G-Tractors, Inc. v. CA and Narciso (1985)

G-Tractors, Inc. v. CA and Narciso

GR No L-57402

February 28, 1985

Ponente: Justice Cuevas

FACTS:

Luis Narciso (private respondent) is a businessman engaged as a producer and exporter of Philippine mahogany logs and operates a logging concession in Camarines Sur and is legally married to Josefina Salak. For the purposes of constructing switch roads and hauling felled trees at the jobsite of Narciso’s logging concession, he entered into a contract with G-Tractors, a domestic corporation engaged in leasing heavy equipment such as tractors and bulldozers. Such contract provided for the payment of the rental use of said tractors. When Narcisco defaulted in his rentals, G-Tractors filed an action against him before the Court of First Instance (Rizal) to collect the total amount of P155,410.25 with legal interest, representing unpaid rentals for the leased tractors. Narciso was declared in default, however, G-Tractors accepted his offer for a compromise agreement which stipulated for payment on an installment plan. Narciso, again in default of the payments, asked for a suspension of the issuance of a writ of execution which was denied by the court. The City Sheriff then held the sale of all personal properties under the levy. The spouses Narciso filed a complaint for declaration of nullity of levy on execution and action sale of the plaintiff’s conjugal property” and alleged that whatever transpired could only be binding on her husband and that the said conjugal property could not be made liable for the satisfaction of the judgment considering that the subject matter of the case was never used for the benefit of the conjugal partnership. The trial court ruled that this contention does not hold. The Court of Appeals granted the appeal of herein respondents and declared the sheriff’s certificate of sale null and void.

ISSUE:

- Whether or not the judgment debt of private respondent Narciso is a conjugal debt for which the conjugal partnership property can be held answerable.

HOLDING/RATIONALE:

- YES. The conjugal partnership of gains must answer for the same.  

Article 161 of the New Civil Code provides that the conjugal partnership shall be liable for all debts and obligations contracted by the husband for the benefit of the conjugal partnership.

- There is no question that Narciso is engaged in business and holds office right in the conjugal dwelling where he and his family reside. There is also no doubt that his account with herein petitioner was brought about in order to enhance the productivity of his logging business, a commercial enterprise for gain which he had the right to embark the conjugal partnership.

- The Supreme Court affirms the trial court’s finding that Narciso’s legitimate business as producer and exporter certainly benefitted the conjugal partnership.

- As long as he believes he is doing right to his family, he should not be made to suffer and answer alone.

- If the husband 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.

JUDGMENT:

- Decision of then CA is hereby REVERSED and SET ASIDE.