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G.R.No.191178

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RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION
G.R.No.191178March13,2013
ANCHORSAVINGSBANK(FORMERLYANCHORFINANCEANDINVESTMENTCORPORATION),Petitioner,
vs.
HENRYH.FURIGAY,GELINDAC.FURIGAY,HERRIETTEC.FURIGAYandHEGEMC.FURIGAY,
Respondents.
DECISION
MENDOZA,J.:
Thisconcernsapetitionforreview_oncertiorarifiledbypetitionerAnchorSavingsBank(ASB)underRule45of
the1997RulesofCivilProcedure,assailingtheMay28,2009Decision1andtheJanuary22,2010Resolution2of
theCourtofAppeals(CA),inCAG.R.CVNo.90123,dismissingtheappeal.3
Theassailedresolutiondeniedtheseparatemotionsforreconsiderationofbothparties.
TheFacts
On April 21, 1999, ASB filed a verified complaint for sum of money and damages with application for replevin
againstCiudadTransportServices,Inc.(CTS),itspresident,respondentHenryH.Furigay his wife, respondent
GelindaC.Furigayanda"JohnDoe."Thecase was docketed as Civil Case No. 99865 and raffled to Branch
143oftheRegionalTrialCourtofMakatiCity(RTC).4
OnNovember7,2003,theRTCrendereditsDecision5infavorofASB,thedispositiveportionofwhichreads:
WHEREFORE,judgmentisherebyrenderedinfavorofplaintiffAnchorSavingsBankorderingdefendantsCiudad
TransportServices,Inc.,HenryH.FurigayandGenildaC.Furigaytopaythefollowing:
1)TheamountofEightMillionSixHundredNinetyFiveThousandTwoHundredTwopesosandFiftyNine
centavos(Php8,695,202.59)asPRINCIPALOBLIGATIONasof12April1999
2)AnINTERESTofTwelvepercent(12%)perannumuntilfullypaid
3)PENALTYCHARGEofTwelvepercent(12%)perannumuntilfullypaid
4)LIQUIDATEDDAMAGESofTen(10%)percentofthetotalamountdue
5)OneHundredThousandpesosasreasonableATTORNEYSFEES
6)Costsofsuit.
SOORDERED.6
WhileCivilCaseNo.99865waspending,respondentspouses donated their registered properties in Alaminos,
Pangasinan, to their minor children, respondents Hegem G. Furigay and Herriette C. Furigay. As a result,
Transfer Certificate of Title (TCT) Nos. 21743,7 21742,8 21741,9 and 2174010 were issued in the names of
HegemandHerrietteFurigay.
Claiming that the donation of these properties was made in fraud of creditors, ASB filed a Complaint for
Rescission of Deed of Donation, Title and Damages11against the respondent spouses and their children. The
casewasdocketedasCivilCaseNo.A3040andraffledtoBranch55oftheRTCofAlaminos,Pangasinan.Inits
Complaint,ASBmadethefollowingallegations:
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xxxx
4. That Ciudad Transport Services, Inc., Henry H. Furigay and Gelinda C. Furigay obtained a loan
from Anchor Savings Bank and subsequently the former defaulted from their loan obligation which
promptedAnchorSavingsBanktofilethecaseentitled"AnchorSavingsBankvs.CiudadTransport
Services, Inc., Henry H. Furigay and Gelinda C. Furigay" lodged before Makati City Regional Trial
Court Branch 143 and docketed as Civil Case No. 99865. On 7 November 2003 the Honorable
CourtintheaforesaidcaseissuedaDecisionthedispositiveportionofwhichreadsasfollows:
xxxx
5. That defendants Sps. Henry H. Furigay and Gelinda C. Furigay are the registered owners of
variousrealpropertieslocatedattheProvinceofPangasinancoveredbyTransferCertificateofTitle
Nos.19721,21678,21679,and21682.xxx
6.Thaton8March2001defendantsSps.HenryH.FurigayandGelindaC.FurigayexecutedaDeed
ofDonationinfavoroftheirchildrenhereindefendantsHegemC.FurigayandHerrietteC.Furigay
donatingtothemalloftheabovementionedproperties.Hence,thefollowingtitleswereissuedunder
theirnamestowit:TransferCertificateofTitleNos.21743,21742,21741,and21740.xxx
7.ThatthedonationmadebydefendantsSps.HenryH.FurigayandGelindaC.Furigayweredone
with the intention to defraud its creditors particularly Anchor Savings Bank. Said transfer or
conveyanceistheonecontemplatedbyArticle1387oftheNewCivilCode,whichreads:
xxxx
8.xxxIntheinstantcase,Sps.Furigaydonatedthepropertiesatthetimetherewasapendingcase
against them. x x x. In the instant case, the Sps. Furigay donated the properties to their son and
daughter. Moreover, the transfer or donation was executed in 2001 when both donees Hegem C.
