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 originally acquired as conjugal property by 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 executed a simulated sale of her share to her brother-in-law, Jose Gemora, who later reconveyed it to her. In the intestate proceedings, the court issued an order adjudicating the entire estate to the children, without awarding Catalina’s conjugal share. Catalina did not appeal this order. The lots were also adjudicated to the plaintiffs in a cadastral proceeding. Subsequently, the plaintiffs and Yap Tico entered into an agreement wherein Yap Tico would sue Catalina for her debt, obtain a default judgment, attach and auction the property, and if purchased, return a portion to the plaintiffs. The property was auctioned, and half was sold to Antonio C. Quiana. Yap Tico paid the plaintiffs P5,000 per the agreement. The plaintiffs then filed this action to recover ownership and possession of the entire property, alleging the auction sale was invalid as the attached half did not belong to Catalina.

ISSUE

Whether the plaintiffs are the absolute owners of the entire property, thereby rendering the attachment and auction sale of one-half void, or whether one-half of the property remained owned by Catalina de la Cruz and was thus validly attached and sold to satisfy her debt.

RULING

The Supreme Court AFFIRMED the trial court’s judgment dismissing the complaint. The Court held:
1. The order in the intestate proceedings adjudicating the entire estate to the children, to the exclusion of Catalina’s conjugal share, was void as it was procured by fraud. Such a fraudulent judgment is subject to collateral attack.
2. Consequently, one-half of the property legally pertained to Catalina de la Cruz as her share of the conjugal property.
3. The subsequent adjudication of the lots to the plaintiffs in the cadastral case, under the circumstances, created an implied trust in favor of Catalina de la Cruz regarding her half-share. The plaintiffs, in conjunction with their mother, acted to defraud her creditor.
4. Therefore, the attachment and auction sale of Catalina’s one-half share to satisfy her debt to Yap Tico was valid. The Court ordered the plaintiffs to execute the necessary deeds to transfer one-half, pro indiviso, of the property to the heirs of the auction purchaser, Antonio C. Quiana.