Gelano v CA

Topic: Charges upon ACP

Facts :
 Insular Sawmill, Inc. (Corporation) is a corporation organized on September 17, 1945 with a corporate life of
50 years or up to September 17, 1995, with the primary purpose of carrying on a general lumber and sawmill
business. To carry on this business, private respondent leased the paraphernal property of Guillermina Gelano
(wife) for P1.2K/month.
 Between November 19, 1947-December 26, 1950, Carlos Gelano (husband) obtained cash advances of
P25,950 on account of rentals. The Corporation and Carlos Gelano made an agreement that the rental fee
may be deducted on the cash advance balance of Carlos Gelano to the Corporation until said advances are
fully paid. However, Carlos Gelano was able to pay only P5,950 leaving an unpaid balance of P20,000.
 Petitioner wife Guillermina Gelano refused to pay the cash advance on the ground that the said amount was
for the personal account of her husband asked for by, and given to him, without her knowledge and consent
and did not benefit the family.
 On May 4, 1948 to September 11, 1949, spouses Gelanos made credit purchases of lumber materials for
repair and improvement of their residence. Their purchases of lumber to the Corporation amounted to
P1,120.46.
 On November 9, 1949, spouses Gelano made partial payment in the amount of P91 and an additional P83
discount cash discount leaving the amount due to the Corporation to a total of P946.46 which the spouses
failed to pay.
 On July 14, 1952, Joseph Tan Yoc Su (from the Corporation) accommodated and help the spouses to renew
previous loans to China BanKing Corporation by executed a joint and several promissory note with Carlos
Gelano in favor of China Banking Corporation bank in the amount of P8,000.00 payable in 60 days.
 Carlos Geliano failed to pay the promisory note upon maturity, thus, the bank collected P9,106 (interest
included) to the Corporation. Carlos only paid P5,000 to the corporation leaving P4,106 unsettled. Guillermina
Gelano refused to pay on the ground that she had no knowledge about the accommodation made by the
Corporation in favor of her husband.
 On May 29, 1959, the Corporation thru Atty. German Lee, filed a complaint for collection against the spouses
before the CFI.
 In the meantime, the Corporation amended its Articles of Incorporation to shorten its term of existence up to
December 31, 1960 only.
 On November 20, 1964 and almost 4 years after the dissolution of the Corporation, the CFI rendered a decision
in favor of the Corporation and holding Carlos Gelano liable.
 Both parties appealed to the CA, the Corporation insisted that both Carlos Gelano and Guillermina Gelano
should be held liable for the substantial portion of the claim. CA modified the decision and held that conjugal
partnership of the spouses is jointly and severally liable for the obligations adjudged against Carlos Gelano.
 Spouses Gelano upon knowledge that the Corporation was dissolved way back on December 31, 1960 filed
a motion to dismiss and/or reconsideration, however, CA deny the aforesaid motion.
 Hence the petition for review on this court.

Issue: Whether Guillermina Gelano as wife of Carlos Gelano should be held liable for the claim of the Corporation.

Ruling/Ratio: Yes. It is sufficient to say that with the findings of the CA that the obligation contracted by Carlos Gelano
redounded to the benefit of the family, the inevitable conclusion is that the conjugal property is liable for his debt,
pursuant to paragraph 1, Art. 1408, Civil Code of 1889 which provision incidentally can still be found in paragraph 1,
Art. 161 of the New Civil Code.

Only the conjugal partnership is liable, not joint and several as erroneously described by the CA, the conjugal
partnership being only a single entity.