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MARIA ANTONIA SIGUAN v. ROSA LIM

FACTS:

Respondent Rosa Lim issued two Metrobank checks in August 1990, which were dishonored. She was subsequently convicted in a criminal case for violation of Batas Pambansa Blg. 22. On appeal, the Supreme Court acquitted Lim but held her civilly liable to petitioner, Maria Antonia Siguan. On another note, Lim executed a Deed of Donation in July 1991 conveying several parcels of land to her children. Petitioner filed an accion pauliana against Lim and her children to rescind the Deed of Donation. Petitioner claimed that the Deed of Donation was fraudulently transferred in bad faith and in fraud of creditors, including herself. The trial court rescinded the Deed of Donation and ordered the cancellation of the transfer certificates of titles issued in the names of Lim's children. However, the Court of Appeals reversed the trial court's decision, dismissing petitioner's accion pauliana. This led petitioner to file a petition for review on certiorari before the Supreme Court. The pivotal issue in the case is whether the Deed of Donation was entered into in fraud of Rosa Lim's creditors.

ISSUES:

  1. Whether or not the Deed of Donation was entered into in fraud of creditors of respondent Rosa Lim (LIM).

  2. Whether the awards of moral damages, attorney’s fees, and expenses of litigation in favor of the petitioner were proper.

RULING:

  1. The Supreme Court ruled that the Deed of Donation was not entered into in fraud of creditors as the requisites for accion pauliana were not met. Specifically, the petitioner did not prove that her credit existed prior to the alienation, that the debtor made a fraudulent conveyance, or that the petitioner exhausted all legal remedies to obtain satisfaction of her claim.

  2. The awards of moral damages, attorney's fees, and expenses of litigation in favor of the petitioner were deemed improper by the Supreme Court due to the lack of factual, legal, or equitable justification.

PRINCIPLES:

  • Accion Pauliana For an accion pauliana to prosper, several requisites must be present: a prior credit, a subsequent fraudulent contract, the creditor's lack of any other legal remedy, the fraudulent nature of the act, and the third party's complicity if done for valuable consideration.

  • Public Documents* Public documents, including notarial documents, are evidence of the fact which gave rise to their execution and of their date.

  • Presumption of Fraud* Under Articles 759 and 1387 of the Civil Code, donations are presumed to be in fraud of creditors when the donor did not reserve sufficient property to pay his debts prior to the donation.

  • Subsidiary Remedy* Rescission is a subsidiary remedy that requires the exhaustion of all other legal means to obtain reparation.

  • Benefit of Rescission* Rescission benefits only the creditor who brought the action and is to the extent of the plaintiff creditor’s unsatisfied credit.