FurigayandHerrietteC.Furigayareminors.
9. Clearly, the Donation made by defendants Sps. Furigay was intended to deprive plaintiff Anchor
Savings Bank from going after the subject properties to answer for their due and demandable
obligationwiththeBank.Thedonationbeingundertakeninfraudofcreditorsthenthesamemaybe
rescindedpursuanttoArticle1381oftheNewCivilCode.Thesaidprovisionprovidesthat:xxxx
Consequently,TransferCertificateofTitleNos.21743, 21742, 21741, and 21740 issued under the
namesofdefendantsHerriette C. Furigay and Hegem C. Furigay should likewise be cancelled and
revertedtothenamesofcodefendantsHenryandGelindaFurigay.
10.Thatbecauseofthefraudperpetratedbydefendants,plaintiffsufferedthefollowingdamages.
11.Plaintiffsufferedactualandcompensatorydamagesasaresultofthefilingofthecasethebank
has spent a lot of manhours of its employees and officers reevaluating the account of defendant
Sps. Furigay. Such manhour when converted into monetary consideration represents the salaries
andperdiemsofitsemployeesparticularlytheCI/Appraiser,HeadOfficeLawyerandBankAuditor
12. Said claim likewise represents administrative expenses such as transportation expenses,
reproductionofdocuments,andcourierexpensesamongothers
13. Defendants should be made to pay plaintiff Anchor Savings Bank the amount of PESOS: ONE
MILLION (P1,000,000.00) as moral damages for the damage it caused to the latters business
goodwillandreputation
14. By way of example for the public and to deter others from the malicious filing of baseless (sic)
suit, defendants should be ordered to pay [plaintiff] the amount of PESOS: TWO HUNDRED
THOUSAND(P200,000.00)asexemplarydamages.
15.Attorneysfeesequivalenttotwentyfivepercent(25%)ofthetotalamountthatcanbecollected
fromdefendant
16.Defendantsshouldalsobeheldliabletopayforthecostofsuit.12
Insteadoffilingananswer,respondentssoughtthedismissal of the complaint, principally arguing that the RTC
failedtoacquirejurisdictionovertheirpersonsaswellasoverthesubjectmatterinviewofthefailureoftheASB
toservethesummonsproperlyandtopaythenecessarylegalfees.
RTCResolutions
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On September 29, 2006, the RTC issued an Order13 denying the motion to dismiss. Respondents sought
reconsiderationoftheOrderaddingthattheASBsactionforrescissionhadalreadyprescribed.
UponfilingofASBsoppositiontothemotionforreconsideration,onFebruary27,2007,theRTCreconsideredits
earlier pronouncement and dismissed the complaint for failure of ASB to pay the correct docket fees and for
prescription.14
RTC explained that the service of summons by publication made by ASB was valid because respondents
whereaboutscouldnothavebeenascertainedwithexactitudeandbecauseSection14,Rule14oftheRulesof
Courtdidnotdistinguishwhatkindofactionitwouldapply.
On the issue of lack of jurisdiction over the subject matter of the case, the RTC ruled that the complaint was
actuallyarealactionasitaffectedtitletoorpossessionofrealproperty.Accordingly,thebasisfordeterminingthe
correct docket fees was the fair market value of the real property under litigation as stated in its current tax
declarationoritscurrentzonalvaluation,whicheverwashigher.ConsideringthatASBdidnotstatethecurrenttax
declarationor current zonal valuation of the real properties involved, as well as the amount of actual damages
andattorneysfeesitprayedfor,thetrial court was of the view that ASB purposely evaded the payment of the
correctfilingfees.
