Short answer. Yes, but only as a last resort. Article 1381 makes contracts undertaken in fraud of creditors rescissible when the creditors cannot in any other manner collect the claims due them. The creditor must first exhaust his other remedies, and rescission cannot reach property already held by a third person in good faith.

What the law says

(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them;

Civil Code, Article 1381 — Which Contracts Are Rescissible. Read the full provision →

What the law says

(4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority;

Civil Code, Article 1381 — Which Contracts Are Rescissible. Read the full provision →

The remedy is subsidiary, and the words say so

The ground reads: Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them;. That closing clause is a condition, not decoration. Article 1383 states it directly — rescission is a subsidiary action that cannot be instituted except when the injured party has no other legal means to obtain reparation. So a creditor must first pursue what the debtor still holds. Article 1177 sets out the same sequence in principle: creditors pursue the debtor's property, then his rights, and only after exhausting those may they impugn the acts he has done to defraud them.

The creditor must show fraud and prejudice

Two elements have to be established, and neither is presumed from a sale alone. First, the credit must exist before the transfer complained of; a person who becomes a creditor after the property was already gone was not prejudiced by its going. Second, the transfer must have left the debtor without enough to answer for the debt. A debtor who sold one asset at a fair price and retains ample others has not defrauded anyone. Circumstances that commonly attract scrutiny include a transfer to a close relative, a price far below value, and a seller who stays in possession afterwards.

Innocent third persons stop the remedy

Article 1385 requires rescission to bring about the mutual restitution of the things which were the object of the contract with their fruits and the price with its interest, and provides that rescission cannot take place when the things are legally in the possession of third persons who did not act in bad faith. If the property has since passed to a good-faith purchaser, unwinding the first sale will not recover it, and the creditor's claim shifts to indemnity from the person who caused the loss. There is also a deadline: under Article 1389 the action to claim rescission must be commenced within four years.

What a creditor should assemble first

Because the remedy is subsidiary and time-limited, the sequence of events is the case. Gather the documents fixing when the debt arose, the demands made and their dates, the title or registration history showing when and to whom the property moved, the stated consideration, and anything indicating the relationship between the parties to the transfer. Also record what the debtor still owns, since the creditor must show there was nothing else to collect from. Those materials decide whether an action is available at all.

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.

Related provisions

Note. Statute text quoted on this page is reproduced from the official enactment and is linked to the full provision. The explanation around it is general legal information from Vivas & Nobles Law Office, not legal advice. Whether it applies to your situation depends on facts only a lawyer reviewing them can assess.