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Article 1255. The debtor may cede or assign his property to his creditors in payment of his debts. This cession, unless there is stipulation to the contrary, shall only release the debtor from responsibility for the net proceeds of the thing assigned. The agreements which, on the effect of the cession, are made between the debtor and his creditors shall be governed by special laws.Â
Payment by Cession
A special form of payment.
It is the assignment of all the properties of the debtor for the benefit of his creditors in order that the latter may sell the same and apply the proceeds thereof to the satisfaction of their credits.
Requisites of Payment by Cession:
There must be two (2) or more creditors;
The debtor must be (partially) insolvent;
The assignment must involve all properties of the debtor; and
The cession must be accepted by the creditors.
Effects of Payment by Cession:
Unless otherwise specified, the assignment does not transfer ownership of the debtor's property to the creditors, and the debtor is only released from obligation up to the net proceeds of the sale of the assigned property.
The debtor is still liable if there is still a balance.
Dation in Payment and Cession distinguished:
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