G.R. No. 152347 - Union Bank of the Philippines vs. Spouses Ong

Union Bank of the Philippines (petitioner) extended a ₱40,000,000.00 credit line to Baliwag Mahogany Corporation (BMC) under a Continuing Surety Agreement executed by spouses Alfredo and Susana Ong on October 10, 1990, with solidary liability.
Spouses Ong owned 70% of BMC’s capital stock.

On October 22, 1991, spouses Ong sold their 974-sqm lot in Greenhills, San Juan, to Jackson Lee for ₱12,500,000.00 and transferred TCT No. 4746-R the next day; they remained in possession under a one-year lease dated October 29, 1991.
By then, BMC had issued 22 promissory notes to Union Bank and on November 22, 1991 filed for rehabilitation and suspension of payments with the SEC.
Union Bank filed Civil Case No. 61601 in the RTC of Pasig City for rescission of the Ong-Lee sale as fraudulent conveyance under Article 1381, citing badges of fraud: alleged undervaluation, Lee’s lack of means, and continued Ong possession.
On September 27, 1999, the RTC granted rescission, finding a holistic “badge of fraud” in view of BMC’s insolvency and the spouses’ intent to prejudice creditors.
The Court of Appeals (CA) on December 5, 2001 (CA-G.R. No. 66030) reversed, holding the sale presumptively valid, that Union Bank failed to show the Ongs had no other assets, and that Lee acted in good faith. Reconsideration was denied on February 21, 2002.
Union Bank elevated the case via Rule 45 petition.

Whether the Ong-Lee sale is a fraudulent conveyance rescissible under Article 1381 of the Civil Code requiring proof that creditors cannot otherwise collect their claims.
Whether the sale is void ab initio under Section 70 of Act No. 1956 (Insolvency Law) as made within 30 days before BMC’s suspension-of-payments petition.
Whether petitioner proved that spouses Ong had no other levyable assets and that Lee colluded in fraud.