Short answer. Yes. If your debtor transferred property to put it out of your reach and the buyer knew what was happening, that buyer can be pursued. The usual aim is to undo the transfer and bring the property back; where returning it has become impossible, the bad-faith acquirer must indemnify you instead.
What the law says
Whoever acquires in bad faith the things alienated in fraud of creditors, shall indemnify the latter for damages suffered by them on account of the alienation, whenever, due to any cause, it should be impossible for him to return them.
Civil Code, Article 1388 — Bad-Faith Acquirer's Liability. Read the full provision →
Who the article reaches
Article 1388 of the Civil Code is aimed at the person on the receiving end of a fraudulent transfer: Whoever acquires in bad faith the things alienated in fraud of creditors, shall indemnify the latter for damages suffered by them on account of the alienation. Three things have to line up. There must be a credit — you must already be a creditor. There must be an alienation, meaning the debtor actually parted with property. And the person who received it must have been in bad faith: he knew, or the circumstances made it obvious to him, that the transfer would leave the debtor without enough left to pay you.
Return first, money second
The primary remedy against a transfer in fraud of creditors is to undo it and bring the property back within reach of your claim. This article deals with what happens when that is no longer possible. The duty to indemnify arises whenever, due to any cause, it should be impossible for him to return them. The wording is deliberately wide: it covers property destroyed, consumed, or passed on again to someone who cannot be touched. The person who took the property knowing of the fraud does not get to profit from the fact that it has since slipped beyond recovery. If he cannot hand it back, he pays.
When the property has changed hands more than once
Chains of transfers are common precisely because they are meant to confuse. The article sets an order of answering: If there are two or more alienations, the first acquirer shall be liable first, and so on successively. You look to the person who took the property from the debtor before you look further down the line. That ordering keeps the pressure closest to the fraud, spares remote acquirers from being called on first, and tells you where the claim should be directed at the outset.
The limits, and what to gather now
This is not a weapon against every inconvenient sale. A buyer who paid a fair price without knowing of your credit is in good faith and the article does not reach him. Rescission for fraud against creditors is also a last resort: it is open when you have no other way to collect, so a creditor who can still be paid out of the debtor's remaining assets will be sent there first. The period for bringing the action is limited and short, which makes delay expensive. Gather what shows timing and knowledge — your demand letters, the dates of each transfer, the relationship between debtor and buyer, and whether the stated price bore any resemblance to real value.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Y-1 Leisure Philippines, Inc., Yats International Ltd. and Y-1 Clubs and Resorts, Inc., vs. James Yu, G.R. No. 207161, September 8, 2015 — read the decision on LawPhil →