Siguan v.

Lim
Facts:

 On Aug 25 and 26, 1990, respondent Lim issued 2 Metrobank checks (P300k and
P241,668).
o Upon presentment of petitioner, the checks were dishonored.
 The RTC of Cebu convicted Lim for violation of BP 22.
 The RTC of Quezon likewise convicted Lim of estafa.
o The SC acquitted Lim but held her civilly liable for P169k to be paid to Victoria
Suarez.
 On July 2, 1991, a Deed of Donation conveying parcels of land and purportedly
executed by Lim on Aug 10, 1989 in favor of her children was registered.
 On June 23, 1993, petitioner filed an accion pauliana against Lim and her children to
rescind the questioned Deed of Donation and to declare as null and void the new
transfer certificates of title.
o That Lim fraudulently transferred all her real property to her children in bad faith
and in fraud of creditors, including herself;
o Lim conspired and confederated with her children in antedating the questioned
Deed of Donation, to petitioner’s and other creditors’ prejudice;
o Lim, at the time of conveyance, left no sufficient properties to pay her
obligations.
 The trial court ordered the rescission of the Deed of Donation.
 The CA reversed the lower court’s decision and dismissed petitioner’s accion pauliana.
o Two of the requisites for filing an accion pauliana were absent: (1) there must be
a credit existing prior to the celebration of the contract; and (2) there must be a
fraud, or at least the intent to commit fraud, to the prejudice of the creditor
seeking the rescission.
o And regarding petitioner’s contention that assuming that the Deed of Donation
was not antedated it was nevertheless in fraud of creditors because Victoria
Suarez became Lim’s creditor, the CA found the same to be untenable, for the
rule is basic that the fraud must prejudice the creditor seeking rescission.
ISSUE: W/N the questioned Deed of Donation was made in fraud of petitioner and, therefore,
rescissible.
HELD: No.
RATIO:

 The action to rescind contracts in fraud of creditors is known as accion pauliana.

o For this action to prosper, the following requisites must be present:
  the plaintiff asking for rescission has a credit prior to the alienation,
although demandable later;
 the debtor has made a subsequent contract conveying a patrimonial
benefit to a third person;
 the creditor has no other legal remedy to satisfy his claim;
 the act being impugned is fraudulent;
 the third person who received the property conveyed, if it is by onerous
title, has been an accomplice in the fraud.
 The general rule is that rescission requires the existence of creditors at the time of the
alleged fraudulent alienation. Without any prior existing debt, there can neither be
injury nor fraud.
o In the case, the alleged debt of Lim in favor of petitioner was incurred in Aug
1990, while the Deed of Donation was purportedly executed on Aug 10, 1989.
 Assuming that petitioner became the creditor prior to the celebration of the contract of
donation, there is still the absence of the 3rd requisite.
o Petitioner neither alleged nor proved that she exhausted all legal means to
obtain satisfaction of his claim.
 th
The 4 requisite is also absent.
o The evidence disclose that as of Aug 10, 1989, when the deed of donation was
executed, Lim had properties.
 Hence, the presumption of fraud as provided for under Arts. 1387 and
759 will not apply.
 Petitioner attempts to support her action for rescission by bringing up a decision
rendered by the SC ordering Lim to pay Victoria Suarez P169k for the obligation incurred
on Oct 8, 1987.
o Victoria Suarez, albeit a creditor prior to the questioned alienation, is not a
party to this accion pauliana.
o Art. 1384 provides that rescission shall only be to the extent necessary to cover
the damages caused.
 Under this article, only the creditor who brought the action for
rescission can benefit from the rescission; those who are strangers to
the action cannot benefit from its effects.
 Petitioner cannot invoke the credit of Suarez to justify rescission of the
subject deed of donation.

Where did the problem arise?

When Lim alienated her property by way of a Deed of Donation in favor of her children,
despite having credit with petitioner; and as further argued by petitioner, the fact that
Lim has credit to a Victoria Suarez in an obligation contracted prior to such alienation.
What did the Court say?
The requisites of an accion pauliana were not met.
Despite Victoria Suarez being a creditor of Lim prior to the latter’s alienation of her
property, the former is not the creditor who brought the accion pauliana against Lim.
Art. 1384 provides that only the creditor who brought the action for rescission can
benefit from such rescission.