RCBC vs.

Buenaventura
GR No. 176479
October 6, 2010
Article 1176
FACT:
Respondent mortgaged their townhouse unit as security for the loan obtained to
petitioner. Under the loan agreement, respondent was to pay RCBC a fixed monthly
payment with adjustable interest for five years. Hence, for this purpose, respondent
opened an account with RCBCs Binondo branch from which the bank was to deduct
the monthly amortizations.
Sometime in 1999, respondent received a Notice of Public Auction of the mortgaged
townhouse unit and immediately demanded the cancellation of the auction sale.
However, notary public proceeded with the public sale where RCBC emerged as the
highest bidder.
Respondent then filed a complaint for Annulment of Sale and Damages against
herein petitioner and prayed that the RTC will annul the extra judicial foreclosure
and sale of the mortgaged property and other costs.
Petitioner argued that the foreclosure sale was done in the lawful exercise of its
right as mortgagee of the property as, at the time of the foreclosure sale,
respondent had unpaid amortizations. The bank points out that respondent made
payments until March 2000, but these payments were not withdrawn by the bank
and credited to respondents loan payments but remained in his account.
RTC ruled in favor of the respondent stating that respondent made regular
payments of the monthly amortizations as they fell due, as evidenced by his
passbooks and the various deposit slips acknowledged by RCBC. CA affirmed the
RTC decision.
ISSUE:
Whether or not respondent has unpaid installment and was in default as would
warrant the subsequent foreclosure and auction sale of the property
HELD:
No.
As a general rule, foreclosure is valid only when the debtor is in default in the
payment of his obligation. Furthermore, under Article 1176 of the Civil Code, the
receipt of the principal by the creditor, without reservation with respect to the
interest, shall give rise to the presumption that the said interest has been paid.
In the case at bar, the receipt of a later installment of a debt without reservation as
to prior installments, shall likewise raise the presumption that such installments
have been paid. Respondents passbooks indicate that RCBC continued to receive
his payments even after it made demands for him to pay his past due accounts, and

even after the auction sale. Petitioner cannot deny receipt of the payments, even
when it claims that the deposits were "not withdrawn." It is not respondents fault
that RCBC did not withdraw the money he deposited. His obligation under the
mortgage agreement was to deposit his payment in the savings account he had
opened for that purpose, in order that RCBC may debit the amount of his monthly
liabilities therefrom. He complied with his part of the agreement.

Siguan vs. Lim

GR No. 134685
November 19, 1999
Article 1177
FACT:
A criminal case was filed against LIM with RTC-Cebu city for issuing 2 bouncing
checks in the amounts of P300, 000 andP241, 668, respectively to petitioner Ma.
Antonia Siguan. Meanwhile, on 2 July 1991, a Deed of Donation conveying the
following parcels of land and purportedly executed by LIM on 10August 1989 in
favor of her children, Linde, Ingrid and Neil, was registered with the Office of the
Register of Deeds of Cebu City. New transfer certificates of title were thereafter
issued in the names of the donees. On 23 June 1993, petitioner filed an accion
pauliana against LIM and her children before RTC-Cebu City to rescind the
questioned Deed of Donation and to declare as null and void the new transfer
certificates of title issued for the lots covered by the questioned Deed.
Petitioner claimed that herein that sometime in July 1991, LIM, through a Deed of
Donation, fraudulently transferred all her real property to her children in bad faith
and in fraud of creditors, including her; that LIM conspired and confederated with
her children in antedating the questioned Deed of Donation, to petitioner's and
other creditors' prejudice; and that LIM, at the time of the fraudulent conveyance,
left no sufficient properties to pay her obligations.
On the other hand, respondent averred that as regards to the questioned Deed of
Donation, respondent maintained that it was not antedated but was made in good
faith at a time when she had sufficient property. Finally, she alleged that the Deed of
Donation was registered only on 2 July 1991because she was seriously ill
ISSUE:
Whether or not the Deed of Donation executed by respondent Rosa Lim in favor of
her children can be rescinded for being in fraud of her alleged creditor, petitioner
Siguan.
HELD:
No.
The general rule is that rescission requires the existence of creditors at the time of
the alleged fraudulent alienation, and this must be proved as one of the bases of
the judicial pronouncement setting aside the contract. W/o any prior existing debt,
there can neither be injury nor fraud.
However, while it is necessary that the credit of the plaintiff in the accion pauliana
must exist prior to the fraudulent alienation, the date of the judgment enforcing it is
immaterial. Even if the judgment be subsequent to the alienation, it is merely

