Facts:

The case involves Asia Banking Corporation (plaintiff and appellant) against Asuncion Nable Jose and Lichauco & Co., Inc. (defendants and appellees). The events leading to the case began on December 17, 1921, when Lichauco & Co., Inc. was the registered owner of two haciendas, "Sevitanan" and "Sapangbalen," and was indebted to the Bank in the amount of P146,242.11. To secure this debt, Lichauco & Co. executed a public document (Exhibit A) agreeing to deliver 37.5% of all sugar produced from the haciendas until the debt was fully paid. Asuncion Nable Jose, a resident of Manila and related to the Lichauco family, was aware of this agreement.

On January 16, 1922, members of the Lichauco family, in collusion with Nable Jose, executed a fictitious deed (Exhibit B) transferring ownership of the haciendas to Nable Jose for P70,000, which was never delivered to Lichauco & Co. The Lichauco Corporation was heavily indebted and had no other assets ...

Facts:

Parties Involved:

• Plaintiff and Appellant: Asia Banking Corporation, a foreign banking corporation organized under the laws of New York, with a branch in Manila.
• Defendants and Appellees: Asuncion Nable Jose, an unmarried resident of Manila, and Lichauco & Co., Inc., a domestic corporation based in Manila.

Background of the Case:

• Lichauco & Co., Inc. was indebted to the Asia Banking Corporation in the amount of P146,242.11 as of December 17, 1921.
• To secure this debt, Lichauco & Co., Inc. executed a public document (Exhibit A) agreeing to deliver 37.5% of all sugar produced from its haciendas "Sevitanan" and "Sapangbalen" until the debt was fully paid.

Alleged Fraudulent Conveyance:

• On January 16, 1922, Faustino Lichauco, Luisa Fernandez, Cornelia B. Lichauco, Tomas Lichauco, and Jose Barbaza, acting for Lichauco & Co., Inc., executed a deed (Exhibit B) transferring a portion of the haciendas to Asuncion Nable Jose for P70,000.
• The bank alleged that this conveyance was simulated and fictitious, intended to defraud creditors, including the bank.
• The bank argued that the P70,000 consideration was never delivered to Lichauco & Co., Inc., and that the property’s actual value was at least P300,000, making the price grossly inadequate.

Legal Proceedings:

• The bank obtained a judgment against Lichauco & Co., Inc. for P146,242.11 in October 1922.
• After execution, the sheriff sold the haciendas to the bank for P70,000, but the bank could not register its deed due to the prior registration of the deed to Nable Jose.
• The bank filed a case to annul the deed to Nable Jose and register its own deed.

Defense of Nable Jose:

• Nable Jose claimed that she acquired the property for a valid consideration and that the bank’s judgment against Lichauco & Co., Inc. was obtained through collusion.
• She also filed a cross-complaint, asserting that she was the sole owner of the property and seeking damages for the bank’s interference with her sale of the property.

Issue:

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Ruling:

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Ratio:

1. Fraudulent Conveyance: The court found that the conveyance to Nable Jose was made while Lichauco & Co., Inc. was insolvent and was intended to defraud creditors, including the bank. The deed was executed without proper authority under the corporation’s by-laws.
2. Inadequacy of Consideration: The court determined that the consideration for the conveyance (P70,000) was grossly inadequate, as the property’s actual value ranged from P250,000 to P600,000. This disparity was a badge of fraud.
3. Rescission Under Civil Code: The court applied Article 1292 of the Civil Code, which allows rescission of payments made by a debtor in a state of insolvency for obligations not yet enforceable. The payment to Nable Jose was made on account of an obligation not yet due, making it subject to rescission.
4. Equitable Remedy: The court allowed the bank to acquire the haciendas by paying Nable Jose the true consideration (P34,000) plus interest, reaffirming the sheriff’s deed in favor of the bank.