G.R. No. 129644 . September 7, 2001.
China Banking Corporation, petitioner, vs. Hon. Court of Appeals, Paulino Roxas Chua and Kiang Ming Chu Chua, respondents.

FACTS

The property covered by TCT No. 410603, registered in the names of spouses Alfonso Roxas Chua and Kiang Ming Chu Chua, was levied on execution to satisfy a judgment against Alfonso in favor of Metropolitan Bank and Trust Company (Metrobank). A compromise agreement limited the levy to Alfonso’s one-half conjugal share. After an execution sale, a certificate of sale was issued to Metrobank and annotated on the title on December 22, 1987. Separately, China Banking Corporation (Chinabank) obtained a money judgment against Alfonso. Pursuant to this, a notice of levy on execution against Alfonso’s interest in the same property was issued on February 4, 1991, and a certificate of sale was later issued to Chinabank and annotated on May 4, 1992.
In the interim, on November 21, 1988, Alfonso executed an “Assignment of Right to Redeem” over his share in the property in favor of his son, Paulino Roxas Chua. Paulino redeemed the property from Metrobank on January 11, 1989. These acts were annotated on the title on March 14, 1989. Private respondents Paulino and Kiang Ming filed an action claiming Paulino’s prior right based on the earlier annotations. The trial court and the Court of Appeals ruled in their favor, enjoining Chinabank from asserting rights over the property. The Supreme Court initially reversed this, rescinding the assignment as fraudulent.

ISSUE

Whether the Assignment of Right to Redeem executed by Alfonso in favor of Paulino is fraudulent and rescissible, and whether Chinabank’s subsequent levy is valid.

RULING

The Supreme Court granted the motion for reconsideration and set aside its prior decision. The presumption of fraud under Article 1387 of the Civil Code was successfully rebutted. The Court found that the assignment was made for valuable consideration, as Paulino paid Alfonso P100,000.00 for the right and later paid the redemption price to Metrobank. Furthermore, Paulino acted in good faith, having no knowledge of his father’s debt to Chinabank at the time of the assignment. The conveyance was not gratuitous and was supported by adequate consideration.
Regarding Chinabank’s levy, the Court ruled it was ineffective. The levy was made on February 4, 1991, but the property had already been redeemed from Metrobank by Paulino on January 11, 1989. Upon redemption, the execution sale in favor of Metrobank was extinguished, and Alfonso’s title was restored, but only for the briefest instant. His right was immediately conveyed to Paulino via the prior assignment. Consequently, Alfonso no longer had any leviable interest in the property when Chinabank sought to levy upon it in 1991. The levy was therefore made on a non-existent interest. The Court affirmed the appellate court’s decision with modification, deleting awards for moral and exemplary damages but awarding attorney’s fees to private respondents.