

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the [herein respondent] and against [herein petitioner] ordering the latter as follows:

1. To pay [respondent], on the promissory note dated November 9, 1988, the amount of P 30,000.00 with interest thereon at the legal rate of 12% per annum from April 18, 1990 until fully paid and a penalty of 20% on the total amount;

2. To pay [respondent], on the promissory note dated November 10, 1988, the amount of P 30,000.00 with interest thereon at 36% per annum compounded at the same rate until fully paid;

3. To pay [respondent] the amount of P 10,000.00, as and for attorney's fees; and

4. To pay the costs of the suit. 13

Aggrieved by the RTC Decision, dated 6 August 1993, petitioner filed an appeal with the Court of Appeals, which was docketed as CA-G.R. CV No. 43604. The appellate court, in a Decision, 14 dated 20 March 2001, found no cogent reason to depart from the conclusions arrived at by the RTC in its appealed Decision, dated 6 August 1993, and affirmed the latter Decision in toto . The Court of Appeals likewise denied petitioner's Motion for Reconsideration in a Resolution, 15 dated 16 July 2001, stating that the grounds relied upon by petitioner in his Motion were mere reiterations of the issues and matters already considered, weighed and passed upon; and that no new matter or substantial argument was adduced by petitioner to warrant a modification, much less a reversal, of the Court of Appeals Decision, dated 20 March 2001.

Comes now petitioner to this Court, via a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, raising the sole issue 16 of whether or not the Court of Appeals committed grave abuse of discretion in affirming in toto the RTC Decision, dated 6 August 1993. Petitioner's main argument is that the Court of Appeals erred when it ruled that there was an assignment of credit and that there was no novation/subrogation in the case at bar. Petitioner asserts the position that consent of the debtor to the assignment of credit is a basic/essential element in order for the assignee to have a cause of action against the debtor. Without the debtor's consent, the recourse of the assignee in case of non-payment of the assigned credit, is to recover from the assignor. Petitioner further argues that even if there was indeed an assignment of credit, as alleged by the respondent, then there had been a novation of the original loan contracts when the respondent was subrogated in the rights of Ms. Picache, the original creditor. In support of said argument, petitioner invokes the following provisions of the Civil Code –

ART. 1300. Subrogation of a third person in the rights of the creditor is either legal or conventional. The former is not presumed, except in cases expressly mentioned in this Code; the latter must be clearly established in order that it may take effect.

ART. 1301. Conventional subrogation of a third person requires the consent of the original parties and the third person.

According to petitioner, the assignment of credit constitutes conventional subrogation which requires the consent of the original parties to the loan contract, namely, Ms. Picache (the creditor) and petitioner (the debtor); and the third person, the respondent (the assignee). Since petitioner never gave his consent to the assignment of credit, then the subrogation of respondent in the rights of Ms. Picache as creditor by virtue of said assignment is without force and effect.

This Court finds no merit in the present Petition.

Before proceeding to a discussion of the points raised by petitioner, this Court deems it appropriate to emphasize that the findings of fact of the Court of Appeals and the RTC in this case shall no longer be disturbed. It is axiomatic that this Court will not review, much less reverse, the factual findings of the Court of Appeals, especially where, as in this case, such findings coincide with those of the trial court, since this Court is not a trier of facts. 17

The jurisdiction of this Court in a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless it is shown, inter alia , that: (a) the conclusion is grounded entirely on speculations, surmises and conjectures; (b) the inference is manifestly mistaken, absurd and impossible; (c) there is grave abuse of discretion; (d) the judgment is based on a misapplication of facts; (e) the findings of fact of the trial court and the appellate court are contradicted by the evidence on record and (f) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both parties. 18 None of these circumstances are present in the case at bar. After a perusal of the records, this Court can only conclude that the factual findings of the Court of Appeals, affirming those of the RTC, are amply supported by evidence and are, resultantly, conclusive on this Court. 19

Therefore, the following facts are already beyond cavil: (1) petitioner obtained two loans totaling P 60,000.00 from Ms. Picache, for which he executed promissory notes, dated 9 November 1988 and 10 November 1988; (2) he failed to pay any of the said loans; (3) Ms. Picache executed on 1 April 1989 an Assignment of Credit covering petitioner's loans in favor of respondent for the consideration of P 60,000.00; (4) petitioner had knowledge of the assignment of credit; and (5) petitioner still failed to pay his indebtedness despite repeated demands by respondent and its counsel. Petitioner's persistent assertions that he never acquired any loan from Ms. Picache, or that he signed the promissory notes in blank and under duress, deserve scant consideration. They were already found by both the Court of Appeals and the RTC to be implausible and inconsistent with petitioner's own evidence.

