PageDIANNE ROSALES MANRIQUE OBLICON CASES 2
Hence, the law presumes that there is fraud of creditors when:a) There is alienation of property by gratuitous title by the debtor who has not reserved sufficientproperty to pay his debts contracted before such alienation; orb) There is alienation of property by onerous title made by a debtor against whom some judgment hasbeen rendered in any instance or some writ of attachment has been issued. The decision or attachmentneed not refer to the property alienated and need not have been obtained by the party seekingrescission.After his conjugal share in TCT 410603 was foreclosed by Metrobank, the only property that Alfonso Roxas Chua had was his right to redeemthe same, it forming part of his patrimony. "Property" under civil law comprehends every species of title, inchoate or complete, legal orequitable.Alfonso Roxas Chua sold his right of redemption to his son, Paulino Roxas Chua, in 1988. Thereafter, Paulino redeemed the property andcaused the annotation thereof at the back of TCT 410603. This preceded the annotation of the levy of execution in favor of China Bank by two(2) years and the certificate of sale in favor of China Bank by more than three (3) years. On this basis, the Court of Appeals concluded that theallegation of fraud made by petitioner China Bank is vague and unsubstantiated.Such conclusion, however, runs counter to the law applicable in the case at bar. Inasmuch as the judgment of the trial court in favor of ChinaBank against Alfonso Roxas Chua was rendered as early as 1985, there is a presumption that the 1988 sale of his property, in this case theright of redemption, is fraudulent under Article 1387 of the Civil Code. The fact that private respondent Paulino Roxas Chua redeemed theproperty and caused its annotation on the TCT more than two years ahead of petitioner China Bank is of no moment. As stated in the case of
Cabaliw vs. Sadorra
"the parties here do not stand in equipoise, for the petitioners have in their favor, by a specific provision of law, thepresumption of fraudulent transaction which is not overcome by the mere fact that the deeds of sale were in the nature of public instruments." This presumption is strengthened by the fact that the conveyance has virtually left Alfonso's other creditors with no other property to attach. Itshould be noted that the presumption of fraud or intention to defraud creditors is not just limited to the two instances set forth in the first andsecond paragraphs of Article 1387 of the Civil Code. Under the third paragraph of the same article, the design to defraud creditors may beproved in any other manner recognized by the law of evidence. In the early case of
Oria vs. Mcmicking
the Supreme Court considered thefollowing instances as badges of fraud:1. The fact that the consideration of the conveyance is fictitious or is inadequate.2. A transfer made by a debtor after suit has begun and while it is pending against him.3. A sale upon credit by an insolvent debtor.4. Evidence of large indebtedness or complete insolvency.5. The transfer of all or nearly all of his property by a debtor, especially when he is insolvent or greatlyembarrassed financially.6.
The fact that the transfer is made between father and son, when there are present other of the abovecircumstances
7. The failure of the vendee to take exclusive possession of all the property. (Emphasis provided)Before China Bank obtained judgment against Pacific Multi Agro-Industrial Corporation and Alfonso Roxas Chua on November 7, 1985, AlfonsoRoxas Chua had only his one-half share of the conjugal property in question to pay his previous creditor, Metrobank. Even his son, privaterespondent Paulino Roxas Chua himself, knew this as shown by the following excerpts of his testimony during the trial:Q: You said that month before or October 1988 your father approached you regarding his problem withrespect to his property, subject of this case, can you tell us what in particular did he tell you aboutMetrobank?A: He told me about his problem with Metrobank, about the loan with Metrobank and Metrobank gonnaforeclose his property.xxx xxx xxxQ: What did your father tell you regarding his problem?A: He told me about Metrobank, our house will gonna foreclosure (
). He cannot pay Metrobankanymore. His business is down.
Despite Alfonso Roxas Chua's knowledge that it is the only property he had which his other creditors could levy, he still assigned his right toredeem his one-half share of the conjugal property in question from Metrobank in favor of his son, Paulino. Alfonso's intent to defraud his othercreditors, specifically, China Bank, becomes even more apparent when we take into consideration the fact that immediately after the Court of Appeals rendered its Resolution dated September 29, 1988, dismissing the appeal of Pacific Multi-Agro and Alfonso Roxas Chua in CA-G.R. No.CV-14681 entitled, "China Banking Corporation, Plaintiff-Appellee versus Pacific Multi Agro-Industrial Corporation,
"he assigned his right to redeem one-half of the conjugal property to his son on November 21, 1988. The Court of Appeals, however, maintained that although the transfer was made between father and son, the conveyance was not fraudulentsince Paulino had indeed paid the redemption price of P1,463,375.39 to Metrobank and the sum of P100,000.00 to his father. The Court of Appeals reiterated the findings of the trial court that Paulino at that time had his own source of income, having been given HK$1Million by hismaternal grandmother which he used to invest in a buy-and-sell business of stuffed toys.It bears emphasis that it is not sufficient that the conveyance is founded on a valuable consideration. In the case of
Oria vs. Mcmicking
wehad occasion to state that "In determining whether or not a certain conveyance is fraudulent the question in every case is whether theconveyance was a
transaction or a trick and contrivance to defeat creditors, or whether it conserves to the debtor a special right. Itis not sufficient that it is founded on good considerations or is made with
intent: it must have both elements. If defective; in either of these, although good between the parties, it is voidable as to creditors. . . . The test as to whether or not a conveyance is fraudulent is, does itprejudice the rights of creditors?"