Published — June 1, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Read also: WHAT ARE THE EXCLUSIVE PROPERTIES OF SPOUSES IN A CONJUGAL PARTNERSHIP?
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In order to bind the conjugal partnership and its properties, the law provides that the debts and obligations contracted by either spouse must be for the benefit of the conjugal partnership.
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Further, in order to bind the conjugal partnership, the other spouse must give his/ her consent to the other’s business venture.
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Debts incurred (before or during the marriage) except insofar as they benefited the family; and fines and pecuniary indemnities shall not be charged to the conjugal partnership.
In the case Johnson & Johnson (Phils.), Inc. vs. CA (G.R. No. 102692, September 23, 1996) the wife, owner of an enterprise, and her husband, were sued by the plaintiff corporation for a sum of money. The wife purchased cosmetic products from the plaintiff and incurred liabilities in the amount of P235,880.89. She issued checks in payment of the same, but the check bounced when presented for payment, hence, the suit.
After trial, the court declared the wife solely liable, stating that plaintiff and the husband had no privity of contract and that the husband was not a co-owner of the business enterprise. In addition, said obligations were contracted without the husband’s knowledge or consent, and that the conjugal partnership never derived benefit therefrom.
The trial court decided that the husband should not be held liable for the obligations incurred by his wife without his knowledge or consent. However, when notices of levy on execution were issued, these covered not only the wife’s exclusive or paraphernal properties, but also the real and personal properties of the conjugal partnership of the spouses. This has caused the husband to file a third-party claim, which was denied by the trial court. The case then reached the Supreme Court.
Supreme Court ruled that:
In order to bind the conjugal partnership and its properties, the law provides that the debts and obligations contracted by the husband must be for the benefit of the conjugal partnership and that the husband must consent to his wife’s engaging in business.
And in the above case, the lower Court already found that the defendant husband did not give his consent; neither did the obligation incurred by the defendant wife redound to the benefit of the family. Hence, the conjugal partnership, as well as the defendant husband, cannot be held liable. As originally decreed by the lower Court, only the defendant wife and her paraphernal property can be held liable. Since the power of the court in execution of judgments extends only to properties unquestionably belonging to the judgment debtor alone, the conjugal properties and the capital of the defendant husband cannot be levied upon.
Family Code also provides that:
Art. 122. The payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family.
Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.
However, the payment of personal debts contracted by either spouse before the marriage, that of fines and indemnities imposed upon them, as well as the support of illegitimate children of either spouse, may be enforced against the partnership assets after the responsibilities enumerated in the preceding Article have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the time of the liquidation of the partner covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the time of the liquidation of the partnership, such spouse shall be charged for what has been paid for the purposes above-mentioned.
Thus, the following shall not be charged against the conjugal partnership:
- debts incurred (before or during the marriage) except insofar as they benefited the family; and
- fines and pecuniary indemnities.
However, if the separate property is insufficient, the conjugal partnership property shall be liable, subject to two conditions:
- the obligations of and charges upon the conjugal partnership shall have been covered; and
- there must be reimbursement during liquidation.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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