Now this Court turns to the questions of law raised by petitioner, all of which hinges on the contention that a conventional subrogation occurred when Ms. Picache assigned the debt, due her from the petitioner, to the respondent; and without petitioner's consent as debtor, the said conventional subrogation should be deemed to be without force and effect.

This Court cannot sustain petitioner's contention and hereby declares that the transaction between Ms. Picache and respondent was an assignment of credit, not conventional subrogation, and does not require petitioner's consent as debtor for its validity and enforceability.

An assignment of credit has been defined as an agreement by virtue of which the owner of a credit (known as the assignor), by a legal cause - such as sale, dation in payment or exchange or donation - and without need of the debtor's consent, transfers that credit and its accessory rights to another (known as the assignee), who acquires the power to enforce it, to the same extent as the assignor could have enforced it against the debtor. 20

On the other hand, subrogation, by definition, is the transfer of all the rights of the creditor to a third person, who substitutes him in all his rights. It may either be legal or conventional. Legal subrogation is that which takes place without agreement but by operation of law because of certain acts. Conventional subrogation is that which takes place by agreement of parties. 21

Although it may be said that the effect of the assignment of credit is to subrogate the assignee in the rights of the original creditor, this Court still cannot definitively rule that assignment of credit and conventional subrogation are one and the same.

A noted authority on civil law provided a discourse 22 on the difference between these two transactions, to wit –

Conventional Subrogation and Assignment of Credits. – In the Argentine Civil Code, there is essentially no difference between conventional subrogation and assignment of credit. The subrogation is merely the effect of the assignment. In fact it is expressly provided (article 769) that conventional redemption shall be governed by the provisions on assignment of credit.

Under our Code, however, conventional subrogation is not identical to assignment of credit. In the former, the debtor's consent is necessary; in the latter, it is not required. Subrogation extinguishes an obligation and gives rise to a new one; assignment refers to the same right which passes from one person to another. The nullity of an old obligation may be cured by subrogation, such that the new obligation will be perfectly valid; but the nullity of an obligation is not remedied by the assignment of the creditor's right to another. (Emphasis supplied.)

This Court has consistently adhered to the foregoing distinction between an assignment of credit and a conventional subrogation. 23 Such distinction is crucial because it would determine the necessity of the debtor's consent. In an assignment of credit, the consent of the debtor is not necessary in order that the assignment may fully produce the legal effects. What the law requires in an assignment of credit is not the consent of the debtor, but merely notice to him as the assignment takes effect only from the time he has knowledge thereof. A creditor may, therefore, validly assign his credit and its accessories without the debtor's consent. On the other hand, conventional subrogation requires an agreement among the parties concerned – the original creditor, the debtor, and the new creditor. It is a new contractual relation based on the mutual agreement among all the necessary parties. 24

Article 1300 of the Civil Code provides that conventional subrogation must be clearly established in order that it may take effect. Since it is petitioner who claims that there is conventional subrogation in this case, the burden of proof rests upon him to establish the same 25 by a preponderance of evidence. 26

In Licaros v. Gatmaitan , 27 this Court ruled that there was conventional subrogation, not just an assignment of credit; thus, consent of the debtor is required for the effectivity of the subrogation. This Court arrived at such a conclusion in said case based on its following findings –

We agree with the finding of the Court of Appeals that the Memorandum of Agreement dated July 29, 1988 was in the nature of a conventional subrogation which requires the consent of the debtor, Anglo-Asean Bank, for its validity. We note with approval the following pronouncement of the Court of Appeals:

"Immediately discernible from above is the common feature of contracts involving conventional subrogation, namely, the approval of the debtor to the subrogation of a third person in place of the creditor. That Gatmaitan and Licaros had intended to treat their agreement as one of conventional subrogation is plainly borne by a stipulation in their Memorandum of Agreement, to wit:

"WHEREAS, the parties herein have come to an agreement on the nature, form and extent of their mutual prestations which they now record herein with the express conformity of the third parties concerned " (emphasis supplied),

which third party is admittedly Anglo-Asean Bank.

Had the intention been merely to confer on appellant the status of a mere "assignee" of appellee's credit, there is simply no sense for them to have stipulated in their agreement that the same is conditioned on the "express conformity" thereto of Anglo-Asean Bank. That they did so only accentuates their intention to treat the agreement as one of conventional subrogation. And it is basic in the interpretation of contracts that the intention of the parties must be the one pursued (Rule 130, Section 12, Rules of Court).

