G.R. No. 29757 , December 29, 1928
JOSE GEMORA, ET AL., plaintiffs-appellants, vs. F. M. YAP TICO & CO., LTD., ET AL., defendants-appellees.

FACTS

The plaintiffs, children of spouses Susano Gemora and Catalina de la Cruz, claimed ownership and possession of several parcels of land, which were originally conjugal property of their parents. After Susano’s death, intestate proceedings were initiated. Catalina initially claimed her half of the conjugal property but later, while indebted to defendant F.M. Yap Tico & Co., Ltd., she simulated a sale of her share to her brother-in-law Jose Gemora, who later reconveyed it to her. The court, in the intestate proceedings, adjudicated the entire estate to the children (plaintiffs) without awarding Catalina’s conjugal share, and she did not appeal. The lots were also adjudicated to the plaintiffs in a cadastral proceeding. Meanwhile, Catalina remained indebted to Yap Tico. The plaintiffs and Yap Tico entered into an agreement wherein Yap Tico would sue Catalina, obtain a default judgment, attach and auction the property (specifically her half), and compensate the plaintiffs. The property was sold at auction to defendant Antonio C. Quiana. The plaintiffs then filed this action to recover the property, alleging ownership. The trial court dismissed their complaint.

ISSUE

Whether the plaintiffs are the absolute owners of the entire property, thereby making the attachment and auction sale of one-half thereof invalid.

RULING

No. The Supreme Court affirmed the trial court’s dismissal of the complaint. The Court held that:
1. The adjudication of the entire estate to the plaintiffs in the intestate proceedings was void, as it was procured by fraud. Catalina, the surviving spouse, was entitled to one-half of the conjugal property. Her failure to claim it and the court’s award of the whole property to the children, while she had a substantial debt, constituted a fraud on her creditor (Yap Tico). A judgment obtained by fraud is subject to collateral attack.
2. Consequently, one-half of the property legally pertained to Catalina de la Cruz. The subsequent adjudication of the lots to the plaintiffs in the cadastral case was considered to be held by them in trust for their mother, Catalina. As such, that half remained liable for her debts.
3. The attachment and auction sale of Catalina’s one-half share to satisfy the judgment in favor of Yap Tico was valid. The plaintiffs were ordered to execute the necessary deeds to transfer one-half of the property to the heirs of the auction purchaser, Antonio C. Quiana.