Acción Revocatoria: Creditor Protection Against Debtor Fraudulent Transfers

Understanding the Revocatory Action (Acción Revocatoria)

The Acción Revocatoria, also known as fraudulent conveyance, is a legal mechanism regulated by Article 1111 of the Civil Code, with its specific prerequisites established in Articles 1295 to 1299. It is presented as a rescissory action aimed at protecting creditors.

Who Can Challenge Debtor Acts?

Creditors are empowered to challenge acts undertaken by the debtor in fraud of their rights. This action seeks to declare the inefficacy of specific acts performed by the debtor, though its value is primarily realized when it benefits the creditor. Its purpose is to request the rescission of fraudulent acts, ensuring that assets and resources that left the debtor's patrimony are returned, allowing the creditor to satisfy their credit.

Prerequisites for the Revocatory Action

The action requires both objective and subjective prerequisites:

Objective Prerequisites: Nature of the Act and Result

This requires a specific type of act and a detrimental result. Despite the general wording of Article 1111 of the Civil Code, not all acts involving fraud are subject to this action. It specifically targets acts that lead to the outflow of assets and resources from the debtor's patrimony, such as sales (enajenaciones) and payments. The essential result is that the debtor's insolvency occurs as a consequence of the challenged act, causing harm to the creditor (known as eventus damni).

Subjective Prerequisites: Creditors and Debtor's Intent

These relate to the creditors and the debtor's passive role. Doctrinal disputes exist regarding whether the debtor must have acted with fraudulent intent (consilium fraudis). However, both legal doctrine and judicial practice also admit culpability based on knowledge of the harm caused (scientia damni).

Types of Acts Subject to Revocatory Action

It is crucial to distinguish between the treatment of onerous (for consideration) and gratuitous (free) transfers:

• Onerous Transfers: These are presumed fraudulent only when made against persons who have a condemnatory sentence or an embargo order against them.
• Gratuitous Transfers: These are understood to be in fraud of creditors, as stipulated in Article 643 and Article 1297.1 of the Civil Code.

Additionally, acts that imply a decrease in the value of assets, such as certain leases, must also be taken into account.

Effects of the Revocatory Action

The action produces several key effects:

1. Rescission and Restitution: As per Article 1295 of the Civil Code, rescission requires the restitution of the things that were the object of the contract, along with their fruits, prices, and interest. However, for the creditor, this restitution is limited to the extent of their claim and the prejudice caused to their credit. Any remaining part of the asset stays with the acquirer.
2. Avoiding Payment: The acquirer may avoid restitution by compensating for the damages caused.
3. Acquirers' Good or Bad Faith: The effects vary depending on whether the acquirer acted in good or bad faith. It is important to study the relevant articles, particularly Article 453 of the Civil Code, which addresses the restitution of missing items or indemnification for their value, especially in cases of unjust enrichment.
4. Statute of Limitations and Subsidiary Nature: The action has a four-year expiration deadline, as established in Article 1299 of the Civil Code. It is also important to note its subsidiary nature, as outlined in Article 1294 of the Civil Code, meaning it can only be exercised when other remedies are unavailable.