Emilio Gaston v. Jose Hernaez

Summary

Emilio Gaston sued to annul a deed of sale whereby Jose Hernaez transferred his entire inheritance in his father's estate to his mother-in-law Eleuteria Chong Veloso for P170,875, claiming fraudulent conveyance. Gaston had served as surety for Hernaez's loans totaling P38,040.12, which Hernaez defaulted on. The evidence showed that at the time of the 1925 transfer, Hernaez faced multiple unsatisfied judgments and pending lawsuits totaling over P500,000, making him insolvent. After the transfer, creditors could find no attachable property belonging to Hernaez. Both the trial court and Supreme Court found the transfer fraudulent under Article 1297 of the Civil Code, which presumes fraud when alienations are made by persons against whom judgments have been rendered. The Supreme Court affirmed the nullification, rejecting the defendants' res judicata defense.