The surviving husband, as the exclusive administrator of the conjugal partnership upon the death of the wife, possesses the full power to sell or mortgage the community property to satisfy partnership obligations pending liquidation; the heirs of the deceased wife hold no vested legal title to specific property until the liquidation is complete and the "net remainder" is determined.

Mariano Nable Jose was married to Paz Borja, with whom he had several children. Paz Borja died in 1898, dissolving the marriage, but the conjugal partnership was never liquidated. Mariano continued to manage the properties acquired during the marriage. Years later, he incurred debts and executed mortgages on these properties in favor of Standard Oil Company of New York, Amparo Nable Jose, and Carmen Castro. When Standard Oil sought to foreclose, the children of Paz Borja intervened, arguing that their father had no authority to mortgage their mother's half-share of the unliquidated community property.

History

• Mariano Nable Jose and Paz Borja were married in 1880 and acquired various properties during their union.
• Paz Borja died intestate in 1898, leaving Mariano and their four children as heirs.
• The conjugal partnership was dissolved by her death but was not liquidated; Mariano retained possession and administration of the properties.
• Between 1907 and 1910, Mariano executed mortgages on several real and personal properties (which were community property) to secure debts owed to Amparo Nable Jose, Carmen Castro, and primarily the Standard Oil Company of New York.
• The titles to the real properties were registered in Mariano's name in the property registry.
• Standard Oil Company filed a complaint to recover the debt and foreclose on the mortgages.
• The children of Paz Borja intervened in the suit, claiming that upon their mother's death, they automatically became owners of her one-half share of the community property.
• The children argued that Mariano had no authority to mortgage their share for his personal debts or business dealings after the dissolution of the marriage.
• The trial court held that the mortgages were valid only as to Mariano's one-half share and void as to the children's one-half share.

• Standard Oil Company and other creditors argued that the surviving husband is the sole administrator of the conjugal partnership until liquidation.
• They contended that the wife's interest (and that of her heirs) is merely inchoate and does not ripen into legal title until the "net remainder" is determined after liquidation.
• They asserted that the husband has the implied power to sell or mortgage property to pay partnership debts.
• They argued that innocent third parties relying on the property registry, where titles were in the husband's name, should be protected.

• The heirs (children of Paz Borja) argued that the community partnership ceased immediately upon their mother's death.
• They claimed to have automatically inherited legal title to their mother's one-half share of the specific assets.
• They contended that the father had no authority to encumber their share of the property for debts incurred after the dissolution of the partnership.
• They insisted the mortgages should be declared null and void regarding their one-half undivided interest.

• Procedural Issues:
• N/A
• Substantive Issues:
• Whether a surviving husband has the power to sell or mortgage community property acquired during marriage after the death of his wife but prior to the liquidation of the conjugal partnership.
• Whether the heirs of a deceased wife possess a vested legal title to specific community assets immediately upon her death, or merely an inchoate right pending liquidation.

• Procedural:
• The Supreme Court reversed the lower court's judgment which had excluded the children's claimed share from the foreclosure. The Court ordered that all the mortgaged properties (excluding specific parcels found to belong to third parties) be sold to satisfy the debts.
• Substantive:
• The Court ruled that the surviving husband is the exclusive administrator of the conjugal partnership affairs until final settlement.
• The Court held that the husband has the power to sell or mortgage community property to pay partnership debts without judicial authorization, and his discretion in this regard is broad.
• The Court determined that the heirs' interest is a mere expectancy (inchoate right) limited to the "net remainder" of the estate; they do not hold legal title to any specific property until liquidation is complete and debts are paid.
• The Court concluded that third-party purchasers or mortgagees acting in good faith are not required to investigate the application of the funds raised by the husband, nor are they subject to the doctrine of caveat emptor in this context.

• Administration of Conjugal Partnership — The surviving husband, not a judicial administrator, is entitled to the possession and administration of the conjugal partnership property until its affairs are finally liquidated and settled.
• Nature of Wife's Interest — Prior to liquidation, the interest of the wife (and upon her death, her heirs) in the community property is inchoate and constitutes a mere expectancy; it does not constitute a legal or equitable estate until a "net remainder" is determined.
• Power to Alienate — The duty imposed on the husband to pay partnership debts carries the necessary implication of the right to realize funds from the property (via sale or mortgage) to satisfy those debts, subject only to liability for fraud.

• "The interest of the wife, and in case of her death, of her heirs, is an interest inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into title until it appears that there are assets in the community as a result of the liquidation and settlement."
• "The husband, acting as liquidator of the conjugal partnership, and charged with the payment of the community debts, may sell or mortgage all or any part of the conjugal property, real or personal, in the fulfillment of the duties imposed upon him and give good and valid title to the purchaser or mortgagee."
• "The doctrine of caveat emptor has no application since it would be inconsistent with the nature and scope of the powers of the husband-administrator, to hold that purchasers of partnership property must look beyond the insignia of power to dispose of the property and ascertain, at their peril, whether in making the sale he is proceeding in the due performance of his duties as such administrator."

• Alfonso vs. Natividad — Cited to affirm that the surviving husband, not the judicial administrator, settles the affairs of the conjugal partnership.
• Enriquez vs. Victoria — Cited to support the husband's exclusive role as administrator of the conjugal partnership.
• Leatherwood vs. Arnold (Texas Supreme Court) — Cited for comparison to illustrate the "unbridled discretion" and "unlimited power" of the surviving spouse in administering community property under laws derived from Spanish civil law.
• Packard vs. Arellanes (California Supreme Court) — Cited to support the principle that the wife's interest is a mere expectancy not subject to administration until the community is liquidated.

• Civil Code Articles 1418 to 1426 — These articles govern the liquidation of the conjugal partnership; cited to show that while the law prescribes duties (inventory, payment of debts), it leaves the means of accomplishing them to the husband's discretion.
• Civil Code Article 1423 — Imposes the duty to pay the debts of the partnership; cited to imply the right to sell property to fund these payments.
• Civil Code Article 1393 — Provides that the conjugal community begins on the day of marriage; cited to discuss the duration of the partnership.
• Civil Code Article 1417 — States that the conjugal community expires on the dissolution of the marriage; cited in the discussion of the partnership's termination.

• Justice Johnson — Concurred with the result. He provided an extensive review of the specific facts and procedural history found by the lower court. He emphasized that because the community property had never been liquidated, the heirs could not claim title to specific assets. He also highlighted that the properties were registered in the husband's name in the registry of property, and under the Mortgage Law, third parties (Standard Oil) relying on the registry cannot be prejudiced by the unregistered claims of the heirs.