China Banking Corporation v. Hon. Court of Appeals

Summary

China Banking Corporation challenged an assignment of redemption rights from debtor Alfonso Roxas Chua to his son Paulino, claiming it was made in fraud of creditors. Alfonso owed China Bank P2,500,000.00 under promissory notes with judgment rendered in 1985. After his conjugal property was foreclosed by Metrobank, Alfonso assigned his redemption rights to son Paulino in November 1988, who immediately redeemed the property. China Bank later levied on Alfonso's interest in 1991. The trial court and Court of Appeals initially ruled for Paulino, finding valuable consideration and prior annotation. However, the Supreme Court reversed, applying Article 1387 of the Civil Code which presumes fraud when a debtor against whom judgment has been rendered alienates property. The Court found the assignment fraudulent despite valuable consideration, as it was between father and son when the father was insolvent with no other property available to creditors, rescinding the assignment and validating China Bank's levy.