AGRIPINA GALLION, PLAINTIFF AND APPELLEE, VS. NARCISO L. GAYARES ET AL., DEFENDANTS AND APPELLANTS.

This action was instituted in the Court of First Instance of
Occidental Negros by the plaintiff, Agripina Gallion, against the
defendants, Paz Nava, her husband, Narciso L. Gayares, and Jose
Millarez, register of deeds of said province, for the purpose (1) of
annulling a document of sale, executed by the deceased husband of the
plaintiff, purporting to convey lot No. 804 of the cadastral survey of
Isabela, in said province, to the defendant Paz Nava; (2) of securing
the cancellation of the transfer certificate of title of said lot
issued in the name of Paz Nava; and (3) to obtain a judicial
declaration to the effect that-the plaintiff is the owner of said lot.
To this complaint the defendants answered with a general denial and
alleged that the sale of lot No. 804, executed by Faustino Limoncito in
favor of Paz Nava, was a valid conveyance.

Upon trying the cause the lower court rendered judgment: (1)
Declaring that the conveyance of lot No. 804, executed by Faustino
Limoncito to Paz Nava, was simulated and of no legal effect and that
the plaintiff, Agripina Gallion, is the owner of said lot; (2) ordering
that, upon the judgment becoming final, a copy thereof should be
presented by the plaintiff in the cadastral case of Isabela, Occidental
Negros, to the end that the corresponding transfer of the certificate
of title might be effected; and (3) requiring the defendants Narciso L.
Gayares and Paz Nava to pay the costs. From said judgment the
defendants appealed.

On February 17, 1895, Faustino Limoncito, now deceased, and the
plaintiff, Agripina Gallion, were united in marriage. Eleven children
were subsequently born to them, of whom only one, Marta Limoncito, now
lives. During marriage the couple acquired certain real and personal
property, of which the lot in question, No. 804 of the cadastral survey
of Isabela, Occidental Negros, forms a part. In the year 1921 or 1922
the pair separated, and from that time continued apart, the wife living
with her daughter, Marta Limoncito, the husband living in illegal
connection with another woman as concubine. While they were thus living
separately, Faustino Limoncito, on June 26, 1924, acknowledged, before
a notary public, a document of sale of lot No. 804 in favor of Paz
Nava, a niece by marriage, for the purported consideration of P8,000.

On September 9, 1924, Agripina Gallion filed against Faustino
Limoncito a criminal complaint for concubinage, and the next day,
September 10, 1924, a civil complaint for the separation of the
conjugal properties. Notice of the pendency of the latter action was
filed with the register of deeds of Occidental Negros in December,
1924. On March 19, 1925, the Court of First Instance rendered judgment
in the criminal case for concubinage, convicting Faustino Limoncito and
sentencing him to imprisonment; and the case having been appealed, the
Supreme Court, on December 31, 1925, affirmed the decision of the trial
court^[1] and sentenced the accused to one year, eight months
and twenty-one days of imprisonment. Faustino Limoncito commenced to
serve his sentence in February, 1926, in Bilibid Prison, Manila. While
he was thus imprisoned, the trial court issued, on April 20, 1926, an
order in the case for the separation of the conjugal properties,
appointing Agripina Gallion manager and receiver of said properties.

Some time in May, 1926, Faustino Limoncito died in Bilibid Prison;
and shortly thereafter his daughter, Marta Limoncito, presented in the
Court of First Instance of Occidental Negros a petition for the
appointment of an administrator and for the settlement of his estate.
Upon this petition she herself was appointed administratrix, and about
the same time she was substituted as a party instead of her father in
the case for the separation of the conjugal properties instituted by
her mother. On September 30, 1926, Marta Limoncito joined with her
mother in presenting in court a project of partition; and on November
27, 1926, the trial court rendered judgment in said case, ordering the
separation of the conjugal properties and approving the project of
partition. As a consequence of this step the lot No. 804 was
adjudicated to the plaintiff, Agripina Gallion, and the remainder, to
Marta Limoncito, as sole heir of Faustino Limoncito. The properties,
which corresponded in the division to Faustino Limoncito and which were
adjudicated to Marta Limoncito, included lots Nos. 813 and 1105 of the
cadastral survey of Isabela, 1430, 1436, 1626 and 1946 of the cadastral
survey of Hinigaran, Occidental Negros, 15 head of carabaos and 50 head
of cattle and other rights of Faustino Limoncito. A copy of this
decision was received by the register of deeds on December 24, 1926.
The document of sale of the lot in question in favor of the defendant,
Paz Nava, which was executed by Faustino Limoncito on May 26, 1924, and
acknowledged on June 26, 1924, was presented for registration in the
latter part of the year 1926 and the new certificate of title in the
name of Paz Nava was issued on December 21, 1926.

