G.R. No. 29503, March 23, 1929
AGRIPINA GALLION, plaintiff-appellee, vs. NARCISO L. GAYARES, ET AL., defendants-appellants.

Ponente: STREET, J.

FACTS

Agripina Gallion and Faustino Limoncito were married in 1895. During their marriage, they acquired conjugal properties, including Lot No. 804. In 1921/1922, they separated. Faustino lived in concubinage with another woman. On June 26, 1924, while separated, Faustino executed a notarized deed of sale over Lot No. 804 in favor of his niece by marriage, Paz Nava, for a purported consideration of P8,000.

On September 10, 1924, Agripina filed a civil complaint for the separation of conjugal properties, and a notice of lis pendens was annotated in December 1924. Faustino was also convicted of concubinage. He died in prison in May 1926. Subsequently, in the liquidation proceedings, the court approved a project of partition wherein Lot No. 804 was adjudicated to Agripina. However, Paz Nava presented the 1924 deed for registration only in late 1926, and a new certificate of title was issued in her name on December 21, 1926after the lis pendens was noted and after the liquidation judgment (a copy of which was received by the Register of Deeds on December 24, 1926).

Agripina then filed this action to annul the sale to Paz Nava, cancel her title, and have herself declared the owner.

ISSUE

Whether the deed of sale executed by Faustino Limoncito in favor of Paz Nava over the conjugal property (Lot No. 804) is valid and binding against the wife, Agripina Gallion.

RULING

NO. The deed of sale is simulated, fraudulent, and without legal effect.

The Supreme Court affirmed the trial court’s judgment. It found the sale to be simulated (fictitious) and made without consideration, based on the following evidence:
1. Faustino had previously threatened to dispose of conjugal property to prevent his wife from benefiting from it.
2. After the alleged sale, Faustino remained in possession and enjoyment of the property until his imprisonment.
3. Narciso L. Gayares (Paz Nava’s husband) continued to act as Faustino’s attorney-in-fact regarding the property, inconsistent with the idea that it had been sold to his wife.
4. Paz Nava admitted there was a secret agreement allowing Faustino to “repurchase” the property at any time and to retain its income.

The Court held the transaction was fraudulently executed to hinder Agripina’s conjugal rights. Since Paz Nava was a party to the fraud and was not an innocent purchaser for value, the wife’s remedy is not limited to seeking compensation from the husband’s estate under Article 1419 of the Civil Code (as might be the case with an innocent grantee). Instead, the fraudulent sale can be directly annulled.

Furthermore, the lis pendens annotated on the title was constructive notice to Paz Nava that she acquired the property subject to the outcome of the liquidation proceedings. By keeping the sale hidden during those proceedings, she could not expect the property to be collated in the husband’s estate.

Thus, Agripina Gallion rightfully owns Lot No. 804 as adjudicated in the liquidation. The sale is declared void, and the title issued to Paz Nava should be cancelled.