Aside for the 'whereas clause" cited by the appellate court in its decision, we likewise note that on the signature page, right under the place reserved for the signatures of petitioner and respondent, there is, typewritten, the words "WITH OUR CONFORME." Under this notation, the words "ANGLO-ASEAN BANK AND TRUST" were written by hand. To our mind, this provision which contemplates the signed conformity of Anglo-Asean Bank, taken together with the aforementioned preambulatory clause leads to the conclusion that both parties intended that Anglo-Asean Bank should signify its agreement and conformity to the contractual arrangement between petitioner and respondent. The fact that Anglo-Asean Bank did not give such consent rendered the agreement inoperative considering that, as previously discussed, the consent of the debtor is needed in the subrogation of a third person to the rights of a creditor.

None of the foregoing circumstances are attendant in the present case. The Assignment of Credit, dated 1 April 1989, executed by Ms. Picache in favor of respondent, was a simple deed of assignment. There is nothing in the said Assignment of Credit which imparts to this Court, whether literally or deductively, that a conventional subrogation was intended by the parties thereto. The terms of the Assignment of Credit only convey the straightforward intention of Ms. Picache to "sell, assign, transfer, and convey" to respondent the debt due her from petitioner, as evidenced by the two promissory notes of the latter, dated 9 November 1988 and 10 November 1988, for the consideration of P 60,000.00. By virtue of the same document, Ms. Picache gave respondent full power "to sue for, collect and discharge, or sell and assign" the very same debt. The Assignment of Credit was signed solely by Ms. Picache, witnessed by two other persons. No reference was made to securing the conforme of petitioner to the transaction, nor any space provided for his signature on the said document.

Perhaps more in point to the case at bar is Rodriguez v. Court of Appeals , 28 in which this Court found that –

The basis of the complaint is not a deed of subrogation but an assignment of credit whereby the private respondent became the owner, not the subrogee of the credit since the assignment was supported by HK $1.00 and other valuable considerations.

The petitioner further contends that the consent of the debtor is essential to the subrogation. Since there was no consent on his part, then he allegedly is not bound.

Again, we find for the respondent. The questioned deed of assignment is neither one of subrogation nor a power of attorney as the petitioner alleges. The deed of assignment clearly states that the private respondent became an assignee and, therefore, he became the only party entitled to collect the indebtedness. As a result of the Deed of Assignment, the plaintiff acquired all rights of the assignor including the right to sue in his own name as the legal assignee. Moreover, in assignment, the debtor's consent is not essential for the validity of the assignment (Art. 1624 in relation to Art. 1475, Civil Code), his knowledge thereof affecting only the validity of the payment he might make (Article 1626, Civil Code).

Since the Assignment of Credit, dated 1 April 1989, is just as its title suggests, then petitioner's consent as debtor is not necessary in order that the assignment may fully produce legal effects. The duty to pay does not depend on the consent of the debtor; otherwise, all creditors would be prevented from assigning their credits because of the possibility of the debtors' refusal to give consent. 29 Moreover, this Court had already noted previously that there does not appear to be anything in Philippine statutes or jurisprudence which prohibits a creditor, without the consent of the debtor, from making an assignment of his credit and the rights accessory thereto; and, certainly, an assignment of credit and its accessory rights does not at all obliterate the obligation of the debtor to pay, but merely puts the assignee in the place of the assignor. 30 Hence, the obligation of petitioner to pay his debt subsists despite the assignment thereof; only, his obligation after he came to know of the said assignment would be to pay the debt to the respondent (the assignee), instead of Ms. Picache (the original creditor).

It bears to emphasize that even if the consent of petitioner as debtor is unnecessary for the validity and enforceability of the assignment of credit, nonetheless, the petitioner must have knowledge, acquired either by formal notice or some other means, of the assignment so that he may pay the debt to the proper party, which shall now be the assignee. This much can be gathered from a reading of Article 1626 of the Civil Code providing that, "The debtor who, before having knowledge of the assignment, pays his creditor shall be released from the obligation."

This Court, in Sison v. Yap Tico , 31 presented and adopted Manresa's analysis of Article 1626 of the Civil Code (then Article 1527 of the old Civil Code) –

Manresa, in commenting upon the provisions of article 1527 of the Civil Code, after discussing the articles of the Mortgage Law, says:

"We have said that article 1527 deals with the individual phase or aspect which presupposes the existence of a relationship with third parties, that is, with the person of the debtor. Let us see in what way.

"The above-mentioned article states that a debtor who, before having knowledge of the assignment, should pay the creditor shall be released from the obligation.