On January 12, 1927, the plaintiff, Agripina Gallion, instituted the
present action in the Court of First Instance of Occidental Negros
against Paz Nava, her husband, Narciso L. Gayares and Jose Millarez,
the register of deeds, for the purposes and with the result stated in
the first two paragraphs of this opinion.

Although the trial court did not state, as a conclusion of fact, in
so many words, that the deed executed by Faustino Limoncito in favor of
Paz Nava, covering lot No. 804 of Isabela cadastral, was simulated and
made without consideration, such finding is nevertheless at the basis
of the decision; and upon examining the proof, we are compelle to
declare that such conclusion is to be properly deduced from the
evidence. In this connection we note that, before this transfer had
been made, Faustino Limoncito had made a threat that he was going to
seek means of disposing of the conjugal property in a way that would
prevent his wife from obtaining any benefit from it. Moreover, the
trial court is supported by the evidence in the finding that,
notwithstanding the alleged sale to Paz Nava, the property continued
thereafter in the possession and enjoyment of Faustino Limoncito until
he surrendered it upon occasion of his being committed to prison.
Furthermore, after the alienation of lot 804 had been effected, Narciso
L. Gayares, the husband of the grantee, continued to deal with the
property in the character of attorney-in-fact for Faustino Limoncito,
and these series of transactions are set forth in the opinion of the
court in detail. The attitude thus indicated on the part of Gayares
seems to be absolutely inconsistent with the idea that, previously to
the doing of these acts, the property had been conveyed to Gayares’
wife. Moreover, we note an admission on the part of Paz Nava herself
that, in addition to the explicit terms of the instrument of conveyance
itself, it was understood between herself and her uncle Faustino, the
grantor, that he should have the right to “repurchase” the property at
any time and that the income of the property for the year following the
execution of the conveyance should belong to him. From these
circumstances and other facts appearing of record we are convinced that
the deed which is the subject of attack in this case represents a
fictitious or simulated transaction, made without consideration, and
unaccompanied by any intention on the part of the parties to the
instrument to transfer the title or to enter into contractual
relations. We are furthermore of the opinion that the transaction, in
question had its origin in the purpose of Faustino Limoncito to hinder
and obstruct his wife, the present plaintiff, in the enforcement of her
conjugal rights in said property, and inasmuch as Paz Nava is not a
purchaser for value, the fraudulent design of the grantor infects the
title in her hands.

In the light of the facts above stated, there can be no doubt that
the conveyance which is the subject of attack in this case is obnoxious
to article 1413 of the Civil Code. In the first paragraph of said
article it is stated that the husband, as manager of the conjugal
property, may, “for a valuable consideration,” alienate and encumber
the conjugal property without the consent of the wife. He is not given
any power to alienate and encumber the property without any
consideration. In the second paragraph of the same article it is, among
other things, declared that no alienation of the conjugal property made
by the husband in fraud of the wife shall prejudice her or her heirs.
In the case before us the wife is still living, and we are therefore
not here concerned with rights of her heir or heirs.

The question, then, is, what are the rights of the wife when
confronted with a fictitious or simulated alienation executed by the
husband in fraud of her rights?

