Libro Quinto Título III. Transmisión de las obligaciones

The creditor may assign its rights without the consent of the debtor, unless there is an agreement to the contrary or the law or the nature of the right does not permit it.

In the assignment, the provisions relating to the juridical act giving rise to it shall be observed, insofar as they have not been modified in this chapter.

The assignment includes all accessory rights unless otherwise agreed.

When the assignment has been for less than the amount of the credit, the debtor may extinguish its obligation by reimbursing the assignee the amount paid for the assignment and the expenses occasioned thereby.

The assignment must be made in a public deed if it involves rights over immovables or rights that must be recorded in the Property Register.

Nominative shares or instruments are transferred by endorsement, in the absence of special provisions in the contract of their creation.

Documents and instruments payable to order are transferred by endorsement, and bearer documents by mere delivery.

Negotiable public securities remain subject, with respect to their transfer, to the provisions of the law authorizing their issuance.

If the assignment does not comprise the entirety of the right and the title remains in the possession of the assignor, this circumstance shall be recorded in the assignment document and the assignor shall be obligated to exhibit it whenever the assignee needs it.

The assignment produces no effect against the debtor or against a third party except from the time it is notified to the debtor or from the time the latter shows himself to be aware of it. The debtor shall be deemed to have knowledge of the assignment when he performs an act that implies it, such as a commencement of payment to the assignee or the answer to the claim brought by the latter.

The notification of the assignment shall be made by the assignor or the assignee, either judicially or through a notary. This formality is not necessary when the creditor is authorized by the debtor to assign the claim without notification to the debtor. Nor is it necessary in endorsable documents.

When it does not involve instruments to order or to bearer, the debtor to whom the assignment is notified may assert against the assignee all defenses that he could have asserted against the assignor on grounds prior to the notification.

Whoever assigns a credit or other right is liable only for its legitimacy and existence at the time of the assignment, unless he has expressly undertaken to the assignee to guarantee the solvency of the debtor, or unless it involves endorsable documents.

The liability of the assignor who undertakes to guarantee the solvency of the debtor is limited to the moment when the obligation is enforceable, except by agreement to the contrary.

Subrogation takes place when the creditor substitutes the paying third party in all the rights, actions and guarantees of the obligation.

One who subrogates may not exercise the rights and actions of the creditor except up to the amount of the sum actually paid by him for the release of the debtor.

Subrogation takes place by operation of law, without need for any declaration by the interested parties:

1°.When a person who is a creditor pays another creditor who is preferred over him;

2°.When the third party who pays has a legal interest in performance of the obligation;

3°.When the third party not interested in the obligation pays with the consent of the debtor; and

4°.When an heir pays with his own property any debt of the inheritance.

When the debt is paid by the debtor with money that a third party lent him for that purpose, the lender shall be subrogated to the creditor by operation of law in his rights, if the loan is evidenced in an authentic document in which it is declared that the money was lent for payment of the debt.

Legal subrogation in favor of one who has paid a debt to which he was obligated with others authorizes him to exercise the rights and actions of the creditor, save the effects of confusion as to the portion corresponding to the subrogee in the obligation.

If the subrogee has been subrogated only in part and the debtor's property is insufficient to pay the entirety of the credit, payment shall be made pro rata.

The substitution of the debtor in a personal obligation and his release are effected by agreement between the creditor and the third party who is substituted.

The substitution may also be agreed between the debtor and the third party, provided that the creditor consents expressly or tacitly.

It is presumed that the creditor consents to the substitution of the debtor when the creditor allows the substitute to perform acts that the debtor was required to perform, such as payment of interest or partial or periodic amortization of principal, provided that the substitute does so in his or her own name and not on behalf of the original debtor.

The creditor who exonerates the former debtor by accepting another in his place may not have recourse against the former if the new one is insolvent, save agreement to the contrary.

The substitute debtor shall be bound on the same terms as the original debtor was bound; but if the debt is secured by a guaranty, such guaranty shall cease upon substitution of the debtor, unless the guarantor expressly consents to its continuation.

If the obligation is secured with mortgage or pledge, the transfer of the pledged or mortgaged thing transmits the debt, with all its consequences and modalities, without need for express agreement of the interested parties.

A person who acquires a patrimony or a business with assets and liabilities is liable for the debts and obligations thereof up to the amount of the property acquired, provided that the acquisition price is in accordance with its effective value accepted by the creditors.

If the price has not been accepted by the creditors, the liability of the acquirer and transferor shall be joint and several.

When two enterprises merge, reciprocally transferring their assets and liabilities, the new enterprise shall be liable for all the liabilities.

The substitute debtor may assert against the creditor the defenses arising from the nature of the debt and those that are personal, but may not assert those that are personal to the original debtor.

When the substitution of the debtor is declared void, the former debt subsists with all its accessories, but with reservation of rights acquired by third parties in good faith. In this case, the original debtor is liable for the diminution of the guarantee.