Article 1313

March 25, 2016

Creditors are protected in cases of contracts intended to defraud them. (n)

Ang mga nagpautang ay protektado sa mga kaso ng mga kontrata na naglalayong

sila ay dayain.

Discussion:

This action is article is an exception to the principle of relativity which covers

contracts that are binding only between parties, their assigns and heirs.

When a debtor intends to defraud his creditor and alienates his property without
leaving enough for them, his creditor may file for rescission of the said contracts.
This action of rescission of contract is also known as accion pauliana.

Fraudulent Insolvency is a serious crime under the Revised Penal Code with the
following essential elements:

1. That the offender is a debtor; that is, he has obligations which are due and
payable;
2. That he absconds with his property;
3. That there be prejudice to his creditors.

Fraudulent Insolvency is punishable with prision mayor if the offender is a

merchant, and prision correcional in its maximum period to prision mayor in its
medium period if not a merchant.

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