G.R. No. 29506 , December 11, 1928
Concepcion Pelaez, et al. vs. Eulalia Butao, et al.

Ponente: Justice Villamor

FACTS

The plaintiffs, legitimate children of spouses Nicolas Pelaez and the deceased Demetria Mercado, sought the annulment of a sale executed by their father Nicolas on June 5, 1908. In that sale, Nicolas sold two parcels of land to Pedro de Lara, the defendants’ father. The plaintiffs claimed the lands were the exclusive property of their deceased mother, Demetria Mercado, and thus Nicolas had no valid title to convey. The defendants, as heirs of Pedro de Lara, countered that they acquired the lands through a valid sale and had been in possession for many years. The trial court found that the properties belonged to the conjugal partnership of Nicolas and Demetria. It declared the sale void because Nicolas, as a mere co-owner of one-half share after liquidation, could not validly alienate the whole property. The court thus held that the lands belonged jointly to the plaintiffs and defendants and ordered partition. The defendants appealed.

ISSUE

Was the sale of the conjugal property by the surviving spouse, Nicolas Pelaez, to Pedro de Lara in 1908 valid and effective?

RULING

YES. The sale is valid and cannot be annulled by the vendor’s heirs.

The Supreme Court reversed the trial court’s decision. Applying the doctrine established in *Nable Jose vs. Nable Jose* (41 Phil. 713) and *Manuel and Laxamana vs. Losano* (41 Phil. 855), the Court held that a surviving husband, acting as the liquidator of the conjugal partnership and charged with paying community debts, may sell or mortgage conjugal property to fulfill his duties. A purchaser in good faith acquires a valid title. The heirs’ remedy, if any, lies against the surviving spouse for any accounting related to the liquidation of the partnership, not against the purchaser.

The Court clarified that Act No. 3176 (approved in 1924), which required judicial formalities for the sale of community property to pay debts, was not applicable because the sale in question occurred in June 1908, long before the law’s enactment. Since there was no evidence of bad faith or fraud in the 1908 sale, the contract remained valid. Consequently, the defendants were absolved from the complaint.