Ontheissueofprescription,theRTCruledthattheactionforrescissionhadalreadyprescribed.Itstatedthatan
actionforrescissiongroundedonfraudshouldbefiledwithinfour(4)yearsfromthediscoveryoffraud.ASBfiled
theactionforrescissiononlyonOctober14,2005orafterfour(4)yearsfromthetimetheDeedofDonationwas
registeredintheRegisterofDeedsofAlaminos,Pangasinan,onApril4,2001.Thefouryearprescriptiveperiod
should be reckoned from the date of registration of the deed of donation and not from the date of the actual
discoveryoftheregistrationofthedeedsofdonationbecauseregistrationisconsiderednoticetothewholeworld.
Thus,theRTCdisposed:
WHEREFORE,premisesconsidered,theOrderdatedSeptember29,2006isherebyreconsideredandsetaside,
inlieuthereof, the instant complaint is hereby ordered dismissed on the account of lack of jurisdiction over the
subjectmatterofthecaseforfailureoftheplaintifftopaythecorrectdocketfeesuponitsinstitutionattendedby
badfaithandonthegroundofprescription.
SOORDERED.15
ASBsoughtreconsideration,buttonoavail.16
RulingoftheCA
Onappeal,theCAagreedwithASBthatitscomplaintshouldnothavebeendismissedonthegroundthatitfailed
topaythecorrectdocketfees.Itstatedthatthelackofspecificamountofactualdamagesandattorneysfeesin
ASBscomplaintdidnot,byitself,amounttoevidentbadfaith.TheCAnotedthatASBhadpreviouslymanifested
beforethetrialcourtthatitwaswillingtopayadditionaldocketfeesshouldthesamebefoundinsufficient.
On the issue of prescription, however, the CA saw things differently. Considering the subsidiary nature of an
action for rescission, the CA found that the action of ASB had not yet prescribed, but was premature. The CA
notedthatASBfailedtoallegeinitscomplaintthatithadresortedtoalllegalremediestoobtainsatisfactionofits
claim.TheCAwrote:
Afterathoroughexaminationoftheforegoingprecepts and the facts engirding this case, this court opines that
plaintiffappellants action for rescission has not yet prescribed for it must be emphasized that it has not even
accruedinthefirstplace.Tostress,anactionforrescissionoraccionpaulianaaccruesonlyifall five requisites
arepresent,towit:
1)Thattheplaintiffaskingforrescission,hasacreditpriortothealienation,althoughdemandablelater
2)Thatthedebtorhasmadeasubsequentcontractconveyingapatrimonialbenefittoathirdperson
3) That the creditor has no other legal remedy to satisfy his claim, but would benefit by rescission of the
conveyancetothethirdperson
4)Thattheactbeingimpugnedisfraudulentand
5)Thatthethirdpersonwhoreceivedthepropertyconveyed,ifbyoneroustitle,hasbeenanaccomplicein
thefraud.
Intheinstantcase,theplaintiffappellantfailedtosatisfythethirdrequirementconsideringthatitdidnotallegein
itscomplaintthatithasresortedtoalllegalremediestoobtainsatisfactionofhisclaim.Itdidnotevenpointoutin
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its complaint if the decision in Civil Case No. 99865 has already become final and executory and whether the
execution thereof yielded negative result in satisfying its claims. Even the skip tracing allegedly done by the
plaintiffappellanttolocatethepropertiesofthedefendantappelleeswas not mentioned. And although the skip
tracingreportsweresubsequentlypresentedbytheplaintiffappellant,suchreportsarenotsufficienttosatisfythe
thirdrequirement.First,theyarenotpreparedandexecutedbythesheriff,andsecond,theydonotdemonstrate
that the sheriff failed to enforce and satisfy the judgment of the court and that the plaintiffappellant has
exhausted the property of the defendantappellees. Perforce, the action for rescission filed by the plaintiff
appellantisdismissible.17
Asstatedattheoutset,bothpartiessoughtreconsiderationbutwererebuffed.
