GR 47689; (June, 1941) (Digest)
G.R. No. 47689; June 10, 1941
WILFREDO MACEDA, ET AL., plaintiffs-appellants, vs. ZOSIMO FERNANDEZ, ET AL., defendants-appellants.
FACTS
On May 30, 1939, plaintiffs Wilfrido Maceda, Ana Fabella, Pedro E. Llamas, Miguela Tabia, Felicita Abaya, and Sancho Salamea filed an action in the Court of First Instance of Laguna against Zosimo Fernandez and Mariano Gabatan (as assignee of the insolvent estate of Francisco Abaya). The complaint alleged that all plaintiffs except Wilfrido Maceda were duly named and proved creditors in the insolvency proceedings of Francisco Abaya. They sought to annul all proceedings in civil case No. 6190, claiming that the debt recovery action brought by Zosimo Fernandez against Francisco Abaya from 1932 to 1934 was a connivance between them, involving an imaginary debt. They alleged the levy and execution sale of Abaya’s properties were done with his implied consent to benefit Fernandez, with the purpose of preventing the plaintiffs from having recourse to those properties. A demurrer to the complaint was sustained on the ground that plaintiffs had no cause of action, leading to the dismissal of the complaint and this appeal.
ISSUE
Whether the plaintiffs, as creditors of an insolvent estate, have the legal standing or cause of action to directly institute an action to annul proceedings (allegedly fraudulent) against the insolvent’s properties, or if such action must be prosecuted by the duly appointed assignee of the insolvent estate.
RULING
The demurrer was correctly sustained, and the order dismissing the complaint is affirmed. Under the Insolvency Law (Act No. 1656), upon the election of an assignee and the assignment of the insolvent’s properties to him, title to all such properties vests in the assignee by operation of law as of the date the petition for insolvency was filed. Consequently, all actions to recover the estate, debts, and effects of the insolvent must be brought and prosecuted by the assignee, not by the individual creditors. Furthermore, the plaintiffs’ complaint, which seeks to nullify allegedly fraudulent transactions, partakes of the nature of an action provided for in section 70 of the Insolvency Law. Such an action must be prosecuted by the assignee in representation of all the general creditors. Therefore, the plaintiffs lack the legal capacity to sue directly for the annulment they seek.