"In the first place, the necessity for the notice to the debtor in order that the assignment may fully produce its legal effects may be inferred from the above. It refers to a notice and not to a petition for the consent which is not necessary. We say that the notice is not necessary in order that the legal effects may be fully produced, because if it should be omitted, such omission will not imply that the assignment will not exist legally, but that its effects will be limited to the parties thereto; at least, they will not reach the debtor.

"* * * * * * * *

"Let us go to the legal effects produced by the failure to give the notice. In the beginning, we have said that the contract does not lose its efficacy with respect to the parties who made it; but article 1527 determines specifically one of the consequences arising from the failure to give notice, for it evidently takes for granted that the debtor who, before having knowledge of the assignment, should pay the creditor shall be released from the obligation. So that if the creditor assigned his credit, acting in bad faith and taking advantage of the fact that the debtor does not know anything about the assignment because the latter has not been notified, and collects its amount, the debtor shall be free from the obligation, inasmuch as it has been legally extinguished by a payment which fully redounds to his benefit. The assignee can take advantage of all civil and criminal actions against the assignor, but he can ask nothing from the debtor, because the latter did not know of the assignment, nor was he bound to know it; the assignor should blame himself for his failure to have the notice made.

"Hence, there not having been any notice to the debtor, the existence of his knowledge of the assignment should be proved by him who is interested therein; and the debtor is not bound to prove his ignorance."

In a more recent case, Aquintey v. Spouses Tibong , 32 this Court stated: "The law does not require any formal notice to bind the debtor to the assignee, all that the law requires is knowledge of the assignment. Even if the debtor had not been notified, but came to know of the assignment by whatever means, the debtor is bound by it."

Since his consent is immaterial, the only other matter which this Court must determine is whether petitioner had knowledge of the Assignment of Credit, dated 1 April 1989, between Ms. Picache and respondent. Both the Court of Appeals and the RTC ruled in the affirmative, and so must this Court. Petitioner does not deny having knowledge of the assignment of credit by Ms. Picache to the respondent. In 1989, when petitioner's loans became overdue, it was respondent and its counsel who sent several demand letters to him. It can be reasonably presumed that petitioner received said letters for they were sent by registered mail, and the return cards were signed by petitioner's agent. Petitioner expressly acknowledged receipt of respondent's demand letter, dated 13 June 1989, to which he replied with another letter, dated 21 June 1989, stating that he would settle his account with respondent but also requesting consideration of the losses he suffered from the electric power disconnection at the property he leased from MRMC. It further appears that petitioner had never questioned why it was respondent seeking payment of the loans and not the original creditor, Ms. Picache. All these circumstances tend to establish that respondent already knew of the assignment of credit made by Ms. Picache in favor of respondent and explains his acceptance of all the demands for payment of the loans made upon him by the respondent.

Finally, assuming arguendo that this Court considers petitioner a third person to the Assignment of Credit, dated 1 April 1989, the fact that the said document was duly notarized makes it legally enforceable even as to him. According to Article 1625 of the Civil Code –

ART. 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.

Notarization converted the Assignment of Credit, dated 1 April 1989, a private document, into a public document, 33 thus, complying with the mandate of the afore-quoted provision and making it enforceable even as against third persons.

WHEREFORE , premises considered, the instant Petition for Review is hereby DENIED , and the Decision, dated 20 March 2001, of the Court of Appeals in CA-G.R. CV No. 43604, affirming in toto the Decision, dated 6 August 1993, of the Quezon City Regional Trial Court, Branch 91, in Civil Case No. Q-90-5247, is hereby AFFIRMED . Costs against the petitioner.

SO ORDERED .

Ynares-Santiago, Chairperson, Austria-Martinez, Nachura, JJ., concur.

1 Rollo, pp. 11-23.

2 Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Eubulo G. Verzola and Candido V. Rivera, concurring; id. at 41-53.

3 Penned by then Judge Marina L. Buzon (now Associate Justice of the Court of Appeals), id. at 37-40.

4 Id. at 26-30.

5 Records, pp. 161-163.

6 Id. at 164-166.

7 Id. at 167.

8 The letters were dated 18 May 1989, 5 June 1989, 13 June 1989, and 31 July 1989, all sent by registered mail, id. at 168-171.

9 Id. at 189-194.

10 Ms. Picache is likewise an incorporator and member of the Board of Directors of respondent Capitol Development Corporation.

11 Id. at 202-215.

12 Rollo, p. 38.

13 Id. at 38-40.

14 Id. at 41-53.

15 Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Eubulo G. Verzola and Candido V. Rivera, concurring; id. at 64-65.