declaratory, with retroactive effect to the date when the credit was constituted. In
the instant case, the alleged debt of Lim in favor of petitioner was incurred in
August 1990, while the deed of donation was purportedly executed on 10 August
1989. SC disagreed w/ the allegation of the petitioner that the questioned deed was
antedated to make it appear that it was made prior to petitioners credit.
For the presumption of fraud to apply, it must be established that the donor did not
leave adequate properties which creditors might have recourse for the collection of
their credits existing before the execution of the donation. Since petitioners alleged
credit existed only a year after the deed of donation was executed, she be said to
have been prejudiced or defrauded by such alienation.
Petitioner did not present evidence that would indicate the actual market value of
Lim's properties. It was not, therefore, sufficiently established that the properties
left behind by Lim were not sufficient to cover her debts existing before the
donation was made. Hence, the presumption of fraud will not come into play.
In any case it is essential that the party asking for rescission under accion pauliana
to prove that he has exhausted all other legal means to obtain satisfaction of his
claim. Petitioner neither alleged nor proved that she did so. On this score, her
action for the rescission of the questioned deed is not maintainable even if the fraud
charged actually did exist.
Petition is dismissed. CA affirmed.
ADDITIONAL INFORMATION:
Accion Pauliana - (impugn or rescind acts or contracts done by the debtor to
defraud the creditors).

For accion pauliana to prosper, the ff. requisites must be present: (1) the
plaintiff asking for rescission has a credit prior to the alienation, although
demandable later; (2) the debtor has made a subsequent contract conveying
a patrimonial benefit to a third person; (3) the creditor has no other legal
remedy to satisfy his claim; (4) the act being impugned is fraudulent; (5) the
third person who received the property conveyed, if it is by onerous title, has
been an accomplice in the fraud.

United Planters Sugar Milling Co., Inc. vs. CA

GR No. 126890
March 9, 2010
Article 1177
FACT:
In 1987, the Republic of the Philippines lost around 1.5 Billion Pesos after it had
waived its right to collect on an outstanding indebtedness from petitioner, by virtue
of a so-called friendly foreclosure agreement that ultimately was friendly only to
petitioner.
Petitioner United Planters Sugar Milling Co. (UPSUMCO) was engaged in the business
of milling sugar. In 1974, as UPSUMCO commenced operations, it obtained a set of
loans from respondent Philippine National Bank (PNB). The loans were secured over
two parcels of land where the milling plant stood and chattel mortgages over the
machineries and equipment. On 27 February 1987, through a Deed of Transfer, PNB
assigned to the Government its rights, titles and interests over UPSUMCO, among
several other assets. The Deed of Transfer acknowledged that said assignment was
being undertaken in compliance with Presidential Proclamation No. 50. The
Government subsequently transferred these rights, titles and interests over
UPSUMCO to the respondent Asset and Privatization Trust (APT).
ISSUE:
Whether or not there is an obligation to give compensation in the present case.
HELD:
The Second Motion Reconsiderations is granted.
Yes, there is obligation to give compensation. The right of PNB to set-off payments
from UPSUMCO arose out of conventional compensation rather than legal
compensation, even though all of the requisites for legal compensation were
present as between those two parties.
The determinative factor is the mutual agreement between PNB and UPSUMCO to
set-off payments. Even without an express agreement stipulating compensation,
PNB and UPSUMCO would have been entitled to set-off of payments, as the legal
requisites for compensation under Article 1279 were present.

As soon as PNB assigned its credit to APT, the mutual creditor-debtor relation
between PNB and UPSUMCO ceased to exist. However, PNB and UPSUMCO had
agreed to a conventional compensation, a relationship which does not require the
presence of all the requisites under Article 1279. And PNB too had assigned all its
rights as creditor to APT, including its rights under conventional compensation.
The absence of the mutual creditor-debtor relation between the new creditor APT
and UPSUMCO cannot negate the conventional compensation. Accordingly, APT, as
the assignee of credit of PNB, had the right to set-off the outstanding obligations of
UPSUMCO on the basis of conventional compensation before the condonation took
effect on 3 September 1987.