Straight Shooting
“If property had simply pleasures, we could stand it,”
wrote Oscar Wilde,
“but its duties make it unbearable.”
Wilde’s statement may have sent shivers down the spine of some property owners.
Many of them have unwisely resorted to fraudulent means to conceal true property ownership. Fortunately, for all of us, the law punishes those who seek to defraud their creditors. Fraudulent conveyance laws provide that where a debtor makes a “tainted” transfer to another person or entity, a court can set aside the transfer as if it never occurred. There are two types of tainted transfers. If a debtor makes a transfer with intent to hinder, delay, or defraud creditors, it is deemed a tainted transfer.
For example, if you are sued on Monday and on Tuesday you transfer all your assets to your spouse, the transfer would be deemed a tainted transfer. The second category of tainted transfers involves transfers for less than fair consideration, when the transfer renders the debtor insolvent. For example, this situation would occur where you make a gift of all your assets to your children so that after the transfer your personal net worth would be negative .
The Philippine fraudulent conveyance law is found in the New Civil Code (Article 1387). The law does not presume the existence of fraud, dishonesty, or bad faith. It may be another story in case there is any fiduciary relationship between the parties . The presumption is in favor of good faith and honesty until the contrary appears. An important ingredient in asset protection is a good lawyer with a firm grasp of the intricate nuances of the law on corporations, partnerships, trusts and insurance. Any fraudulent intent to prejudice creditors must never be entertained as this can complicate matters for you. Many Filipinos have lost their valued properties as a direct result of adverse judgments. Even before litigation gets messy, your properties could be subjected to attachments and liens. A preliminary attachment may be secured from the court or at anytime before the entry of judgment as security for the payment of the judgment . Many could have saved their properties or diminished their liability exposure, not through fraudulent practices, but by employing legitimate devices provided by law. The primary foes are internal in nature. Ignorance and carelessness will threaten your assets beyond any external foe.
