Saddul v. Losloso

FIRST DIVISION

[G.R. No. 205093. January 30, 2019.]

ZENAIDA B. SADDUL, petitioner, vs.JOSEPH F. LOSLOSO AND ELIZABETH F. LOSLOSO, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJanuary 30, 2019which reads as follows:

"G.R. No. 205093 (Zenaida B. Saddul v. Joseph F. Losloso and Elizabeth F. Losloso). — This is a petition for review on certiorari1 under Rule 45 of the Revised Rules of Court assailing the January 26, 2012 Decision 2 and November 8, 2012 Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 117526. The CA reversed and set aside the March 26, 2010 Order 4 of Branch 27 of the Regional Trial Court (RTC) of Bayombong, Nueva Vizcaya in Civil Case No. 6933 and dismissed the amended complaint for accion pauliana filed by petitioner, Zenaida B. Saddul, against respondents, Joseph F. Losloso and Elizabeth F. Losloso, for lack of merit.

Spouses Herminigildo Dela Cruz and Norma Caringal (spouses Dela Cruz) obtained a loan from petitioner in the amount of P5,680,000.00 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. When the first check became due and demandable, petitioner presented it to the drawee bank for payment but it was dishonored for being drawn on a closed account. The second check was similarly dishonored. Petitioner tried to communicate with the spouses Dela Cruz and reach them personally but to no avail. 5

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. 6 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. 7

In their answer, respondents denied the allegations in the amended complaint and, by way of special and affirmative defenses, 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. 8 According to respondents, petitioner failed to show that she has exhausted all other available legal remedies to satisfy her claim before instituting the complaint. 9 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. 10 acEHCD

On July 1, 2009, respondents filed a motion to set a hearing on the special and affirmative defenses pleaded in their answer. However, the RTC denied it in its March 26, 2010 Order, 11 holding that it is not mandated to grant the motion under the rules. It also did not find 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 filed a separate civil case for collection of sum of money against the spouses Dela Cruz already sufficiently stated her cause of action against respondents. 12

Feeling aggrieved, respondents filed a petition for certiorari before the CA assailing the March 26, 2010 Order 13 of the RTC.

As mentioned, the CA reversed and set aside the said Order in its January 26, 2012 Decision, 14 thus the dispositive portion of which states:

WHEREFORE, the petition is GRANTED. The assailed Order promulgated on March 26, 2010 of the Regional Trial Court, of Bayombong, Nueva Vizcaya, Branch 27, is ANNULLED and SET ASIDE. Consequently, the complaint for accion pauliana is DISMISSED for lack of merit without prejudice to whatever proper legal recourse the private respondent might take against the Spouses Herminigildo Dela Cruz and Norma Caringal.

SO ORDERED. 15

Petitioner filed a motion for reconsideration, 16 but the CA denied it through its November 8, 2012 Resolution. 17

Hence, this petition.

The issue to be resolved in this case is whether the CA erred in ruling that the RTC gravely abused its discretion when it denied hearing respondents' affirmative defense that petitioner's amended complaint was premature and dismissible for its failure to state a cause of action for accion pauliana.

The appeal lacks merit.

The trial court has the discretion to conduct a preliminary hearing on affirmative defenses pleaded in the answer. However, when the defenses invoked by defendants as grounds for the dismissal of the action appear to be indubitable, a preliminary hearing should be conducted. 18 We adopt the following conclusions of the CA: 19

Having settled that a preliminary hearing is subject to the discretion of the trial court, this leads Us to the more important question on whether the issues raised in the case at bar appears to be indubitable or not. SDHTEC

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. (Citations omitted.)

For [petitioner's] 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. The disquisition by the Court of Appeals stamped with the Supreme Court's imprimatur in the case of Keh Hong Cheng vs. Court of Appeals, et al. is particularly instructive, thus:

xxx xxx xxx

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. The accion pauliana 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, an 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. (Emphasis in the original; citation omitted.)

The foregoing finds backing in a much recent consolidated cases of Metropolitan Bank, et al. vs. International Exchange Bank and Chuayuco Steel Manufacturing vs. International Exchange Bank, viz.:

Under Article 1381 of the Civil Code, an accion pauliana is an action to rescind contracts in fraud of creditors. AScHCD

However, jurisprudence is clear that 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). It is thus apparent that an action to rescind, or an accion pauliana, must be of last resort, availed of only after the creditor has exhausted all the properties of the debtor not exempt from execution or after all other legal remedies have been exhausted and have been proven futile. (Emphasis in the original; citation omitted.)

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 for accion pauliana. Her claim that the properties subject of the chattel mortgage [has] been attached by [other] creditors becomes of no moment in light of the fact that she did not exhaust other available remedies before resorting to accion pauliana. Worse, there is still no judgment or order of execution for the satisfaction of her claim against the Spouses Dela Cruz upon which [petitioner's] complaint was grounded. Hence, her accion pauliana case has clearly no leg to stand on. Besides, the filing of accion pauliana cannot be justified based solely on her sweeping conclusion that her credit cannot be fully satisfied with. [Petitioner's] suit clearly lacks a cause of action if not prematurely filed.

xxx xxx xxx

It also appears that [petitioner's] complaint, aside from being prematurely filed, failed to show either that the Spouses Dela Cruz have no other properties to satisfy a judgment award should her collection case be decided in her favor. Clearly, she has no material interest in the rescission of the contract between the Spouses Dela Cruz and [respondents]. Besides, her allegations of fraud are just mere presumptions sans concrete evidence or even pronouncement by the competent court that said spouses have the intention of defrauding her.

