SALE v. CESSION (CESION DE BIENES)

Transfer of assets (cession or cesion de bienes) is the voluntary abandonment by the debtor of all his own to his creditor or creditors, when, as a result of unavoidable accidents, he is not in a state of paying his debts.

Sale differs from cession in much the same way as sale, differs from dation in payment. Moreover, in cession the assignee (creditor) does not acquire ownership over the things assigned, but only the right to sell said things. From the proceeds of such sale, the creditors are to be paid what is due them.

The concept of cession is found in Art. 1255 of the Civil Code, which provides that "the debtor may cede or assign his property to his creditors in payment of his debts. This cession, unless there is a stipulation to the contrary, shall only release the debtor from responsibility of 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."

Manresa defines cession as that which "consists in the abandonment of all the property of the debtor for the benefit of his creditors in order that the latter may apply the proceeds thereof to the satisfaction of their credits." (8 Manresa 321)

Historically, the transfer of property is one of the first and most archaic insolvency proceedings, and responded in part to the need to counter the very harsh institutions that early Roman law envisaged against debtors, and which authorized its creditors even to dismember the body of the insolvent debtor. Thanks to the cession (transfer of property), the debtor could abandon all his assets, but in return he can save his life. Over time, as more sophisticated legal mechanisms for debt collection emerged, such as execution of judgment and bankruptcy proceedings, the transfer of assets gradually fell into disuse.

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