G.R. No. L-45965. April 29, 1939.

AMPARO GONZALEZ and ALFREDO TRINIDAD, petitioners, vs. PRIMITIVO TRINIDAD and MARIA YNARES, respondents.

FACTS

Respondents Primitivo Trinidad and Maria Ynares executed a deed of sale over a Manila property in favor of petitioners Amparo Gonzalez and Alfredo Trinidad for P10,000, with the petitioners assuming an existing mortgage. The sale was simulated; no price was paid. The purpose was to fraudulently place the property beyond the reach of a potential attachment by a creditor (Dr. Ramon Papa) of Primitivo Trinidad. That creditor died, and his successor (Carmen Papa) later entered into an agreement with Primitivo Trinidad for future payment, thus averting the feared litigation and attachment. The respondents (original owners) later sued to have the deed declared null and void. The Court of First Instance of Manila declared the sale null and void. The Court of Appeals reversed this decision. Petitioners appealed to the Supreme Court via certiorari.

ISSUE

Whether the simulated deed of sale is null and void.

RULING

Yes, the simulated deed of sale is null and void. The Supreme Court affirmed the decision of the Court of Appeals, which had reversed the trial court.

The contract was a simulated or fictitious sale without any real consideration. Articles 1305 and 1306 of the Civil Code (on illegal consideration) are inapplicable because the stated price (the consideration) and the property (the object) were themselves lawful. The defect was the absence of any real consideration, not its illegality. The fraudulent motive of the vendors (to defraud a creditor) is distinct from the consideration of the contract. Since the sale was fictitious and lacked a real cause or consideration, it is null and void per se under Article 1261 of the Civil Code. The Court noted that the fraudulent purpose was not realized because the creditor died and his successor entered into a new payment agreement, allowing equity to favor unmaking the simulated contract.

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