G.R. No. L-57402. February 28, 1985.
G-TRACTORS, INC., petitioner, vs. HONORABLE COURT OF APPEALS and LUIS R. NARCISO AND JOSEFINA SALAK NARCISO, respondents.

FACTS

Petitioner G-Tractors, Inc. filed a collection suit against private respondent Luis R. Narciso for unpaid rentals of leased heavy equipment. The parties entered into a compromise agreement, which was approved by the court as a judgment. Upon Narciso’s failure to comply, G-Tractors obtained a writ of execution. The sheriff levied on and sold at auction a parcel of land covered by TCT No. 120923, registered in the name of Luis R. Narciso but alleged to be conjugal property of the spouses Narciso. G-Tractors was the highest bidder.
Subsequently, the spouses Narciso filed an action to declare the levy and auction sale null and void. Josefina Salak Narciso, the wife, argued that she was not a party to the original collection case, that the obligation was solely her husband’s and not for the benefit of the conjugal partnership, and that her share in the conjugal property could not be held liable. The Court of Appeals ruled in favor of the spouses, declaring the levy and sale null and void. G-Tractors elevated the case to the Supreme Court via a petition for review.

ISSUE

Whether the conjugal property can be levied upon and sold at public auction to satisfy the money judgment against the husband arising from an obligation incurred by him alone, which is not shown to have redounded to the benefit of the conjugal partnership.

RULING

The Supreme Court reversed the Court of Appeals and upheld the validity of the levy and sale. The Court held that under Article 161 of the Civil Code, the conjugal partnership is liable for debts and obligations contracted by the husband for the benefit of the conjugal partnership. However, the law also presumes that obligations contracted by the husband accrue to the benefit of the conjugal partnership. This presumption is juris tantum and can be rebutted by clear and convincing evidence.
In this case, the wife, Josefina Salak Narciso, failed to overcome this legal presumption. She did not present sufficient evidence to prove that the obligation for unpaid equipment rentals, contracted by her husband in the course of his logging business, was not incurred for the benefit of the conjugal partnership. The mere allegation that the debt was exclusively her husband’s is insufficient. Consequently, the conjugal property is answerable for the judgment debt. Furthermore, the non-inclusion of the wife as a party in the original collection case is not a fatal defect. A judgment against the husband, as administrator of the conjugal partnership, can be enforced against conjugal assets for a partnership obligation without the wife being impleaded. Therefore, the levy and auction sale of the conjugal property to satisfy the judgment were valid.