16 Id. at 17.

17 Jammang v. Takahashi Trading Co., Ltd. , G.R. No. 149429, 9 October 2006, 504 SCRA 31, 42.

18 China Banking Corporation v. Dyne-Sem Electronics Corporation , G.R. No. 149237, 11 July 2006, 494 SCRA 493, 499 .

19 Security Bank and Trust Company v. Gan , G.R. No. 150464, 27 June 2006, 493 SCRA 239, 242-243.

20 Far East Bank & Trust Company v. Diaz Realty, Inc. , 416 Phil. 147, 161 (2001).

21 Chemphil Export & Import Corporation v. Court of Appeals, 321 Phil. 619, 642 (1995).

22 Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. IV, 1996 ed., p. 402.

23 See South City Homes, Inc. v. BA Finance Corporation , 423 Phil. 84, 95 (2001); Far East Bank & Trust Company v. Diaz Realty, Inc. , supra note 20; Licaros v. Gatmaitan, 414 Phil. 857, 866-867 (2001); Sesbreño v. Court of Appeals , G.R. No. 89252, 24 May 1993, 222 SCRA 466, 478-479; Rodriguez v. Court of Appeals , G.R. No. 84220, 25 March 1992, 207 SCRA 553, 558.

24 Licaros v. Gatmaitan, id.

25 Section 1, Rule 131 of the Revised Rules of Court reads, "Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law."

26 According to Section 1, Rule 133 of the Revised Rules of Court, "In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. x x x." By "preponderance of evidence is meant simply evidence which is of greater weight, or more convincing than that which is offered in opposition to it." ( Rivera v. Court of Appeals , G.R. No. 115625, 23 January 1998, 284 SCRA 673, 681.)

27 Supra note 23 at 868-870.

28 Supra note 22 at 558-559.

30 National Investment and Development Corporation v. De los Angeles , 148-B Phil. 452, 461 (1971).

31 37 Phil. 584, 587-588 (1918).

32 G.R. No. 166704, 20 December 2006.

33 Bernardo v. Atty. Ramos , 433 Phil. 8, 15 (2002).

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Deed of assignment of shares of stock sample.

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Contract Assignment Agreement

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A Contract Assignment Agreement is a document that is used when one party (the "assignor") has an existing contract with an obligor and the said contract will be assigned to another party (the "assignee") . Assigning the contract means that all the rights and obligations of the assignor will be transferred to the assignee. Once the contract is assigned, the assignee will now have the duty to fulfill all the obligations under the contract and they will also have all the rights under the contract.

Take note however that some contracts have provisions that prohibit its assignment. This could be an absolute prohibition or it could be prohibited until the consent of the obligor is obtained. If there is an absolute prohibition against assigning the contract, then the contract cannot be assigned using this document. However, if the obligor's consent is required, then it is necessary to first obtain the consent of the obligor before assigning the contract.

How to use this document

The parties should first check the contract that will be assigned to see if assignment is permitted, or prohibited, or if the consent of the the obligor is required before the contract can be assigned . If assignment is permitted or the required consent is obtained, then this document can be used to assign the contract.

The user should enter all the information necessary to complete the document. The information that should be entered includes the details of the assignor, assignee, and the obligor . The name or title of the contract that will be assigned can also be entered. If there will be any attachments, such as the contract that will be assigned or the written consent of the obligor, a copy of the same should be marked and attached to the document . To mark the document, the user should write Annex "A" or Annex "B", etc. on the upper right-hand part of the first page of each attachment. The user should use the document as a guide to properly mark the document .

Once the document is completed the parties should review the document and, if all the information is complete, sign the same. Each party should keep an original copy of the signed document.

Notarizing the document

Notarizing this document is optional. However, if the parties would want to notarize this document, the document includes an Acknowledgment portion. Notarization of the document converts the document from a private document to a public document so that it becomes admissible in court without the need for further proof of its authenticity.

To notarize the document, the parties must print and sign an extra copy (for the notary public) of the document and bring all the copies to a notary public to acknowledge that they have signed the Contract Assignment Agreement freely and voluntarily . They should also present a valid I.D. issued by an official agency bearing their photograph and signature such as a driver's license or a passport, among others.

Once notarized, the parties should each keep at least one (1) copy of the notarized document and the notary public will also keep one (1) copy for their notarial book.

Applicable law

The laws on contracts and obligations apply to this contract. However, other laws may apply depending on the type of contract that will be assigned.

How to modify the template

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Other names for the document:

Contract Assignment Contract, Agreement to Assign Contract, Contract to Assign Agreement, Assignment Agreement for Contracts, Agreement for Assignment of Contract

Country: Philippines

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