G.R. No. 28496 , March 31, 1928
ASIA BANKING CORPORATION, plaintiff-appellant, vs. MARIA LUISA CORCUERA, et al., defendants-appellees.

FACTS

Asia Banking Corporation, a creditor of the insolvent domestic corporation Lichauco & Co., Inc., filed a complaint to annul a deed of conveyance executed by the corporation. On January 16, 1922, Lichauco & Co. conveyed an 88-hectare hacienda to Maria Luisa Corcuera, as administratrix of the estate of her deceased husband Galo Lichauco. The stated consideration was P24,000, representing a pre-existing loan from Galo Lichauco to the corporation dated January 9, 1920, secured by a mortgage on bancas which was later released. The plaintiff bank alleged the conveyance was fraudulent, without consideration, and intended to defraud creditors, especially since the corporation was insolvent at the time. The bank, having obtained a judgment against Lichauco & Co. and purchased the property at a sheriff’s sale for P16,000, sought to have the deed declared void and its sheriff’s deed registered. The trial court initially ruled in favor of the bank but, upon motion for reconsideration, reversed itself and upheld the validity of the conveyance.

ISSUE

Was the deed of conveyance from Lichauco & Co., Inc. to Maria Luisa Corcuera (as administratrix) fraudulent and void for lack of consideration or gross inadequacy of price, thereby prejudicing the corporation’s creditors?

RULING

No. The Supreme Court affirmed the trial court’s final judgment, upholding the validity of the conveyance. The Court found that:
1. Consideration Existed: The conveyance was made for a valid pre-existing debt of P24,000 owed by the corporation to the estate of Galo Lichauco, which was due and enforceable.
2. Inadequacy of Price Not Proven: While the property was carried on corporate books at P50,000, the evidence of its actual value was insufficient to establish that the P24,000 consideration was so grossly inadequate as to “startle a correct mind” and constitute fraud. The disparity was not as egregious as in a related case ( G.R. No. 28495 ).
3. Article 1292 of the Civil Code Not Applicable: The conveyance was for a pre-existing and demandable obligation, not for an obligation whose fulfillment was gratuitously or fraudulently promised at the time of the contract’s constitution. Therefore, it did not fall under the annullable contracts described in Article 1292.

The Court distinguished this case from the related Nable Jose case, noting the smaller land area involved here and the lack of conclusive evidence of fraudulent intent based on the price alone.