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:

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.