Article 118 Family Code of the Phiippines
E.O. No. 209 s. 1987
Student # 7
by : Hilda D. Garcia
Article 118.
Property bought on installments paid partly from exclusive funds of either or both spouses and partly from conjugal funds belongs to the buyer or buyers if full ownership was vested before the marriage and to the conjugal partnership if such ownership was vested during the marriage. In either case, any amount advanced by the partnership or by either or both spouses shall be reimbursed by the owner or owners upon liquidation of the partnership. (n)
Illustrative Example:
Property acquired on installments. X bought a house and lot on installment basis from Y for P150,000.00. He paid P120,000 but there is a stipulation that upon the execution of the contract, ownership shall be vested upon X. A few months later, X married Z. During the marriage, the amount of P20,000.00 was paid out of conjugal funds. Who owns the house and lot? X is the owner, because ownership was vested in him before the marriage. The fact that the amount was paid on installment basis does not matter. What matters is the stipulation that the ownership shall be vested before the marriage. Under Article 1478 of the Civil Code, the parties may stipulate that ownership of the thing shall not pass to the purchaser until he has fully paid the price. Conversely, they can agree that even if the price has not yet been fully paid, ownership shall be acquired by the vendee.
Article 1498 of the Civil Code provides that when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be inferred.
If the ownership in the case above-cited is vested during the marriage, the house and lot are owned by the conjugal partnership. The law, however, requires that in either case, X must reimburse the conjugal partnership for whatever he advanced or paid. In the same vein, in the second case, the conjugal partnership shall reimburse X the amount of P120,000.00 he paid to Y. (See Art. 118, Family Code).
Case Digest:
BA FINANCE CORPORATION,petitioner,vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing business under the name and style of A & L INDUSTRIES),respondents.
G.R. No. L-61464 May 28, 1988
Ponente: Justice Gutierrez Jr.
Facts:
Augusto Yulo secured a loan from the BA Finance (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. She allegedly authorized the husband to procure the loan and sign the promissory note. 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 and non-payment of their debt. Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusto Yulo and she are husband and wife, first, the Augusto had abandoned her and their children five (5) months before the filing of the complaint; second, that they were already separated when the promissory note was executed; third, that her signature in the special power of attorney was forged because she had never authorized Augusto Yulo in any capacity to transact any business for and in behalf of A & L Industries, which is owned by her as a single proprietor, fourth, that she never got a single centavo from the loan; and that as a result of the illegal attachment of her properties, which constituted the assets of the A & L Industries, the latter closed its business and was taken over by the new owner.
Issue:
Whether or not A&L Industries can be held liable for the obligations contracted by her husband.
Ruling:
Yes. 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 beneficial consequences conjugal partnership. The obligation contracted by Augusto was 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. Under Art. 94 (2 & 3) of the Civil code, the absolute community of property shall be liable for:(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community, or by both spouses, or by one spouse with the consent of the other;(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited. Apparently, there was no consent from Lily since it was found out that her signatures were forged. The decision of the Court of Appeals is hereby SET ASIDE and the petitioner is ordered to pay the private respondent Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS (P660,000.00) as actual damages. The remaining properties subject of the attachment are ordered released in favor of the petitioner.