Facts:

This case involves BA Finance Corporation as the petitioner and Augusto Yulo and Lily Yulo, doing business as A & L Industries, as respondents. The events leading to this case began on July 1, 1975, when Augusto Yulo secured a loan of P591,003.59 from BA Finance Corporation, evidenced by a promissory note he signed both personally and as a representative of A & L Industries. The loan was purportedly authorized by a special power of attorney from his wife, Lily Yulo, who managed A & L Industries. However, it was revealed that Augusto had abandoned Lily and their children two months prior to the loan agreement. When the loan became due, Augusto failed to repay it, prompting BA Finance Corporation to file an amended complaint on October 7, 1975, against both spouses, alleging fraud in the loan transaction. The petitioner claimed that the Yulos had induced them into the contract by executing a Deed of Assignment concerning a construction contract with A. Soriano Corpo...

Facts:

1. Loan Agreement and Promissory Note
On July 1, 1975, Augusto Yulo secured a loan from BA Finance Corporation in the amount of P591,003.59. He signed a promissory note on behalf of himself and A & L Industries, presenting a Special Power of Attorney (SPA) allegedly executed by his wife, Lily Yulo, who managed A & L Industries. However, Augusto had abandoned his family two months prior to the loan, and Lily Yulo later claimed her signature on the SPA was forged.

2. Default and Filing of Complaint
When the loan became due, Augusto Yulo failed to pay. BA Finance Corporation filed an amended complaint on October 7, 1975, against both Augusto and Lily Yulo, alleging fraud. The petitioner claimed that the spouses induced them to enter into a contract by executing a Deed of Assignment for a construction contract with A. Soriano Corporation, but they misappropriated the proceeds instead of remitting them to BA Finance.

3. Writ of Attachment
The trial court granted BA Finance's request for a writ of attachment, allowing the petitioner to attach the properties of A & L Industries. BA Finance also filed a motion for the examination of the attachment debtor, claiming the attached properties were insufficient to secure the judgment.

4. Lily Yulo’s Defense
Lily Yulo filed an answer with a counterclaim, asserting that Augusto had abandoned her and their children before the loan was contracted. She denied authorizing Augusto to transact on behalf of A & L Industries, claiming her signature on the SPA was forged. She also argued that the illegal attachment of her properties caused the closure of A & L Industries.

5. Trial Court Decision
The trial court dismissed BA Finance's complaint against Lily Yulo and A & L Industries, ordering BA Finance to pay Lily Yulo P660,000 in actual damages, P500,000 in unrealized profits, P300,000 in exemplary damages, P30,000 in attorney’s fees, and costs.

6. Court of Appeals Decision
The Court of Appeals affirmed the trial court’s decision but reduced the exemplary damages to P150,000 and attorney’s fees to P20,000. The appellate court found that Lily Yulo’s signature on the SPA was forged and that BA Finance acted in bad faith in securing the writ of attachment.

Issue:

1. Forgery of the Special Power of Attorney
   Whether the signature of Lily Yulo on the SPA was forged, rendering the promissory note invalid as to her and A & L Industries.

2. Conjugal Partnership Liability
   Whether the assets of A & L Industries, a single proprietorship registered under Lily Yulo, could be held liable for the obligation contracted by Augusto Yulo, despite being part of the conjugal partnership.

3. Award of Damages
   Whether the trial and appellate courts erred in awarding actual, exemplary damages, and attorney’s fees to Lily Yulo, and whether the attached properties should be returned instead of awarding damages.

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Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Conclusion:

The Supreme Court set aside the Court of Appeals’ decision in part, affirming the award of P660,000 in actual damages to Lily Yulo but disallowing the awards for unrealized profits, exemplary damages, and attorney’s fees. The remaining attached properties were ordered to be released to BA Finance.