G-Tractors, Inc. v.

Court of Appeals
FACTS: Luis R. Narciso is a businessman who is married to Josefina Narciso.
He is engaged in business as a producer and exporter of mahogany logs and
operates a logging concession at del Gallego, Camarines Sur. G-Tractors, Inc.,
on the other hand, is a domestic corporation that leases heavy equipments
such as tractors, bulldozers, and the like.
Luis entered into a Contract of Hire of heavy equipment with G-Tractors for
the construction of switch roads and hauling felled trees in his logging
concession. The contract provided for payment of rental for the use of said
tractors which Narciso failed to pay. Petitioners instituted an action urging
Luis to pay for the unpaid rentals. G-Tractors accepted his offer for a
compromise agreement stating that he would pay it an installment basis. GTractors filed a motion for execution since Luis failed to comply. Luis asked
for suspension of the motion stating that he still has a pending loan with a
bank, but the request for suspension was denied. Subsequently, levy was
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 all the properties listed in the levy. Luis then offered
to redeem such properties for the same amount in which G-Tractors accepted
and 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 G-Tractors as the highest bidder.
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.
G-Tractors moved to have a transfer of the certificate, which Louis opposed
their motion on account of his complaint to nullify the said action of the land.
RTC granted G-Tractors petition, Luis moved to reconsider. However, judge
dismissed his motion. A motion for a preliminary injunction was then filed by
Luis, which was also dismissed.

On Oct.2, 1976, Narciso spouses filed a petition for certiorari with preliminary
injunction before the C.A.
C.A. reversed RTC decision
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. CAs decision reversed and set aside
RATIO: Art. 161 of the NCC provides that conjugal partnership is liable for all
debts and obligations contracted by the husband for the benefit of the
conjugal partnership "do not require that actual profit or benefit must accrue
to the conjugal partnership from the husband's transaction", but it suffices
that the transaction should be one that normally would produce such benefit
for the partnership.
The obligations were contracted in connection with his legitimate business as
a producer and exporter in mahogany logs and certainly benefited the
conjugal partnership thus cant be deemed his exclusive and private debts.
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. If he incurs debts in the pursuit of his career or profession
or suffers losses in a business, the conjugal partnership must equally bear
the indebtedness and the losses, unless he acted to the prejudice of his
family.