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    DIGEST - Oria v. Mcmicking PDF

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    Agatha Apolinario
    The Supreme Court affirmed the trial court's judgment finding the sale of a business from Oria Hermanos & Co to Manuel Oria fraudulent and void as against creditors. There were numerous "badges of fraud" present, including inadequate consideration, the sale occurring while a lawsuit was pending, Manuel's lack of assets or experience, and the seller retaining control over the property. The creditor Gutierrez was found to have properly levied against the property to satisfy its judgment without first annulling the fraudulent sale.

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    DIGEST - Oria v. Mcmicking PDF

    Uploaded by

    Agatha Apolinario
    196 views2 pages
    The Supreme Court affirmed the trial court's judgment finding the sale of a business from Oria Hermanos & Co to Manuel Oria fraudulent and void as against creditors. There were numerous "badges of fraud" present, including inadequate consideration, the sale occurring while a lawsuit was pending, Manuel's lack of assets or experience, and the seller retaining control over the property. The creditor Gutierrez was found to have properly levied against the property to satisfy its judgment without first annulling the fraudulent sale.

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    153. DIGEST - Oria v. Mcmicking.pdf

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    The Supreme Court affirmed the trial court's judgment finding the sale of a business from Oria Hermanos & Co to Manuel Oria fraudulent and void as against creditors. There were numerous "badges of fraud" present, including inadequate consideration, the sale occurring while a lawsuit was pending, Manuel's lack of assets or experience, and the seller retaining control over the property. The creditor Gutierrez was found to have properly levied against the property to satisfy its judgment without first annulling the fraudulent sale.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    196 views2 pages

    DIGEST - Oria v. Mcmicking PDF

    Uploaded by

    Agatha Apolinario
    The Supreme Court affirmed the trial court's judgment finding the sale of a business from Oria Hermanos & Co to Manuel Oria fraudulent and void as against creditors. There were numerous "badges of fraud" present, including inadequate consideration, the sale occurring while a lawsuit was pending, Manuel's lack of assets or experience, and the seller retaining control over the property. The creditor Gutierrez was found to have properly levied against the property to satisfy its judgment without first annulling the fraudulent sale.

    Copyright:

    © All Rights Reserved
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    of 2

    153. Oria v.

    Mcmicking
    G.R. No. 7003 | 18 January 1912 | Moreland, J.
    Aggy | Topic: Badges of Fraud (Art. 1387)

    Doctrine:
    Test of whether or not a certain conveyance is fraudulent:
    “Whether the conveyance was a bona fide transaction or a trick and contrivance to defeat creditors, or
    whether it conserves to the debtor a special right” (Does it prejudice the rights of creditors?)

    Facts:
    1. In August 1909 and March 1910, Gutierrez Hermanos brought 2 actions against Oria Hermanos
    & Co. (OHC) for the recovery of sums of money. (1) Case 7289 - P147,204.28 and (2) Case 7719
    - P12,318.57.
    2. On or about April 1910, the members of OHC dissolved their partnership and entered into liquidation
    on account of the expiration of the term of the partnership as stated in their agreement.
    3. On June 1910, Tomas Oria (managing partner), acting for himself and on behalf of his co-owners,
    entered into a contract with Manuel Oria Gonzales (plaintiff) for the purpose of selling and
    transferring to Manuel all the property owned by OHC.
    a. The consideration of the sale is P274,000 to be paid in installments within a period of 12
    years. (to pay not less than P10,000 per year)
    b. Manuel was prohibited from alienating, transferring, or mortgaging the property, either wholly
    or in part, without written authorization of Tomas Oria, so long as the consideration of the
    sale is not fully satisfied.
    4. Case 7719 filed by Gutierrez was resolved by CFI in favor of Gutierrez. SC affirmed.
    a. The sheriff immediately demanded Tomas Orias to make the payment of the said judgment.
    Tomas replied that there were no fund.
    b. Sheriff, then, levied the steamship, Serantes, took possession of it, and announced it for
    sale at a public auction.
    c. Manuel presented to the sheriff a written statement claiming to be the owner of the steamship
    by reason of the sale to him by OHC.
    d. Sheriff required Gutierrez to present a bond for his protection. After having done so, sheriff
    proceeded to the sale of the steamship. Gutierrez became the purchaser since he’s the
    highest bidder.
    5. Manuel filed this present action seeking the (1) issuance of preliminary action to prevent the sale of
    the steamship, (2) declaration that he is the owner of said property and is entitled to the possession
    of the same, and (3) Gutierrez be required to restore the property to Manuel, plus damages of
    P10,000.
    a. Gutierrez contends that the sale was fraudulent as against the creditors of OHC and that the
    transfer is void as to such creditors.
    b. Manuel argues that OHC had sufficient other property to pay the judgment of Gutierrez.
    6. CFI ruled in favor of Gutierrez and the complaint was dismissed.

    Issue/Holding:
    W/N the sale from Oria Hermanos & Co to Manuel Oria is fraudulent and void? – YES. It was done in
    fraud of OHC’s creditors.
    • In determining whether or not a certain conveyance of property is fraudulent, the question is
    whether the conveyance was a bona fide transaction or a trick and contrivance to defeat
    creditors, or whether it conserves to the debtor a special right.
    • It is not sufficient that it is founded on good consideration or is made with bona fide intent. It
    must have BOTH elements (good consideration & bona fide intent).
    • SC laid down the rules in determining the • SC noted the facts of the case which are relevant
    fraudulent character of a transaction. The as to the issue of fraud:
    following are circumstances which courts have
    denominated as badges of fraud:

    o The fact that the consideration of the o Consideration was only P274,000 which
    conveyance is fictitious or is inadequate. was the same value of the assets of OHC
    o A transfer made by a debtor after suit has at the time of sale.
    been begun and while it is pending o At the time of sale, there was an action
    against him. pending against OHC for the aggregate
    o A sale upon credit by an insolvent debtor. amount of P160,000.
    o Evidence of large indebtedness or o Nothing of value seems to have been
    complete insolvency. delivered by Manuel in consideration of
    o The transfer of all or nearly all of his the sale and no security whatsoever was
    property by a debtor, especially when he provided.
    is insolvent or greatly embarrassed o Manuel is only 25 years old and was
    financially. merely a student without assets and
    o The fact that the transfer is made without gainful occupation.
    between father and son; when there are o Manuel was the son of Tomas Oria.
    present other of the above o Manuel was aware that there was a case
    circumstances. pending against OHC at the time of sale.
    o The failure of the vendee to take o Prohibition in the contract against sale
    exclusive possession of all the property. until full satisfaction of the consideration
    of P274,000 was not a security.

    • All of the badges mentioned are present in the case at bar.


    • SC also noted that the turning over of a business to an “impecunious and vocationless youth”
    who knew absolutely nothing about the business he received is unusual, so devoid of care and
    caution, and so wholly outside of the well-defined lines of ordinary business transactions.
    (TRANSLATION: it’s a big BS.)
    • The sale was fraudulent and void as to Gutierrez in so far as was necessary to permit the
    collection of its judgment.
    • Lastly, SC held that Gutierrez had the right to levy and test the validity of the sale, without first
    annulling the sale. He may attack the sale by ignoring it and seizing under his execution the
    property which is the subject of the sale.
    • (I think what SC is saying is that Gutierrez can rescind the sale hanggang sa amount lang nung
    credit niya. And that pweds niya diretso ilevy and attack yung validity ng sale kahit na hindi siya
    magfile ng action for annulment of sale)

    Ruling:
    CFI judgment is affirmed.

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