Khe Hong Cheng v. CA

G.R. No. 144169, March 28, 2001, 355 SCRA 701

FACTS:

Petitioner is the owner of Butuan Shipping Lines. In one of the vessels owned by the petitioner, Philippine Agricultural Trading Corporation boarded 3,400 bags of copra to be shipped from Masbate to Dipolog City and which said shipment of copra was insured by PhilAm. While on board, the ship sank amounting to total loss of the shipments. Because of the loss, the insurer paid the damages to the consignee. Having subrogated the rights of the consignee, PhilAm instituted a civil case to recover the money paid to the consignee based on breach of contract of carriage. While the case was pending, petitioner executed deeds of donations of parcels of land to his children. The trial court rendered judgment against the petitioner, Khe Hong Cheng in the civil case on December 29, 1993. After the decision became final, a writ of execution was issued but it was not served. Therefore, an alias writ was applied for which was granted. The sheriff did not found any property under Butuan Shipping Lines and/or Khe Hong Cheng. In 1997, PhilAm filed complaint for annulling the deeds of donation made by herein petitioner to his children and alleged the donation was to defraud his creditors including PhilAm. Petitioner filed an answer stating that the action had already prescribed.

ISSUE:

Whether or not the action to rescind the donation had already prescribed.

HELD:

No, the action for rescission has not yet prescribed.

Article 1389 of the Civil Code simply provides that the action to claim rescission must be commenced within four years. When the law is silent as to when the prescriptive period shall commence, general rule must apply that it will commence when the moment the action accrues.
According to the trial court, the period began from December 29, 1993 when the civil case was resolved. Thus, the CA maintained that the four year period began only on January 1997, the time when it first learned that the judgment award could not be satisfied because Khe Hong Cheng had no more properties in his name. An action for rescission must be the last resort of the creditors and can only be availed after the creditor had exhausted all the properties. The herein respondent came to know only in January 1997 about the unlawful conveyances of the petitioner when, together with the sheriff and counsel, were to attach the property of the petitioner and it was then only when they found out it is no longer in the name of the petitioner. Since the respondent filed accion pauliana on February 1997, a month after the discovery that petitioner had no property in his name to satisfy the judgment, action for rescission of subject deeds had not yet prescribed.

 * Case digest by Kristine Camille Gahuman, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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