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CASE Ayala Investments v. CA February 12, 1998 (286 SCRA 272) FACTS Philippine Blooming Mills (hereinafter referred to as PBM) obtained a P50,300,000.00 loan from petitioner Ayala Investment and Development Corporation (hereinafter referred to as AIDC). As added security for the credit line extended to PBM, respondent Alfredo Ching, Executive Vice President of PBM, executed security agreements on December 10, 1980 and on March 20, 1981 making himself jointly and severally answerable with PBM's indebtedness to AIDC. (In short, Ching signed as a SURETY.) PBM failed to pay the loan. Thus, on July 30, 1981, AIDC filed a case for sum of money against PBM and respondent-husband Alfredo Ching. After trial, the court rendered judgment ordering PBM and respondent-husband Alfredo Ching to jointly and severally pay AIDC the principal amount of P50,300,000.00 with interests. The lower court issued a writ of execution pending appeal. Upon AIDC's putting up of an P8,000,000.00 bond, a writ of execution dated May 12, 1982 was issued upon respondents-spouses of a notice of sheriff sale dated May 20, 1982 on three (3) of their conjugal properties. Respondent spouses filed injunction against petitioners on the ground that subject loan did not redound to the benefit of the said conjugal partnership. CA issued a TRO enjoining lower court from enforcing its order paving way for the scheduled auction sale of respondent spouses conjugal properties. A certificate of sale was issued to AIDC, being the only bidder and was registered on July 1982. ISSUE Under Article 161 of the Civil Code (NOW ARTICLE 121 of the FAMILY CODE), what debts and obligations contracted by the husband alone are considered "for the benefit of the conjugal partnership" which are chargeable against the conjugal partnership? Is a surety agreement or an accommodation contract entered into by the husband in favor of his employer within the contemplation of the said provision? RULING/DOCTRINE The obligations of PBM to AIDC cannot be charged against the conjugal properties of the Spouses Ching. RATIONALE: Art. 161. (now Article 121 of the Family Code) The conjugal partnership shall be liable for: (1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership. To elaborate, the Court stated: A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his own profession, that contract falls within the term . . . . obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. 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. B) On the other hand, if the money or services are given to another person or entity, and the husband acted only as a surety or guarantor, that contract cannot, by itself, alone be categorized as falling within the context of "obligations for the benefit of the conjugal partnership." The contract of loan or services is clearly for the benefit of the principal debtor and not for the surety or his family. No presumption can be inferred that, when a husband enters into a contract of surety or accommodation agreement, it is "for the benefit of the conjugal partnership." Proof must be presented to establish benefit redounding to the conjugal partnership.
On September 1978, Philippine Blooming Mills Company (PBMCI) obtained a 9-million peso loan from Allied Banking Corporation (ABC). Alfredo Ching together with two other persons executed a continuing guarantee with ABC binding themselves jointly and severally liable for the PBMCI obligations. The extent of their guarantee is up to 38 million pesos. PBMCI failed to settle the loans which amounted to P12,612,972.88 (exclusive of interests, penalties and other bank charges.) Together with the writ of preliminary attachment, the sheriff levied (seized) the 100,000 common shares of City Corporation stocks registered solely to Alfredo Ching. Mrs. Ching filed a petition to set aside the levy of the 100,000 common shares. According to her, the shares were purchased out of the conjugal funds. She also argued that the loan of PBMCI did not redound to the benefit of the conjugal partnership (or family).
Whether or not the ABC can charge PBMCIs obligation against the shares of Spouses Ching, which were purchased out of conjugal funds.
No. In this case, the petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the private respondent. RATIONALE: Article 161(1) of the New Civil Code (now Article 121[2 and 3] of the Family Code of the Philippines) provides: Art. 161. The conjugal partnership shall be liable for: (1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership. For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must be a showing that some advantages accrued to the spouses. Certainly, to make a conjugal partnership responsible for a liability that should appertain alone to one of the spouses is to frustrate the objective of the New Civil Code to show the utmost concern for the solidarity and well being of the family as a unit. The husband, therefore, is denied the power to assume unnecessary and unwarranted risks to the financial stability of the conjugal partnership. In this case ABC failed to prove that the conjugal partnership of the petitioners was benefited by the petitioner-husbands act of executing a continuing guaranty and suretyship agreement with the private respondent for and in behalf of PBMCI. The contract of loan was between the private respondent and the PBMCI, solely for the benefit of the latter. No
Furthermore, it is clear that both Michele and Cleodualdo have waived their title to and ownership of the house and lot in Taal St. in favor of petitioners, their minor children. The property should not have been levied and sold at execution sale, for lack of legal basis.
1. Whether or not the obligation of the wife arising from her criminal liability is chargeable to the conjugal partnership 2. Whether or not the husband of the judgment debtor may file an independent action to protect the conjugal property subject to execution.
1. No. The obligation of the wife arising from her criminal liability is NOT chargeable to the conjugal partnership.
RATIONALE: Article 122 of the Family Code explicitly provides that 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. Unlike in the system of absolute community where liabilities incurred by either spouse by reason of a crime or quasi-delict is chargeable to the absolute community of property, in the absence or insufficiency of the exclusive property of the debtor-spouse, the same advantage is not accorded in the system of conjugal partnership of gains. The conjugal partnership of gains has no duty to make advance payments for the liability of the debtorspouse.
RATIONALE: A spouse may file an independent action provided that he is deemed as a stranger or a third-party claimant. A spouse may be considered as a stranger when an obligation that has NOT redounded to the benefit of the conjugal partnership. A spouse is deemed a stranger to the action wherein the writ of execution was issued and is therefore justified in bringing an independent action to vindicate his right of ownership over his exclusive or paraphernal property. Parenthetically, by no stretch of imagination can it be concluded that the civil obligation arising from the crime of slander committed by Erlinda redounded to the benefit of the conjugal partnership.
Pana vs. Heirs of Juanite G.R. No. 164201 December 10, 2012
The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and others of murder before the. Regional Trial Court (RTC) of Surigao City. Efren was acquitted, and Melecia and others were convicted. As a result, the guilty parties were ordered to pay the damages aside from their punishment of
Whether or not the conjugal properties of spouses Efren and Melecia can be levied and executed upon for the satisfaction of Melecias civil liability in the murder case.
Yes, provided that the conditions under Article 121 of the Family Code have been covered. RATIONALE: What is clear is that Efren and Melecia were married when the Civil Code was still the operative law on marriages. The presumption, absent any