Issue
Hence,thisrecourseofASBtotheCourt,presentingtheloneissueof:
WHETHER OR NOT THE COURT OF APPEALS, IN CA G.R. CV NO 90123, HAS DECIDED A QUESTION OF
SUBSTANCE,NOTHERETOFOREDETERMINEDBYTHESUPREMECOURT,ORHASDECIDEDITINAWAY
PROBABLYNOTINACCORDANCEWITHLAWORTHEAPPLICABLEDECISIONSOFTHESUPREMECOURT,
WHENITRENDEREDTHEDECISIONDATED28MAY2009,ANDRESOLUTIONDATED22JANUARY2010,IN
FINDING THAT PETITIONER FAILED TO PROVE THAT IT HAS RESORTED TO ALL LEGAL REMEDIES TO
OBTAINSATISFACTIONOFITSCLAIM,WITHOUTGIVINGPETITIONERTHEOPPORTUNITYTOBEHEARD
ORTHECHANCETOPRESENT EVIDENCE TO SUPPORT ITS ACTION, THEREBY DEPRIVING THE LATTER
OFTHERIGHTTODUEPROCESS.18
ASBarguesthat,consideringthatitsactionwasstillinitspreliminarystages,theCAerredindismissingitsaction
on the ground that it failed to allege in its complaint the fact that it had resorted to all other legal remedies to
satisfyitsclaim,becauseitisamatterthatneednotbeallegedinitscomplaint,but,rather,tobeprovedduring
trial.Itassertsthatitsactionisnotyetbarredbyprescription,insistingthatthereckoningpointofthefour
(4)yearprescriptiveperiodshouldbecountedfromSeptember2005,whenitdiscoveredthefraudulentdonation
madebyrespondentspouses.
ThebasicissueinthiscaseiswhethertheCAwascorrectindismissingASBscomplaintonthegroundthatthe
actionagainstrespondentswaspremature.
RulingoftheCourt
TheCourtfindsthepetitionbereftofmerit.
Section 1 of Rule 2 of the Revised Rules of Court requires that every ordinary civil action must be based on a
cause of action. Section 2 of the same rule defines a cause of action as an act or omission by which a party
violatestherightofanother.Inorderthatonemayclaimtohaveacauseofaction,thefollowingelementsmust
concur:(1)arightinfavoroftheplaintiffbywhatevermeansandunderwhateverlawitarisesoriscreated(2)an
obligationonthepartofthenameddefendanttorespectornottoviolatesuchrightand(3)anactoromissionon
thepartofsuchdefendantinviolationoftherightoftheplaintifforconstitutingabreachoftheobligationofthe
defendanttotheplaintiffforwhichthelattermaymaintainanactionforrecoveryofdamagesorotherappropriate
relief.19In other words, "a cause of action arises when that should have been done is not done, or that which
shouldnothavebeendoneisdone."20
InPhilippineAmericanGeneralInsuranceCo.,Inc.v.SweetLines,Inc.,21itwasheldthat"beforeanactioncan
properlybecommenced,alltheessentialelementsofthecauseofactionmustbeinexistence,thatis,thecause
of action must be complete. All valid conditions precedent to the institution of the particular action, whether
prescribed by statute, fixed by agreement of the parties or implied by law must be performed or complied with
before commencing the action, unless the conduct of the adverse party has been such as to prevent or waive
performanceorexcusenonperformanceofthecondition."
Moreover,itisnotenoughthatapartyhas,ineffect,acauseofaction.
Therulesofprocedurerequirethatthecomplaintmust contain a concise statement of the ultimate or essential
factsconstitutingtheplaintiff'scauseofaction."Thetestofthesufficiencyofthefactsallegedinthecomplaintis
whetherornot,admittingthefactsalleged,thecourtcanrenderavalidjudgmentuponthesameinaccordance
withtheprayerofplaintiff."22Thefocusisonthesufficiency,nottheveracity,ofthematerialallegations.Failure
tomakeasufficientallegationofacauseofactioninthecomplaintwarrantsitsdismissal.23
In relation to an action for rescission, it should be noted that the remedy of rescission is subsidiary in nature it
cannotbe instituted except when the party suffering damage has no other legal means to obtain reparation for
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thesame.24Article1177oftheNewCivilCodeprovides:
Thecreditors,afterhavingpursuedthepropertyinpossessionofthedebtortosatisfytheirclaims,mayexercise
all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his
persontheymayalsoimpugntheactionswhichthedebtormayhavedonetodefraudthem.(Emphasisadded)
Consequently,followingthesubsidiarynatureoftheremedyofrescission,acreditorwouldhaveacauseofaction
tobringanactionforrescission,ifitisallegedthatthefollowingsuccessivemeasureshavealreadybeentaken:
(1)exhaustthepropertiesofthedebtorthroughlevyingbyattachmentandexecutionuponallthepropertyofthe
debtor, except such as are exempt by law from execution (2) exercise all the rights and actions of the debtor,
savethosepersonaltohim(accionsubrogatoria)and(3)seekrescissionofthecontractsexecutedbythedebtor
infraudoftheirrights(accionpauliana).25
Withrespecttoanaccionpauliana,itisrequiredthattheultimatefactsconstitutingthefollowingrequisitesmust
allbeallegedinthecomplaint,viz.:
1)Thattheplaintiffaskingforrescission,hascreditpriortothealienation,althoughdemandablelater
2)Thatthedebtorhasmadeasubsequentcontractconveyingapatrimonialbenefittoathirdperson
3) That the creditor has no other legal remedy to satisfy his claim, but would benefit by rescission of the
conveyancetothethirdperson
4)Thatactbeingimpugnedisfraudulentand
5)Thatthethirdpersonwhoreceivedthepropertyconveyed,ifbyoneroustitle,hasbeenanaccomplicein
thefraud.26
A cursory reading of the allegations of ASBs complaint would show that it failed to allege the ultimate facts
constituting its cause of action and the prerequisites that must be complied before the same may be instituted.
