Sonny Lo v. Kjs Eco-Formwork System Phil.

Summary

This case involves a commercial debt dispute where petitioner Sonny Lo purchased scaffolding equipment worth P540,425.80 from respondent KJS ECO-FORMWORK but defaulted on payments. To settle his obligation, petitioner executed a Deed of Assignment transferring his receivables from Jomero Realty Corporation. However, Jomero refused to honor the assignment, claiming petitioner was also indebted to it. The Supreme Court ruled that the assignment did not extinguish petitioner's original obligation because, as assignor, he warranted the existence and legality of the assigned credit under Article 1628 of the Civil Code. When the assigned credit proved inexistent due to compensation, petitioner became liable under his warranty. The Court also found petitioner breached his contractual obligation to execute necessary acts to enable collection. The decision affirmed the Court of Appeals' order for petitioner to pay P335,462.14 with legal interest but deleted attorney's fees for lack of evidence.