BA Finance Corp vs CA

BA Finance Corp vs. CA

GR 61464, May 28 1988

FACTS:

Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as evidenced by a promissory note
he signed in his own behalf and as a representative of A&L Industries. Augusto presented an alleged special power
of attorney executed by his wife, Lily Yulo, who managed the business and under whose name the said business was
registered, purportedly authorized the husband to procure the loan and sign the promissory note. 2months prior
the procurement of the loan, Augusto left Lily and their children which in turn abandoned their conjugal home.
When the obligation became due and demandable, Augusto failed to pay the same.

The petitioner prayed for the issuance of a writ of attachment alleging that said spouses were guilty of fraud
consisting of the execution of Deed of Assignment assigning the rights, titles and interests over a construction
contract executed by and between the spouses and A. Soriano Corporation. The writ hereby prayed for was issued
by the trial court and not contented with the order, petitioner filed a motion for the examination of attachment
debtor alleging that the properties attached by the sheriff were not sufficient to secure the satisfaction of any
judgment which was likewise granted by the court.

ISSUE: WON A&L Industries can be held liable for the obligations contracted by the husband?

HELD:

No. Under Art. 121 of the Family Code it states that the conjugal partnership shall be liable for all debts and
obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal
partnership of gains, or by both spouses or by one of them with the consent of the other.

A&L Industries is a single proprietorship, whose registered owner is Lily Yulo. The said proprietorship was established
during the marriage and assets were also acquired during the same. Hence, it is presumed that the property forms
part of the conjugal partnership of the spouses and be held liable for the obligations contracted by the husband.
However, for the property to be liable, the obligation contracted by the husband must have redounded to the benefit
of the conjugal partnership. The obligation was contracted by Augusto for his own benefit because at the time he
incurred such obligation, he had already abandoned his family and left their conjugal home. He likewise made it
appear that he was duly authorized by his wife in behalf of the company to procure such loan from the petitioner.
Clearly, there must be the requisite showing that some advantage accrued to the welfare of the spouses.
Thus, the Court ruled that petitioner cannot enforce the obligation contracted by Augusto against his conjugal
properties with Lily. Furthermore, the writ of attachment cannot be issued against the said properties and that the
petitioner is ordered to pay Lily actual damages amouting to P660,000.00.