Presumption Of Fraud When Property Is Alienated By Debtor

The ruling in MR Holdings, Ltd. v. Sheriff Bajar is pertinent and instructive:

Article 1387 of the Civil Code of the Philippines provides:

 

"Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay all debts contracted before the donation.

 

Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been rendered in any instance or some writ of attachment has been issued. The decision or attachment need not refer to the property alienated, and need not have been obtained by the party seeking rescission

 

In addition to these presumptions, the design to defraud creditors may be proved in any other manner recognized by law and of evidence."

 

This article presumes the existence of fraud made by a debtor.  Thus, in the absence of satisfactory evidence to the contrary, an alienation of a property will be held fraudulent if it is made after a judgment has been rendered against the debtor making the alienation.This presumption of fraud is not conclusive and may be rebutted by satisfactory and convincing evidence.  All that is necessary is to establish affirmatively that the conveyance is made in good faith and for a sufficient and valuable consideration.

Source : http://sc.judiciary.gov.ph/jurisprudence/2009/october2009/160236.htm