Siguan

v. Lim
376 Phil 840 | GR No. 134685 | 19 November 1999 | Davide, Jr., CJ.

Contracts in Fraud of
Creditors

Princess Trisha Joy Z. Uy | Law 101-Obligations and Contracts | Grp3

The Deed of Donation is NOT rescissible.

Facts:

! Lim issued two checks payable to cash
! When petitioner presented it, the checks were dishonored for the reason account closed.
! PET demanded the RESP to make good the checks, however Lim did not respond. The PET then filed a
criminal case for violation of BP 22.
! The lower court convicted Lim, and now the case is pending for review.
! Lim was also convicted of estafa in a case filed by one Victoria Suarez, the CA affirmed the decision but
the SC acquitted Lim but held her civilly liable.
! Lim executed a Deed of Donation conveying parcels of land in favor of her children. The Donation was
registered with the Office of the Register of Deeds.
! New TCTs were issued in the names of her children.
! Siguan filed an accion pauliana against Lim and her children to rescind the Deed of Donation and to
declare the TCTs null an void.
o Siguan claims that Lim fraudulently transferred her real property to her children in fraud of
creditors, including her.
o PET furthers that the Deed of Donation was antedated to make it seem like the transfer was made
before Lim issued the checks.
! The trial court granted the petition and directed Lim to pay the petitioner.
! CA reversed the decision and held that the 2 requisites for filing an accion pauliana were absent.
o There must be a credit existing prior to the celebration of the contract the Deed of Donation
which was notarized had ben executed on 10 August 1989,, while the indebtedness of Lim to the
petitioner was incurred in August 1990.
o There must be fraud, or at least the intent to commit fraud, to the prejudice of the creditor seeking
the rescission.

Issue/Ratio:
WON the Deed of Donation was made in fraud of petitioner and, therefore, rescissible. NO

! Accion Pauliana an action to rescind contracts in fraud of creditors.
! Requisites of accion pauliana:
o The plaintiff asking for rescission has a credit prior to the alienation, although demandable later.
Without any prior existing debt, there can neither be injury nor fraud. The Deed of Donation was
dated a year prior to the date of when the debt was incurred. The court is not convinced that the
deed was antedated. The deed is a public document, notarized and presumed that the date is true.
The fact that the Deed was registered on 2 July 1991 is not enough to overcome the presumption
as to the truthfulness of the statement of the date in the questioned deed.
o The debtor has made a subsequent contract conveying a patrimonial benefit to a third person.
o The creditor has no other legal remedy to satisfy his claim. it must be established that the donor
did not leave adequate properties which creditors may have recourse for the collection of their
credits existing before the execution of the donation. It was not established that the properties
left behind by Lim were not sufficient to cover her debts existing before the donation was made.

o The act being impugned is fraudulent. - The credit existed only a year after the deed of donation
was executed, she cannot be said to have been prejudiced or defrauded by such alienation.
o The third person who received the property conveyed, if it is by onerous title, has been an
accomplice in the fraud.
! Under 1381, contracts entered into in frau of creditors may be rescinded only when the creditors cannot
in any manner collect the claims due them.