[Saddul v. Losloso] | [G.R. No.

205093] | [January 30, 2019] | [SCRA Citation]

[Notice] | [Bersamin Court]

Doctrine: An accion pauliana accrues only when the creditor discovers that he has no other legal remedy
for the satisfaction of his claim against the debtor other than an accion pauliana. It is an action of a last
resort. For as long as the creditor still has a remedy at law for the enforcement of his claim against the
debtor, the creditor will not have any cause of action against the [debtor] for rescission of the contracts
entered into by and between the debtor and another person or persons

Facts: Spouses Dela Cruz obtained a loan from petitioner in the amount of P5,680,000 upon the assurance that
they are of sound and stable financial status. This loan was secured by a chattel mortgage covering certain motor
vehicles, as well as post-dated checks payable on different occasions. Both checks were dishonored for being
drawn on a closed account. Petitioner tried to communicate with the spouses Dela Cruz and reach them personally
but to no avail.

Subsequently, petitioner learned that, on December 31, 2008 and January 9, 2009, spouses Dela Cruz were able to
transfer, by way of sale, two parcels of land in favor of their son, Harold Dela Cruz, his wife Clariss, and Clariss'
siblings, herein respondents Joseph and Elizabeth Losloso. Since petitioner could not effect any extrajudicial
demand on the spouses Dela Cruz due to their unknown whereabouts, she decided to institute an accion pauliana
against respondents by seeking the rescission of the deeds of absolute sale entered into by respondents and the
spouses Dela Cruz, the cancellation of the certificates of title in the name of respondents, and the restoration of
the same to the spouses Dela Cruz.

Sps. Dela Cruz denied the allegations and moved for its dismissal for failure to state a cause of action considering
that accion pauliana is a subsidiary remedy which can only be instituted after all remedies available have been
exhausted by the creditor. According to respondents, petitioner failed to show that she has exhausted all other
available legal remedies to satisfy her claim before instituting the complaint. Respondents also pointed out that
the spouses Dela Cruz's loan was secured by a chattel mortgage over various motor vehicles. Petitioner should
have first sought these personal properties for the full and complete satisfaction of the loan instead of prematurely
filing a complaint for accion pauliana.

The Sps. Dela Cruz filed a motion to set a hearing on the special and affirmative defenses pleaded in their answer.
However, the RTC denied it holding that it is not mandated to grant the motion under the rules. It also did not
finnd the motion impressed with merit and held that, while the action for rescission is subsidiary in nature,
petitioner's allegation that she is unable to collect despite having fied a separate civil case for collection of sum of
money against the is sufficient to give a cause of action.

Summary of Issues: Whether the action for accion pauliana was premature? YES.

Ratio:
Issue: WHETHER THE ACTION FOR ACCION PAULIANA WAS PREMATURE? YES.
At the onset, [petitioner] filed a complaint for Accion Pauliana pursuant to Article 1381 of the Civil
Code claiming that the conveyance of properties made by the Spouses Dela Cruz immediately after
incurring a loan is a classic example of a conveyance entered into in fraud of creditors considering that
the latter did not reserve adequate properties to pay off the debts contracted before the disposal. The
action to rescind contracts under Article 1381 of the Civil Code which is the basis of [petitioner's]
complaint has the following essential requisites, to wit:

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.
For the suit to prosper, it must allege and contain the above enumerated elements. There is no question with
regard to the first two elements considering that the same have remained undisputed. The pith of the present
controversy lies on the third element that an accion pauliana can be availed of only when there is no other
available legal remedy for the creditor to satisfy his claim.
In a string of cases, the Supreme Court held that an accion pauliana is a remedy of last resort. This means that this
action only accrues when the creditor has no other legal remedies to satisfy his claim against the plaintiff.

“Accion pauliana is a remedy of last resort. This means that this action only accrues
when the creditor has no other legal remedies to satisfy his claim against the plaintiff."
(Saddul v. Losloso)

An accion pauliana accrues only when the creditor discovers that he has no other legal remedy for the satisfaction
of his claim against the debtor other than an accion pauliana. It is an action of a last resort. For as long as the
creditor still has a remedy at law for the enforcement of his claim against the debtor, the creditor will not have any
cause of action against the [debtor] for rescission of the contracts entered into by and between the debtor and
another person or persons. Indeed, a n accion pauliana presupposes a judgment and the issuance by the trial court
of a writ of execution for the satisfaction of the judgment and the failure of the Sheriff to enforce and satisfy the
judgment of the court. It presupposes that the creditor has exhausted the property of the debtor. The date of the
decision of the trial court against the debtor is immaterial. What is important is that the credit of the plaintiff
antedates that of the fraudulent alienation by the debtor of his property. After all, the decision of the trial court
against the debtor will retroact to the time when the debtor became indebted to the creditor.

The following successive measures must be taken by a creditor before he may bring an action for rescission of an
allegedly fraudulent contract: (1) exhaust the properties of the debtor through levying by attachment and
execution upon all the property of the debtor, except such as are exempt by law from execution; (2) exercise all
the rights and actions of the debtor, save those personal to him (accion subrogatoria); and (3) seek
rescission of the contracts executed by the debtor in fraud of their rights (accion pauliana).

Here, it was not shown that [petitioner] has exhausted other legal remedies to obtain relief other than the
institution of an accion pauliana. In fact, what appears is that the loan was secured by a chattel mortgage, thus,
giving [petitioner] another option in law to satisfy [her] claim against the Spouses Dela Cruz thereby precluding
them from directly filing a complaint foraccion pauliana.