November 2007 - Philippine Supreme Court Resolutions
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[G.R. No. 164144 : November 14, 2007] TSAI WEN TUAN V. ART-CHEM INDUSTRIAL CORP., REPRESENTED BY KENNY YAP :
[G.R. No. 164144 : November 14, 2007]
TSAI WEN TUAN V. ART-CHEM INDUSTRIAL CORP., REPRESENTED BY KENNY YAP
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated 14 November 2007:
G.R. No. 164144 (Tsai Wen Tuan v. Art-Chem Industrial Corp., represented by Kenny Yap)
This Petition for Review on Certiorari under Rule 45 prays for the reversal of the December 22, 2003 Decision[1] and June 18, 2004 Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 74090 entitled Art-Chem Industrial Corp. v. Zenaida Tsai and Tsai Wen Tuan. The appellate court affirmed the December 12, 2001 Decision[3] of the Manila Regional Trial (RTC) Court, Branch 49, which held petitioner Tsai Wen Tuan liable for the payment of PhP 901,450 to respondent Art-Chem Industrial corp. (Art-Chem).
In December 1999, Art-Chem sold petrolene products valued at PhP 901,450 to Central Manufacturing, a business entity owned by petitioner's wife, Zenaida M. Tsai. The transactions were covered by sales invoices and job/sale orders. Zenaida issued checks in partial payment of the products, but the checks were dishonored because Zenaida's account was closed. Despite demand by Art-Chem, the spouses failed to pay for the products.[4]
On June 29, 2000, Art-Chem filed a complaint against the spouses for a sum of money with application for preliminary attachment with the RTC. After hearing, an order for a writ of attachment was issued on August 14, 2000. Injection machines were then levied but remained in petitioner's compound.[5]
Only petitioner filed an answer. He argued that he and his wife were business partners in a plastic factory but when their marital relationship turned sour, their business started to fall. The factory was subjected to an insolvency proceeding. They also filed a petition for annulment of their marriage on July 20, 1999. Since said date, petitioner allegedly did not participate in the business anymore; thus, he concluded that it should be Zenaida alone who should be liable for the obligations.
The trial court ruled in favor of Art-Chem. The dispositive portion of its decision reads:
Petitioner reiterates his argument that Zenaida incurred the debts in her personal capacity. He claims that the ruling in Ayala Investment & Development Corp. v. CA[7] does not apply because the debts in said case were contracted by the husband in behalf of the family business. He asserted that there is no proof that the transactions were entered into in behalf of a family business since (1) he was no longer living with his wife in December 1999; and (2) Central Manufacturing, of which Zenaida is the sole proprietress, had already been broken by their separation de facto.
We affirm the appellate court's ruling.
Article 122 of the Family Code provides, "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."
In Ayala Investment & Development Corp., we held that "no actual benefit may be proved. x x x Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership."[8] To overthrow this presumption, there must be evidence that the transaction did not redound to the benefit of the family. Absent such proof, the presumption must prevail. Petitioner was still the legal husband of Zenaida at the time the obligations were incurred; hence, he is liable for her obligations.
WHEREFORE, we DENY the petition, and AFFIRM the December 22, 2003 Decision and June 18, 2004 Resolution in CA-G.R. CV No. 74090. Costs against petitioner.
SO ORDERED.
G.R. No. 164144 (Tsai Wen Tuan v. Art-Chem Industrial Corp., represented by Kenny Yap)
This Petition for Review on Certiorari under Rule 45 prays for the reversal of the December 22, 2003 Decision[1] and June 18, 2004 Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 74090 entitled Art-Chem Industrial Corp. v. Zenaida Tsai and Tsai Wen Tuan. The appellate court affirmed the December 12, 2001 Decision[3] of the Manila Regional Trial (RTC) Court, Branch 49, which held petitioner Tsai Wen Tuan liable for the payment of PhP 901,450 to respondent Art-Chem Industrial corp. (Art-Chem).
In December 1999, Art-Chem sold petrolene products valued at PhP 901,450 to Central Manufacturing, a business entity owned by petitioner's wife, Zenaida M. Tsai. The transactions were covered by sales invoices and job/sale orders. Zenaida issued checks in partial payment of the products, but the checks were dishonored because Zenaida's account was closed. Despite demand by Art-Chem, the spouses failed to pay for the products.[4]
On June 29, 2000, Art-Chem filed a complaint against the spouses for a sum of money with application for preliminary attachment with the RTC. After hearing, an order for a writ of attachment was issued on August 14, 2000. Injection machines were then levied but remained in petitioner's compound.[5]
Only petitioner filed an answer. He argued that he and his wife were business partners in a plastic factory but when their marital relationship turned sour, their business started to fall. The factory was subjected to an insolvency proceeding. They also filed a petition for annulment of their marriage on July 20, 1999. Since said date, petitioner allegedly did not participate in the business anymore; thus, he concluded that it should be Zenaida alone who should be liable for the obligations.
The trial court ruled in favor of Art-Chem. The dispositive portion of its decision reads:
All told, the Court arrives in an inevitable finding that the defendant partnership, the Central Manufacturing owned by Zenaida Tsai and Tsai Wen Tuan as business partners, is liable to the plaintiff, hence, the Court hereby orders said defendants, to pay the plaintiff, the sum of P901,450.00. The counterclaim is dismissed for lack of sufficient proof to justify the same.[6]On appeal to the CA, petitioner argued that Zenaida did business in her personal capacity and Central Manufacturing is not a business partnership as contemplated by the Civil Code provisions on partnership. The appellate court held that there was no partnership between the spouses; however, the obligations can be charged to the conjugal partnership, applying the presumption of the law regarding debts that redounded to the benefit of the family. The appellate court affirmed the trial court, dismissed the appeal, and denied petitioner's motion for reconsideration. Hence, we have this petition.
Petitioner reiterates his argument that Zenaida incurred the debts in her personal capacity. He claims that the ruling in Ayala Investment & Development Corp. v. CA[7] does not apply because the debts in said case were contracted by the husband in behalf of the family business. He asserted that there is no proof that the transactions were entered into in behalf of a family business since (1) he was no longer living with his wife in December 1999; and (2) Central Manufacturing, of which Zenaida is the sole proprietress, had already been broken by their separation de facto.
We affirm the appellate court's ruling.
Article 122 of the Family Code provides, "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."
In Ayala Investment & Development Corp., we held that "no actual benefit may be proved. x x x Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership."[8] To overthrow this presumption, there must be evidence that the transaction did not redound to the benefit of the family. Absent such proof, the presumption must prevail. Petitioner was still the legal husband of Zenaida at the time the obligations were incurred; hence, he is liable for her obligations.
WHEREFORE, we DENY the petition, and AFFIRM the December 22, 2003 Decision and June 18, 2004 Resolution in CA-G.R. CV No. 74090. Costs against petitioner.
SO ORDERED.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
Endnotes:
[1] Rollo, pp. 21-27. Penned by Hon. Bienvenido L. Reyes and concurred in by Associate Justices Conrado M. Vasquez, Jr., ans Arsenio J. Magpale.
[2] Id. at 30-31.
[3] Id. at 65-68.
[4] Supra note 1, at 21.
[5] Rollo, p.22.
[6] Supra note 3, at 68.
[7] G.R. No. 118305, February 12, 1998, 286 SCRA 272.
[8] Id. at 282.
