Air France vs. CA DIGEST

G.R. No.
104234 June 30, 1995
AIR FRANCE, petitioner,

vs.
HONORABLE COURT OF APPEALS, IOLANI DIONISIO, MULTINATIONAL TRAVEL
CORPORATION OF THE PHIL., FIORELLO and VICKY PANOPIO, respondents.
FACTS:
1. Petitioner Air France filed a complaint for sum of money and damages against
private respondents Multinational Travel Corporation of the Philippines,
2. After trial, the court rendered judgment in favor of petitioner, ordering private
respondents to pay petitioner, jointly and severally, with legal rate of interest per
annum from September 22, 1986, until fully paid and P50,000.00 as and for
attorney's fees.
3. On December 29, 1989, petitioner moved for the issuance of an alias writ of
execution on the ground of unsatisfied judgment. It likewise moved to declare the
sale to Iolani Dionisio of a parcel of land with a house erected thereon in the
name of the Multinational Food Corporation as one in fraud of creditors.
4. Petitioner, in said motion, stated that private respondent spouses jointly owned
91% of Multinational Food and Catering Corporation.
5. Petitioner further alleged that private respondent spouses subsequently sold the
property to Iolani Dionisio. However, the sale was not registered until one year
and nine months later or at the time petitioner was pursuing the issuance of a writ
of attachment.
6. Petitioner's motion was set for hearing.
7. Private respondent spouses filed their opposition thereto on the following

grounds:(a) the respondent court has no jurisdiction because the alleged buyer in
the person of Iolani Dionisio is not a party in the case; (b) that Iolani Dionisio was
not served with summons and therefore to declare the sale to her in fraud of
creditors without even jurisdiction would amount to deprivation of property
without due process of law; and (c) that the proper remedy is an independent civil
action where indispensable parties are to be impleaded to afford them to answer
and/or refute charges.
ISSUE: Whether or not the appellate court err in holding that the trial court acted with
grave abuse of discretion in resolving these matters through mere motion of petitioner
and not an independent civil action or only after a full-blown trial.
RULING:
1. The Supreme Court said yes, the trial court acted with grave abuse of discretion
because the petitioner should have filed an independent civil action and not only
a mere motion.
2. Multinational Food and Iolani Dionisio, not being parties to the case, the property
may not be levied upon to satisfy the obligations of private respondents.
3. Petitioner's contrary claim that the property belongs to private respondent

spouses, if true, requires a rescissory action which cannot be done in the same
case, but through the filing of a separate action.
4. Recission implies a contract which, even if initially valid, produces a lesion or

pecuniary damage to someone that justifies its invalidation for reasons of equity.
5. Under Art. 1381 of the Civil Code, the following contracts are rescissible:
(1) Those which are entered into by guardians whenever the wards whom
they represent suffer lesion by more than one fourth of the value of the
things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer

the lesion stated in the preceeding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any
other manner collect the claims due them;
(4) Those which refer to things under litigation if they have been entered
into by the defendant without the knowledge and approval of the litigants
or of competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
6. 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.
7. 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.
THEREFORE THE SALE COULD BE RESCINDED UNDER ART. 1381 (3) BUT BECAUSE THEY FILE
THROUGH A MOTION ONLY IT WAS DISMISSED.

Air France vs. CA DIGEST

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G.R. No.

104234 June 30, 1995

AIR FRANCE, petitioner,

6. Petitioner's motion was set for hearing.

7. Private respondent spouses filed their opposition thereto on the following

3. Petitioner's contrary claim that the property belongs to private respondent

4. Recission implies a contract which, even if initially valid, produces a lesion or

(2) Those agreed upon in representation of absentees, if the latter suffer

(5) All other contracts specially declared by law to be subject to rescission.

7. An action for rescission may not be raised or set up in a summary proceeding

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