ASB,withoutavailingofthefirstandsecondremedies,thatis,exhaustingthepropertiesofCTS,HenryH.Furigay
andGenildaC.Furigayortheirtransmissiblerightsandactions,simplyundertookthethirdmeasureandfiledan
actionforannulmentofthedonation.Thiscannotbedone.TheCourtherebyquoteswithapprovalthethorough
discourseoftheCAonthisscore:27
Toanswertheissueofprescription,thecaseofKheHongChengvs.CourtofAppeals(G.R.No.144169,March
28,2001)ispertinent.Insaidcase,PhilamfiledanactionforcollectionagainstKheHongCheng.Whilethecase
wasstillpending,oronDecember20,1989,KheHongCheng,executeddeedsofdonationsoverparcelsofland
in favor of his children, and on December 27, 1989, said deeds were registered. Thereafter, new titles were
issued in the names of Khe Hong Chengs children. Then, the decision became final and executory. But upon
enforcementofwritofexecution,PhilamfoundoutthatKheHongChengnolongerhadanypropertyinhisname.
Thus, on February 25, 1997, Philam filed an action for rescission of the deeds of donation against Khe Hong
Chengallegingthatsuchwasmadeinfraudofcreditors.However,KheHongChengmovedforthedismissalof
the action averring that it has already prescribed since the fouryear prescriptive period for filing an action for
rescissionpursuanttoArticle1389oftheCivilCodecommencedtorunfromthetimethedeedsofdonationwere
registeredonDecember27,1989.KheHongChengaverredthatregistrationamountstoconstructivenoticeand
sincethecomplaintwasfiledonlyonFebruary25,1997,ormorethanfour(4)yearsaftersaidregistration,the
actionwasalreadybarredbyprescription.Thetrialcourtruledthatthecomplainthadnotyetprescribedsincethe
prescriptiveperiodbegantorunonlyfromDecember29, 1993, the date of the decision of the trial court. Such
decisionwasaffirmedbythiscourtbutreckonedtheaccrualofPhilam'scauseofactioninJanuary1997,thetime
when it first learned that the judgment award could not be satisfied because the judgment creditor, Khe Hong
Cheng, had no more properties in his name. Hence, the case reached the Supreme Court which ruled that the
actionforrescissionhasnotyetprescribed,ratiocinatingasfollows:
"Essentially,theissueforresolutionposedbypetitionersisthis:Whendidthefour(4)yearprescriptiveperiodas
providedforinArticle1389oftheCivilCodeforrespondentPhilamtofileitsactionforrescissionofthesubject
deedsofdonationcommencetorun?
Thepetitioniswithoutmerit.
Article1389oftheCivilCodesimplyprovidesthat,Theactiontoclaimrescissionmustbecommencedwithinfour
years.Sincethisprovisionoflawissilentastowhentheprescriptiveperiodwouldcommence,thegeneralrule,
i.e,fromthemomentthecauseofactionaccrues,therefore,applies.Article1150oftheCivilCodeisparticularly
instructive:
ARTICLE1150.Thetimeforprescriptionforallkindsofactions,whenthereisnospecialprovisionwhichordains
otherwise,shallbecountedfromthedaytheymaybebrought.