The answer to this question, in so far as it relates to the present
controversy, depends, in our opinion, upon the two circumstances,
first, that the sale of lot No. 804 by Faustino Limoncito to Paz Nava
was a simulated transaction and, secondly, that the certificate of
title issued by the register of deeds to Paz Nava has the fact noted
thereon that the title acquired by the grantee is subject to the lis
pendens created by the action instituted by the present plaintiff for
the separation and liquidation of the properties pertaining to the
conjugal estate between herself and Faustino Limoncito, It is
established doctrine in this court that a simulated transfer of
property made without consideration, and with intent to defraud the
creditors of the grantor may be treated as non-existent (De Belen vs.
Collector of Customs and Sheriff of Manila, 46 Phil., 241). A wife who
is damnified by a fraudulent conveyance of property, effected by her
husband, is substantially in the position of a creditor who is
defrauded by a fictitious transfer executed by his debtor. We are of
the opinion, in short, that the wife, so defrauded, has a remedy, under
article 1413 of the Civil Code, to annul the transfer and cancel the
Torrens title issued in favor of the grantee. With respect to the
judicial partition it is worthy of note that the proceedings instituted
to that end were conducted, and lot 804 awarded to the plaintiff,
without any intervention on the part of Paz Nava for the assertion of
her rights under her deed, which was more than 2 years old when the
partition was consummated. Indeed, the instrument under which Paz Nava
claims was not presented for registration until in the latter part of
the year 1926, when the liquidation proceedings had about reached their
conclusion.

In Uy Coque vs. Navas L. Sioca (45 Phil., 430), it was held
that, in a proceeding to annul a conveyance made by a husband in fraud
of his wife, the heirs of the wife are entitled to recover only
one-half of the property so conveyed away; and it may be urged, with
some plausibility, that this rule should be applied in this case. But
in view of the fact that the sale in question was a simulated transfer
which was kept secret by the grantee while the liquidation proceedings
were being conducted, we are of the opinion that the trial court did
not err in setting aside the deed in its entirety. Where a partition is
effected in a judicial proceeding, the partitioners occupy a position
similar to that of purchasers for value with respect to the portion, or
portions, assigned to them respectively. In other words, the plaintiff
in this case is a purchaser for value of lot 804 in consideration of
the assignment of other parcels of the estate in liquidation to her
daughter; and to deprive the plaintiff now of any part of said lot as a
consequence of the fictitious conveyance made to Paz Nava would be
prejudicial to the plaintiff to the extent of the value of the part so
taken from her. This would be a direct violation of the second
paragraph of article 1413 of the Civil Code. The lis pendens noted on
the certificate issued in favor of Paz Nava was notice to her that she
was acquiring title subject to the result of the liquidation
proceeding, and her rights must be determined accordingly.

It is insisted by the attorneys for the appellants that, even
admitting that the conveyance which is subject to attack in this case
was made in fraud of the plaintiff and was in fact a simulated
transaction, the proper remedy of the plaintiff was to cause the
alienated property to be included-in the inventory and to have it
collated, in accordance with the second paragraph of article 1419 of
the Civil Code, with the result that said lot would have been assigned
to, or charged against, the husband, while other property of equal
value would have been assigned to the wife. This process, it is urged,
would have had the effect of avoiding any damage to the wife. In this
connection emphasis is laid upon the fact that in the liquidation
proceeding other property having, supposedly, equal value with lot 804
was assigned to Marta Limoncito; and this, it is urged, should have
been assigned to the plaintiff. This argument overlooks the fact that
Paz Nava did not see fit to come forward and show her hand in the
liquidation proceedings, and on the contrary kept the conveyance in
question under cover until the judicial proceedings had been concluded.
It could hardly be expected of the parties to the partition proceeding
to cause the alienated property to be brought into collation and
assigned to the husband, when no definite knowledge then existed to the
effect that the property had in fact been conveyed away.

The attorneys for the appellants cite a passage from Manresa,
wherein the author expresses the view that the only remedy of the wife
in a case of this kind is to obtain compensation in the manner
indicated in the second paragraph of article 1419 (Manresa, Comm., Civ.
Code, vol. 9, pages 678 et seq.). If the situation were one
where a conveyance had been executed by the husband with intent to
defraud his wife, and it appeared that the grantee was an innocent
purchaser for value, we would have no difficulty in accepting the
conclusion of Manresa, to the effect that the wife must seek
compensation in the manner indicated. But this idea is not, in, our
opinion, applicable to the situation where the conveyance was
fictitious and the grantee is found to have been a party to the fraud.

From what has been said it follows that the appealed judgment must
be affirmed. It it so ordered, with costs against the appellants
Narciso L. Gayares and Paz Nava.

Johnson, Malcolm, Villamor, Ostrand, Johns, Romualdez, and Villa-Real, JJ., concur.

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^[1] People vs. Limoncito, G. R. No. 24355, not reported.