Air France v CA; G.R. No. 104234; June 30, 1995; Romero, J.

FACTS:

Air France filed a complaint for damages against private respondents. Petitioner also filed for the sale of land by private respondent for fraud of the creditors. The former averred that they sold this land without even registering the sale. Petitioners claim that through their petition they can also rescind the contract. The private respondent filed for a motion for reconsideration but was denied hence the petition on the grounds of grave abuse of discretion of CA.

ISSUE:

Whether or not through the earlier petition the contract can be rescinded.

RULING:

No.

Rescission is a relief which the law grants on the premise that the contract is valid for the protection of one of the contracting parties and third persons from all injury and damage that contract may cause, or to protect some incompatible and preferential right created by the contract.

Rescissible contracts, not being void, they remain legally effective until set aside in a rescissory action and may convey title. Nor can they be attacked collaterally upon the grounds for rescission in a land registration proceeding. An action for rescission may not be raised or set up in a summary proceeding

through a motion, but in an independent civil action and only after a full-blown trial by virtue of Article 1383 of the Civil Code.

Regarding contracts undertaken in fraud of creditors, the existence of the intention to prejudice the same should be determined either by the presumption established by Article 1387 or by the proofs presented in the trial of the case. In any case, the presumption of fraud established by this article is not conclusive, and may be rebutted by satisfactory and convincing evidence. To repeat, an independent action is necessary to prove that the contract is rescissible. The accion pauliana, the action to rescind contracts made in favor of creditors under Article 1389, must commence within four years.