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Indeed,thisCourtenunciatedtheprinciplethatitisthelegalpossibilityofbringingtheactionwhichdeterminesthe
startingpointforthecomputationoftheprescriptiveperiodfortheaction.Article1383oftheCivilCodeprovides
asfollows:
ARTICLE 1383. An action for rescission is subsidiary it cannot be instituted except when the party suffering
damagehasnootherlegalmeanstoobtainreparationforthesame.
Itisthusapparentthatanactiontorescindoranaccionpaulianamustbeoflastresort,availedofonlyafterall
otherlegalremedieshavebeenexhaustedandhavebeenprovenfutile. Foranaccionpaulianatoaccrue,the
followingrequisitesmustconcur:
1 w p h i1

1)Thattheplaintiffaskingforrescission,hasacreditpriortothealienation,althoughdemandablelater2)That
thedebtorhasmadeasubsequentcontractconveyingapatrimonialbenefittoathirdperson3)Thatthecreditor
has no other legal remedy to satisfy his claim, but would benefit by rescission of the conveyance to the third
person 4) That the act being impugned is fraudulent 5) That the third person who received the property
conveyed,ifbyoneroustitle,hasbeenanaccompliceinthefraud.
WequotewithapprovalthefollowingdisquisitionoftheCAonthematter:
Anaccionpaulianaaccruesonlywhenthecreditordiscoversthathehasnootherlegalremedyforthesatisfaction
ofhisclaimagainstthedebtorotherthananaccionpauliana.Theaccionpaulianaisanactionofalastresort.For
aslongasthecreditorstillhasaremedyatlawfortheenforcementofhisclaimagainstthedebtor,thecreditor
willnothaveanycauseofactionagainstthecreditorforrescissionofthecontractsenteredintobyandbetween
thedebtorandanotherpersonorpersons.Indeed,anaccionpaulianapresupposesajudgmentandtheissuance
bythetrialcourtofawritofexecutionforthesatisfactionofthejudgmentandthefailureoftheSherifftoenforce
andsatisfythejudgmentofthecourt.Itpresupposesthatthecreditorhasexhaustedthepropertyofthedebtor.
Thedateofthedecisionofthetrialcourtagainstthedebtorisimmaterial.Whatisimportantisthatthecreditof
theplaintiffantedatesthatofthefraudulentalienationbythedebtorofhisproperty.Afterall,thedecision of the
trialcourtagainstthedebtorwillretroacttothetimewhenthedebtorbecameindebtedtothecreditor.
Petitioners,however,maintainthatthecauseofactionofrespondentPhilamagainstthemfortherescissionofthe
deeds of donation accrued as early as December 27, 1989, when petitioner Khe Hong Cheng registered the
subjectconveyanceswiththeRegisterofDeeds.RespondentPhilamallegedlyhadconstructiveknowledgeofthe
executionofsaiddeedsunderSection52ofPresidentialDecreeNo.1529,quotedinfra,asfollows:
SECTION52.Constructiveknowledgeuponregistration.Everyconveyance,mortgage,lease,lien,attachment,
order,judgment,instrumentorentryaffectingregisteredlandshall,ifregistered,filedorenteredintheOfficeof
theRegisterofDeedsfortheprovinceorcitywherethelandtowhichitrelateslies,beconstructivenoticetoall
personsfromthetimeofsuchregistering,filing,orentering.
PetitionersargumentthattheCivilCodemustyieldtotheMortgageandRegistrationLawsismisplaced,forinno
waydoesthisimplythatthespecificprovisionsoftheformermaybealltogetherignored.Tocountthefouryear
prescriptiveperiodtorescindanallegedlyfraudulentcontractfromthedateofregistrationoftheconveyancewith
theRegisterofDeeds,asallegedbythepetitioners,wouldruncountertoArticle1383oftheCivilCodeaswellas
settled jurisprudence. It would likewise violate the third requisite to file an action for rescission of an allegedly
fraudulentconveyanceofproperty,i.e.,thecreditorhasnootherlegalremedytosatisfyhisclaim.
