Maria Antonia Siguan vs. Rosa Lim, et al.

Posted Nov 19, 1999

By Anonymous

7 min read

Case Title and Citation

Maria Antonia Siguan, petitioner, vs. Rosa Lim, Linde Lim, Ingrid Lim and Neil Lim, respondents.
G.R. No. 134685, November 19, 1999
Supreme Court - First Division
Ponente: DAVIDE, JR., C.J.

Facts

On August 25 and 26, 1990, Rosa Lim issued two Metrobank checks payable to “cash” for P300,000 and P241,668, respectively; both checks were dishonored for “account closed.” Demands were unsuccessful.
Petitioner filed criminal cases for violation of Batas Pambansa Blg. 22 against Rosa Lim (Criminal Cases Nos. 22127-28); the RTC convicted Lim on December 29, 1992. That criminal case was pending review before the Supreme Court (docketed G.R. No. 134685).
Rosa Lim had earlier been convicted by the RTC of Quezon City in Criminal Case No. Q-89-22162 (decision dated July 31, 1990) for estafa; the Court of Appeals affirmed; this Court later acquitted her of estafa on April 7, 1997 (G.R. No. 102784) but held her civilly liable for P169,000 plus interest.
A Deed of Donation, acknowledged before a notary public and dated August 10, 1989, purporting to convey four parcels of land from Rosa Lim to her children (Linde, Ingrid and Neil Lim), was registered on July 2, 1991 with the Register of Deeds of Cebu City; new titles were issued in the names of the donees.
1. Lot in Barrio Lahug, Cebu City, area 563 sq. m., TCT No. 93433.
2. Lot in Barrio Lahug, Cebu City, area 600 sq. m., TCT No. 93434.
3. Lot in Cebu City, area 368 sq. m., TCT No. 87019.
4. Lot in Cebu City, area 511 sq. m., TCT No. 87020.
On June 23, 1993, petitioner filed an accion pauliana (Civil Case No. CEB-14181) in the RTC of Cebu City seeking rescission of the Deed of Donation and cancellation of the new titles, alleging the donation was antedated and made in fraud of creditors (including petitioner) and left insufficient property to pay creditors.
The trial court (RTC) on December 31, 1994 ordered rescission of the Deed of Donation, annulment and cancellation of the new titles, reinstatement of prior titles in Rosa Lim’s name, and awarded P10,000 moral damages, P10,000 attorney’s fees, and P5,000 litigation expenses jointly and severally against respondents.
The Court of Appeals, in a decision dated February 20, 1998, reversed the trial court and dismissed the accion pauliana, holding (inter alia) that (a) the Deed of Donation was a public (notarial) document dated August 10, 1989 and petitioner’s indebtedness arose in August 1990, thus petitioner’s credit did not exist prior to the donation; and (b) petitioner failed to prove antedating or fraud and failed to show exhaustion of other remedies.
Petitioner sought review by this Court via Rule 45, raising primarily whether the Deed of Donation was entered into in fraud of creditors.

Issues

Was the Deed of Donation executed on August 10, 1989 entered into in fraud of the creditors of respondent Rosa Lim (in particular, of petitioner)?
Were the trial court’s awards of moral damages, attorney’s fees and expenses of litigation proper?

Ruling

No - The Court held that the accion pauliana failed because petitioner’s credit arose in August 1990, after the deed’s stated date; the notarial deed’s date is entitled to a presumption of truth; petitioner did not prove antedating, did not exhaust other remedies, and did not sufficiently prove fraud or insufficiency of remaining property.
No - The Court found no factual or legal basis in the trial court’s decision to support awards of moral damages, attorney’s fees, or litigation expenses, and thus these awards were properly deleted by the Court of Appeals.

