FACTS: Luis R. Narciso, legally
married to Josefina Narciso, is a businessman engaged in business as a producer
and exporter of Philippine mahogany logs and operates a logging concession at
del Gallego, Camarines Sur. G-Tractors, Inc. is a domestic corporation engaged
primarily in the business of leasing heavy equipments such as tractors,
bulldozers, and the like.
Luis entered into a Contract of
Hire of Heavy Equipment with G-Tractors under the terms of which the latter
leased to the former tractors for the purpose of constructing switchroads and
hauling felled trees at the jobsite of Narciso's logging concession at del
Gallego, Camarines Sur. The contract provided for payment of rental for the use
of said tractors. Luis Narciso failed to pay; G-Tractors instituted an action
urging Luis to pay a certain amount (P155,410.25), representing the unpaid
rentals. G-Tractors accepted his offer for a compromise agreement, stating the
mode of payment (installment plan); Luis failed to comply; G-Tractors filed a
motion for execution; Luis asked for suspension of the motion stating that he
still has a pending loan with a banking institution; request for suspension
denied. Levy was accordingly made by the City Sheriff of QC on certain personal
properties of the spouses at their residence in Quezon City. Auction sale was
held, and G-Tractors was awarded with the sale of such. Luis then offered to
redeem such properties for the same amount; accepted; a Deed of Reconveyance
was executed by G-Tractors.
On February 12, 1975, the Sheriff
of Quezon City made a levy on "all rights, interest, title, participation
which the defendant Luis R. Narciso" may have over a parcel of residential
land of the Registry of Deeds of QC which parcel of land is allegedly the
conjugal property of the spouses Luis and Josefina. Sheriff sold at public
auction to the highest bidder for cash. Certificate of Sale was then issued to
G-Tractors as the highest bidder for P180,000.
On March 31, 1976, Josefina and
Luis filed a complaint in CFI of Quezon City for "declaration of nullity
of levy on execution and auction sale of plaintiff's conjugal property with
damages and injunction", claiming that the conjugal property of the
plaintiffs-spouses could not be made liable considering that the subject matter
was never used for the benefit of the conjugal partnership or of the family
ISSUE: Whether or not the
conjugal property of the spouses can be held answerable for the debt of the
husband
HELD: YES, the conjugal property
of the spouses can be held answerable for the debt of the husband. CA’s
decision reversed and set aside
RATIO:
Article 161 of the New Civil Code
provides that the conjugal partnership shall be liable for:
(1) All the debts and obligations contracted by the husband for
the benefit of the conjugal partnership, and those contracted by the wife, also
for the same purpose, in the cases where she may legally bind the partnership
His account with petitioner G-Tractors,
Inc. represents rentals for the use of petitioner's tractors which he leased
for the purpose of constructing switchroads and hauling felled trees at the
jobsite of the logging concession at del Gallego, Camarines Sur which is not
his exclusive property but that of his family. There is no doubt then that his
account with the petitioner was brought about in order to enhance the
productivity of said logging business, a commercial enterprise for gain which
he had the right to embark the conjugal partnership.
It is very clear, therefore, that
the obligations were contracted in connection with his legitimate business as a
producer and exporter in mahogany logs and certainly benefited the conjugal
partnership.
The husband is the administrator
of the conjugal partnership and as long as he believes he is doing right to his
family, he should not be made to suffer and answer alone. So that, if he incurs an indebtedness in the
legitimate pursuit of his career or profession or suffers losses in a
legitimate business, the conjugal partnership must equally bear the
indebtedness and the losses, unless he deliberately acted to the prejudice of
his family.
The sale at public auction
belonging to the conjugal partnership of gains of the Narcisos in order to
satisfy the judgment debt of the private respondent Luis R. Narciso was validly
and legally made in accordance with law.
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