Based on the foregoing, there is merit in [respondents'] contention that the court a quo arbitrarily exercised its discretion in denying their motion not because of the discretionary nature of a preliminary hearing but due to the fact that there is basically no cause of action against them for accion pauliana. We find that the refusal to have a preliminary hearing notwithstanding the patent want of cause of action is really a capricious exercise of discretion brushing aside fundamental legal tenets consistently applied in many Supreme Court decisions having similar facts obtaining in the present case.

In sum, We are convinced of the merits of [respondents'] case that the court a quo erred in denying to hear their affirmative defenses despite the obvious feeble cause of [petitioner's] complaint. For [risk] of being repetitive, just to accentuate Our point, accion pauliana applies only when a creditor cannot recover what is due him, in which case, the creditor, armed with a favorable judgment, x x x must prove that she earnestly sought other properties to satisfy her judgment award but to no avail. Otherwise, such disposition cannot just be simply declared to have been disposed in [fraud] of the creditors. Such is wanting in the present case, hence, the dismissal of the complaint is in order. 20

Indeed, we have held that, before an action can properly be commenced, all the essential elements of the cause of action must be in existence, that is, the cause of action must be complete. All valid conditions precedent to the institution of the particular action, whether prescribed by statute, fixed by agreement of the parties, or implied by law, must be performed or complied with before commencing the action, unless the conduct of the adverse party has been such as to prevent or waive performance or excuse non-performance of the condition. 21

Further, the rules of procedure require that the complaint must contain a concise statement of the ultimate or essential facts constituting the plaintiff's cause of action. The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer of plaintiff. The focus is on the sufficiency, not the veracity, of the material allegations. Failure to make a sufficient allegation of a cause of action in the complaint warrants its dismissal. 22

Here, petitioner filed an amended complaint for accion pauliana, an action for rescission, which is subsidiary in nature, and which may only be filed when the party suffering damage has no other legal means to obtain reparation for the same. 23 However, the amended complaint failed to allege the ultimate facts constituting its cause of action and the prerequisites that must be complied with before the action may be instituted. Petitioner alleged that she filed a case for collection of a sum of money against the spouses Dela Cruz before Branch 30, RTC of Bambang, Nueva Vizcaya, which allegedly had already been decided on July 16, 2009 and which judgment remained unsatisfied as properties owned by the spouses Dela Cruz are yet to be found and attached. 24 Nonetheless, petitioner did not attach in the amended complaint proof of failure to execute the decision.

Moreover, the spouses Dela Cruz's loan was secured by a Memorandum of Chattel Mortgage 25 covering five motor vehicles. Petitioner alleged in the amended complaint that these vehicles became the subject of a writ of preliminary attachment and notice of attachment issued by the RTC of Cauayan City, and a writ of attachment and notice of attachment issued by the RTC of Ilagan City in other civil cases for sum of money filed against the spouses Dela Cruz. Further, these vehicles are now in the possession of the sheriffs of the said courts. 26 However, the writs and notices attached to the petition do not indicate which personal properties of spouses Dela Cruz have been attached. In a notice of levy of personal properties and real estate attached to the petition, 27 two vehicles were ordered to be attached by the RTC of Ilagan City, which vehicles were also mortgaged to petitioner. Even then, the amended complaint did not indicate any effort on the part of petitioner to pursue her rights over these and the other motor vehicles subject of the Memorandum of Chattel Mortgage. The only conclusion that may be made in light of the circumstances is that petitioner failed to exhaust all possible remedies before instituting a complaint for accion pauliana, which consequently makes the amended complaint dismissible.

All told, the Court finds the allegations in petitioner's amended complaint insufficient to establish her cause of action against respondents. Hence, the CA correctly dismissed it for being premature. caITAC

WHEREFORE, the petition is DENIED. The January 26, 2012 Decision and November 8, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 117526 which annulled and set aside the March 26, 2010 Order of the Regional Trial Court of Bayombong, Nueva Vizcaya, Branch 27, in Civil Case No. 6933 and dismissed the amended complaint are hereby AFFIRMED.

SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

 

Footnotes

1.Rollo, pp. 3-19.

2.Id. at 21-31. Penned by Associate Justice Edwin D. Sorongon and concurred in by Associate Justices Noel G. Tijam (now a member of this Court) and Romeo F. Barza.

3.Id. at 40-41.

4.Id. at 111-114.

5.Id. at 22.

6.Id.

7.Id.

8.Rollo, p. 87.

9.Id. at 91.

10.Id. at 85.

11.Id. at 111-114.

12.Id. at 113-114.

13.Supra note 2.

14.Rollo, pp. 21-31.

15.Id. at 31.

16.Id. at 32-38.

17.Supra note 3.

18.Gochan v. Gochan, G.R. No. 146089, December 13, 2001, 372 SCRA 256, 270.

19.Rollo, pp. 25-31.

20.Id.

21.Anchor Savings Bank v. Furigay, G.R. No. 191178, March 13, 2013, 693 SCRA 384, 395.

22. Id. at 396

23. Id.

24. Rollo, pp. 48-49.

25. Id. at 56-58.

26. Id. at 47-48; 75, 77-79.

27. Id. at 79.