Case Digest: Asia Banking Corporation vs Corcuerra, 51 Phil 781, G.R. No. L-28496

Asia Banking Corporation vs Corcuerra, 51 Phil 781, G.R. No. L-28496 March 31, 1928

Subject: Obligations and Contracts

FACTS

On January 16, 1922, the Lichauco Corporation, conspiring with the defendant, Maria Luisa Corcuera, et al., and for the purpose of defrauding and delaying the plaintiff in the collection of its indebtedness against the Lichauco Corporation, executed and caused to be recorded an illegal and fictitious deed of conveyance from the Lichauco Corporation to the defendant, Maria Luisa Corcuera the former’s property. However, it was falsely recited in the questioned deed that there was a consideration of P24,000.00; that the said consideration was grossly inadequate; that Lichauco Co. Inc. was not really indebted to the estate of Galo Lichauco. Certificate No.455 was obtained by the plaintiff but it was refused to be registered by the register of property because the deed was previously registered to Maria Luisa Corcuera.

Plaintiff prayed that said deed be declared fraudulent and void. the defendants made a general and specific denial, and as an affirmative defense alleged the execution of the deed to the land in question on January 16, 1922, for a consideration of P24,000 which was then due and owing from the Lichauco Corporation to the Galo Lichauco estate, the recording of the deed as alleged, and that the heirs of Galo Lichauco are the sole and exclusive owners of the property. The Lower Court ruled against the defendants.

ISSUE

Whether or not the contract entered into by the parties can be rescinded

RULING

Yes.

Under Article 1382, payments made in the state of insolvency for obligation to whose fulfillment the debtor could not be compelled at the times they were effected, are also rescissible.

In this case, since there was fraud committed by the defendants against the plaintiff causing for the insolvency for the obligation, the contract between them can be rescined.