By-Kamin

Rescissible contracts are validly agreed upon but may be rescinded in the cases established by law by reason of lesion Or economic prejudice. Contracts are considered undertaken in fraud of creditors when the creditor cannot collect the claims due them. Another case is when the debtor alienates properties by gratuitous titles through donations and fails to reserve sufficient property to pay all debtors before making the donation. Alienations by onerous title are also presumed fraudulent when made by persons against whom 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 the rescission. In addition to these presumptions, the design to defraud creditors may be proved in another manner recognized by the law of evidence. Courts have the duty to scrupulously examine transfers of property between close relatives. Relatives, especially those who sleep together (such as spouses), have excellent “means, motives and opportunities” to perpetrate fraud on creditors. In many instances, some jurisdictions have found that the existence of a spousal relationship provides an adequate basis to show fraud and nullify the conveyance.
Certain transfers declared to be fraudulent are not merely rescissible but void. Except for a valuable pecuniary consideration made in good faith, any sale or transfer (including mortgage, pledge, payment, and assignment) of property of whatever character made by the insolvent within one month before the filing of a petition for insolvency shall be void . If any transfer is made in the usual and ordinary course of business of the debtor, or if such seizure is made under a judgment, which the debtor has confessed or offered to allow, that fact shall be prima facie evidence of fraud. If the debtor, being insolvent or about to be insolvent, transfers or conveys any part of his property one month before the filing of the insolvency petition with a view of preventing the said property from being distributed ratably among his creditors, such conveyance or transfer will be void.
The fact that the contract price was six times the alleged going rate does not invalidate it. This “badge”, along with a few others, does not establish simulation of the contract. A fictitious and simulated agreement lacks consent that is essential to a valid and enforceable contract. A contract is simulated if the parties do not intend to be bound at all (absolutely simulated), or if the parties conceal their true agreement (relatively simulated). The legal presumption is always on the validity of contracts . But bear in mind that the apparent gross and enormous disproportion between the stipulated price in each deed of P1.00 plus unspecified services and the valuable real estate sold worth at least P 10, 500.00 demonstrates the false and fictitious consideration, thus, these two deeds are not only voidable but void ab initio (Bagias, supra). No badges of fraud were found when individuals literally relied, albeit mistakenly, on a provision of its contract with other parties when they rescinded the contract to sell extra judicially and sold the property to a third person.

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