Reasoning / Ratio Decidendi

Jurisdictional note: The Court limits Rule 45 review to errors of law but may review factual findings where findings of the trial court and Court of Appeals conflict; that exception applied here.
Requisites for accion pauliana (rescission for fraud of creditors): under Article 1381 Civil Code and jurisprudence, the plaintiff-creditor must prove:
1. A credit existing prior to the alienation (though it may be demandable later);
2. A subsequent contract conveying patrimonial benefit to a third person;
3. The creditor has no other legal remedy to satisfy his claim (rescission is subsidiary);
4. The act is fraudulent; and
5. If onerous, the third person was an accomplice.
On the first requisite: petitioner’s alleged debt arose in August 1990 while the Deed of Donation was dated August 10, 1989. The deed is a notarial/public document; under Section 23 and Section 19(b), Rule 132, Rules of Court, notarial documents are evidence of the facts giving rise to their execution and of their date. The presumption of the deed’s date was not overcome by mere later registration (registered July 2, 1991).
On antedating allegation: petitioner failed to present convincing evidence that the notary and parties antedated the deed; the public-document presumption of veracity stands unless satisfactorily rebutted.
On the subsidiary remedy requirement: under Article 1383 and related authorities, rescission is subsidiary and requires exhaustion of other legal remedies to collect the creditor’s claim; petitioner neither alleged nor proved exhaustion of remedies.
On proof of fraud/insufficiency of estate: Articles 759 and 1387 create presumptions that donations are in fraud of creditors when donor did not reserve sufficient property to pay prior debts. Those presumptions apply only where creditor’s debt pre-existed the donation. Here petitioner’s debt post-dated the deed; further, evidence showed Lim retained several properties as of August 10, 1989 (Sto. Niño house and lot valued by Lim at P800,000–P900,000; other parcels with tax-declared values), and petitioner did not prove insufficiency of those assets.
Badges of fraud (Oria v. McMicking) were not established: inadequate consideration, transfer after suit, sale on credit by insolvent debtor, large indebtedness, transfer of all/most property, transfers among relatives with other suspicious circumstances, failure of donee to take possession—none sufficiently proved.
On invocation of third-party creditor’s judgment (Victoria Suarez): Article 1384 limits rescission to extent necessary to cover damages of the creditor bringing the action; a nonparty creditor’s right cannot be asserted by petitioner to obtain rescission for petitioner’s benefit.
On damages and fees: the trial court awarded moral damages, attorney’s fees and litigation expenses in the dispositive clause but the decision body lacked factual or legal findings justifying those awards; therefore, they were properly set aside.

Doctrine / Legal Principle

Notarial/public documents are prima facie evidence of their execution and date (Sec. 19(b) and Sec. 23, Rule 132, Rules of Court); their dates are presumptive and not overcome by mere late registration.
Requisites for accion pauliana: existence of creditor’s claim prior to alienation; subsequent patrimonial transfer; creditor’s lack of other remedies; fraudulent act; and, if onerous, accomplice status of transferee.
Rescission for fraud of creditors is subsidiary; creditor must exhaust other remedies before seeking rescission (Art. 1383 Civil Code).
Presumptions in donations: donations are presumed fraudulent vis-à-vis creditors when donor did not reserve sufficient property to pay prior debts (Art. 759; Art. 1387), but the presumption applies only when creditor’s claim predates the donation.
Only the creditor who sues benefits from rescission; strangers to the action cannot profit from it (Art. 1384 Civil Code).

Disposition

The petition is dismissed. The decision of the Court of Appeals in CA-G.R. CV. No. 50091 is affirmed in toto.
Effect: The accion pauliana was dismissed; the Deed of Donation and the titles in the names of the donees remain (the trial court’s order rescinding the deed and canceling titles was reversed). Awards of moral damages, attorney’s fees and litigation expenses previously granted by the trial court were deleted. No pronouncement as to costs.

Concurring / Dissenting Opinions

Concurring: Puno, Kapunan, Pardo and Ynares-Santiago, JJ.
No dissenting opinions noted.

Significance / Notes

Reinforces the strong evidentiary presumption attaching to notarial/public documents as to their date and execution; mere late registration does not establish antedating.
Confirms that an accion pauliana requires the creditor’s claim to exist prior to the impugned alienation; claims arising after the donation cannot support rescission.
Emphasizes that rescission is a subsidiary remedy; a creditor must exhaust other remedies to collect before obtaining rescission.
Affirms that badges of fraud must be proven; enumerated circumstances (from Oria v. McMicking) are illustrative, not exhaustive.
Clarifies that a creditor who is not a party to the accion pauliana (a stranger) cannot have his credit invoked to benefit another creditor seeking rescission.

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