G.R. No. 149420 - Lo vs. KJS Eco-Formwork System Phil. Inc.

On February 22, 1990, petitioner Sonny L. Lo (doing business as San’s Enterprises) ordered steel scaffoldings worth ₱540,425.80 from respondent KJS Eco-Formwork System Phil., Inc.
Petitioner paid a downpayment of ₱150,000.00 and agreed to settle the balance in ten monthly installments; respondent delivered the scaffoldings.

Petitioner paid only the first two installments, then defaulted due to financial difficulties despite oral and written demands by respondent.
On October 11, 1990, parties executed a Deed of Assignment whereby petitioner assigned his receivables from Jomero Realty Corporation amounting to ₱335,462.14 in partial payment (dación en pago). The deed included:

A warranty of the existence and legality of the assigned credit at the time of sale.
An undertaking by petitioner to perform all further acts reasonably necessary to enable respondent to collect the assigned receivables.

Respondent’s agent sought payment from Jomero Realty Corporation, which refused to honor the assignment, claiming petitioner still owed it money.
Respondent then demanded payment from petitioner (November 26, 1990); upon refusal, respondent filed suit for recovery of a sum of money (RTC Makati, Civil Case No. 91-074). Trial court (Aug. 25, 1994) dismissed the complaint, holding that the assignment extinguished petitioner’s obligation.
Court of Appeals (Apr. 19, 2001) reversed and ordered petitioner to pay ₱335,462.14 with 6% legal interest from January 10, 1991, plus attorney’s fees (10% of the amount due). Petitioner’s motion for reconsideration was denied.

Whether the Court of Appeals erred in declaring the Deed of Assignment null and void for lack of object based on hearsay.
Whether the Deed of Assignment extinguished petitioner’s obligation to respondent, or whether petitioner breached his warranty under the deed.
Whether the Court of Appeals erred in reversing the trial court and in awarding legal interest and attorney’s fees.