Anaccionpaulianathuspresupposesthefollowing:1)Ajudgment2)theissuancebythetrialcourtofawritof
executionforthesatisfactionofthejudgment,and3)thefailureofthesherifftoenforceandsatisfythejudgment
ofthecourt.Itrequiresthatthecreditorhasexhaustedthepropertyofthedebtor.Thedateofthedecisionofthe
trial court is immaterial. What is important is that the credit of the plaintiff antedates that of the fraudulent
alienationbythedebtorofhisproperty.Afterall,thedecisionofthetrialcourtagainstthedebtorwillretroactto
thetimewhenthedebtorbecameindebtedtothecreditor.
xxxx
EvenifrespondentPhilamwasaware,asofDecember27,1989,thatpetitionerKheHongChenghadexecuted
thedeedsofdonationinfavorofhischildren,thecomplaintagainstButuanShippingLinesand/orpetitionerKhe
HongChengwasstillpendingbeforethetrialcourt.RespondentPhilamhadnoinkling,atthetime,thatthetrial
court'sjudgmentwouldbeinitsfavorandfurther,thatsuchjudgmentwouldnotbesatisfiedduetothedeedsof
donationexecutedbypetitionerKheHongChengduringthependencyofthecase.HadrespondentPhilamfiled
hiscomplaintonDecember27,1989,suchcomplaintwouldhavebeendismissedforbeingpremature.Notonly
wereallotherlegalremediesfortheenforcementofrespondentPhilam'sclaimsnotyetexhaustedatthetimethe
deeds of donation were executed and registered. Respondent Philam would also not have been able to prove
then that petitioner Khe Hong Cheng had no more property other than those covered by the subject deeds to
satisfyafavorablejudgmentbythetrialcourt.
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xxxx
As mentioned earlier, respondent Philam only learned about the unlawful conveyances made by petitioner Khe
HongChenginJanuary1997whenitscounselaccompaniedthesherifftoButuanCitytoattachthepropertiesof
petitionerKheHongCheng.Theretheyfoundthathenolongerhadanypropertiesinhisname.Itwasonlythen
thatrespondent
Philam's action for rescission of the deeds of donation accrued because then it could be said that respondent
Philamhad exhausted all legal means to satisfy the trial court's judgment in its favor. Since respondent Philam
fileditscomplaintforaccionpaulianaagainstpetitionersonFebruary25,1997,barelyamonthfromitsdiscovery
that petitioner Khe Hong Cheng had no other property to satisfy the judgment award against him, its action for
rescissionofthesubjectdeedsclearlyhadnotyetprescribed."
Fromtheforegoing,itisclearthatthefouryearprescriptiveperiodcommencestorunneitherfromthedateofthe
registrationofthedeedsoughttoberescindednorfromthedatethetrialcourtrendereditsdecisionbutfromthe
day it has become clear that there are no other legal remedies by which the creditor can satisfy his claims.
[Emphasesintheoriginal]
In all, it is incorrect for ASB to argue that a complaint need not allege all the elements constituting its cause of
actionsinceitwouldsimplyadduceproofofthesameduringtrial."Nothingismoresettledthantherulethatina
motiontodismissforfailuretostateacauseofaction,theinquiryis"intothesufficiency,nottheveracity,ofthe
materialallegations."28Theinquiryisconfinedtothefourcomersofthecomplaint,andnoother.29Unfortunately
for ASB, the Court finds the allegations of its complaint insufficient in establishing its cause of action and in
apprisingtherespondentsofthesamesothattheycoulddefendthemselvesintelligentlyandeffectivelypursuant
totheirrighttodueprocess.Itisaruleofuniversalapplicationthatcourtsofjusticeareconstitutedtoadjudicate
substantiverights.Whilecourtsshouldconsiderpublicpolicyandnecessityinputtinganendtolitigationsspeedily
theymustneverthelessharmonizesuchnecessitywiththefundamentalrightoflitigantstodueprocess.
WHEREFORE,thepetitionisDENIED.
SOORDERED.
JOSECATRALMENDOZA
AssociateJustice
WECONCUR:
TERESITAJ.LEONARDODECASTRO*
AssociateJustice
DIOSDADOM.PERALTA**
AssociateJustice
ActingChairperson

ROBERTOA.ABAD
AssociateJustice

MARVICMARIOVICTORF.LEONEN
AssociateJustice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt'sDivision.
DIOSDADOM.PERALTA
AssociateJustice
ActingChairperson,ThirdDivision
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionActingChairperson'sAttestation,Icertify
thattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothe
writeroftheopinionoftheCourt'sDivision.
MARIALOURDESP.A.SERENO
ChiefJustice

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