G-Tractors vs CA (Martin)
Facts
In February 26, 1973, Respondent Luis R. Narciso entered into a Contract of Hire
of Heavy Equipment with petitioner 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. However, Luis R. Narciso defaulted in his rental payments. Hence, on
August 15, 1974, G-Tractors instituted an action against him to collect the total
amount of P155,410.25 with legal interest thereon, representing unpaid rentals
for the leased tractors liquidated damages, and for attorney's fees, and the costs
of suit, before the then CFI of Rizal, Quezon City. Luis R. Narciso was declared
in default. However, G-Tractors accepted his offer for a compromise agreement.
Luis Narciso failed to comply with the compromise agreement so G-Tractors
decided to file a motion for execution and it was granted by the lower court. The
Sheriff then made a levy on "all rights, interest, title, participation which the
defendant Luis R. Narciso" may have over a parcel of residential land covered by
TCT No. 120923 of the Registry of Deeds of Quezon City which parcel of land is
allegedly the conjugal property of the spouses Luis R. Narciso and Josefina
Salak Narciso. The parcel of land was bought by the petitioners.
Josefina Salak Narciso and her husband Luis R. Narciso filed a complaint in the
same Court of First Instance of Quezon City for "declaration of nullity of levy on
execution and auction sale of plaintiff's conjugal property with damages and
injunction," the complaint alleged that whatever transpired in Civil Case regarding
his payment to the petitioner be binding only on the husband Luis R. Narciso and
could not affect or bind the plaintiff-wife Josefina Salak Narciso who was not a
party to that case and 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 and that the conjugal property of the plaintiffs-spouses could not be made
liable for the satisfaction of the judgment in said case considering that the subject
matter of said case was never used for the benefit of the conjugal partnership or
of the family; and that the levy of the wife's share in the conjugal property to
satisfy the money judgment against her husband is null and void.
ISSUE
Whether or not the judgment debt of private respondent Luis R. Narciso is a
conjugal debt for which the conjugal partnership property can be held
answerable.
Held
YES.
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.
The contention that the conjugal partnership is not liable because the obligation
contracted by the husband is personal in nature is not applicable in this case.
The record shows that Luis R. Narciso is a producer and exporter of Philippine
mahogany logs and that the bulldozers leased to him was used for the
construction of switchroads for logging. 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.
