G-Tractors, Inc. - v - CA

135 SCRA 192

Facts:

1.    Luis R. Narciso is engaged in business as a producer and exporter of Philippine mahogany logs and operates a logging concession at 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.

2.    Luis R. Narciso entered into a Contract of Hire of Heavy Equipment with petitioner G-Tractors. The contract provided for payment of rental for the use of said tractors. Luis R. Narciso defaulted in his rental payments. G-Tractors instituted an action against him in CFI Quezon City. Luis R. Narciso was declared in default. G-Tractors and Narciso entered compromise agreement. The compromise agreement stipulated for payment by Luis R. Narciso of the total claim of G-Tractors on an installment plan. Luis R. Narciso failed to comply
3.    G-Tractors filed a motion for execution by the City Sheriff of Quezon City on certain personal properties of private respondents including allegedly the conjugal property of the spouses Luis R. Narciso and Josefina Salak Narciso.

4.    Respondent’s wife filed "Declaration of nullity of levy on execution and auction sale of plaintiff's conjugal property with damages and injunction," alleging that

•   it could be binding only on the husband not her who was not a party to that case; that the nature of the Sheriff's sale clearly stated that only the property of the husband may be sold to satisfy the money judgment against him; the subject matter of said case was never used for the benefit of the conjugal partnership or of the family

5.    2 orders were issued by the lower court, one denying the motion for reconsideration and the other denying the motion for preliminary injunction. A motion to reconsider the order denying the preliminary injunction was likewise denied. Hence, the spouses filed before the then Court of Appeals, a petition for certiorari with Preliminary Injunction.

6.    Court of Appeals rendered null the assailed Decision on the basis of :

1.    a levy on a residential land does not include the residential house or any improvement erected and existing thereon;

2.    the judgment debt of private respondent was not the conjugal debt

3.    there was laches and delay in the filing

4.    the writs applied for by private respondents-spouses in the petition itself not being the proper remedy

Issue: WON the judgment debt of private respondent Luis R. Narciso is a conjugal debt for which the conjugal partnership property can be held answerable.

Held/Ratio: Decision  of the CA is reversed.

            Article 161 (1) of the New Civil Code provides that the conjugal partnership shall be liable for: "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."

            There is no question that private respondent Luis R. Narciso is engage in business 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.

            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.

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