THIRD DIVISION

[G.R. No. 156125. August 25, 2010.]

FRANCISCO MUÑOS, JR., petitioner, vs. ERLINDA

RAMIREZ and ELISEO CARLOS, respondents.

DECISION

BRION, J :p

We resolve the present petition for review on certiorari 1 filed by

petitioner Francisco Muñoz, Jr. (petitioner) to challenge the
decision 2 and the resolution 3 of the Court of Appeals (CA) in CA-G.R.
CV No. 57126. 4 The CA decision set aside the decision 5 of the
Regional Trial Court (RTC), Branch 166, Pasig City, in Civil Case No.
63665. The CA resolution denied the petitioner's subsequent motion
for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly
summarized below.
Subject of the present case is a seventy-seven (77)-square
meter residential house and lot located at 170 A. Bonifacio Street,
Mandaluyong City(subject property), covered by Transfer Certificate
of Title (TCT) No. 7650 of the Registry of Deeds of Mandaluyong City
in the name of the petitioner. 6
The residential lot in the subject property was previously
covered by TCT No. 1427, in the name of Erlinda Ramirez, married to
Eliseo Carlos(respondents). 7
On April 6, 1989, Eliseo, a Bureau of Internal Revenue
employee, mortgaged TCT No. 1427, with Erlinda's consent, to the
Government Service Insurance System (GSIS) to secure a
P136,500.00 housing loan, payable within twenty (20) years, through
monthly salary deductions of P1,687.66. 8 The respondents then
constructed a thirty-six (36)-square meter, two-story residential house
on the lot.
 On July 14, 1993, the title to the subject property was
transferred to the petitioner by virtue of a Deed of Absolute Sale,
dated April 30, 1992, executed by Erlinda, for herself and as
attorney-in-fact of Eliseo, for a stated consideration of
P602,000.00. 9 HCITAS

On September 24, 1993, the respondents filed a complaint with

the RTC for the nullification of the deed of absolute sale, claiming that
there was no sale but only a mortgage transaction, and the documents
transferring the title to the petitioner's name were falsified.
The respondents alleged that in April 1992, the petitioner
granted them a P600,000.00 loan, to be secured by a first mortgage
on TCT No. 1427; the petitioner gave Erlinda a
P200,000.00 10 advance to cancel the GSIS mortgage, and made her
sign a document purporting to be the mortgage contract; the petitioner
promised to give the P402,000.00 balance when Erlinda surrenders
TCT No. 1427 with the GSIS mortgage cancelled, and submits an
affidavit signed by Eliseo stating that he waives all his rights to the
subject property; with the P200,000.00 advance, Erlinda paid GSIS
P176,445.27 11 to cancel the GSIS mortgage on TCT No. 1427; 12 in
May 1992, Erlinda surrendered to the petitioner the clean TCT No.
1427, but returned Eliseo's affidavit, unsigned; since Eliseo's affidavit
was unsigned, the petitioner refused to give the P402,000.00 balance
and to cancel the mortgage, and demanded that Erlinda return the
P200,000.00 advance; since Erlinda could not return the P200,000.00
advance because it had been used to pay the GSIS loan, the
petitioner kept the title; and in 1993, they discovered that TCT No.
7650 had been issued in the petitioner's name, cancelling TCT No.
1427 in their name.
The petitioner countered that there was a valid contract of sale.
He alleged that the respondents sold the subject property to him after
he refused their offer to mortgage the subject property because they
lacked paying capacity and were unwilling to pay the incidental
charges; the sale was with the implied promise to repurchase within
one year, 13 during which period (from May 1, 1992 to April 30, 1993),
the respondents would lease the subject property for a monthly rental
of P500.00; 14 when the respondents failed to repurchase the subject
property within the one-year period despite notice, he caused the
transfer of title in his name on July 14, 1993; 15 when the respondents
failed to pay the monthly rentals despite demand, he filed an
ejectment case 16 against them with the Metropolitan Trial
Court (MeTC), Branch 60, Mandaluyong City, on September 8, 1993,
or sixteen days before the filing of the RTC case for annulment of the
deed of absolute sale.
During the pendency of the RTC case, or on March 29, 1995,
the MeTC decided the ejectment case. It ordered Erlinda and her
family to vacate the subject property, to surrender its possession to
the petitioner, and to pay the overdue rentals. 17
In the RTC, the respondents presented the results of the
scientific examination 18 conducted by the National Bureau of
Investigation of Eliseo's purported signatures in the Special Power of
Attorney 19 dated April 29, 1992 and the Affidavit of waiver of rights
dated April 29, 1992, 20 showing that they were forgeries.
The petitioner, on the other hand, introduced evidence on the
paraphernal nature of the subject property since it was registered in
Erlinda's name; the residential lot was part of a large parcel of land
owned by Pedro Ramirez and Fructuosa Urcla, Erlinda's parents; it
was the subject of Civil Case No. 50141, a complaint for annulment of
sale, before the RTC, Branch 158, Pasig City, filed by the surviving
heirs of Pedro against another heir, Amado Ramirez, Erlinda's brother;
and, as a result of a compromise agreement, Amado agreed to
transfer to the other compulsory heirs of Pedro, including Erlinda, their
rightful shares of the land. 21
THE RTC RULING
In a Decision dated January 23, 1997, the RTC dismissed the
complaint. It found that the subject property was Erlinda's exclusive
paraphernal property that was inherited from her father. It also upheld
the sale to the petitioner, even without Eliseo's consent as the deed of
absolute sale bore the genuine signatures of Erlinda and the petitioner
as vendor and vendee, respectively. It concluded that the NBI finding
that Eliseo's signatures in the special power of attorney and in the
affidavit were forgeries was immaterial because Eliseo's consent to
the sale was not necessary. 22 AHCTEa

The respondents elevated the case to the CA via an ordinary

appeal under Rule 41 of the Revised Rules of Court.
THE CA RULING
The CA decided the appeal on June 25, 2002. Applying the
second paragraph of Article 158 23 of the Civil
Code and Calimlim-Canullas v. Hon. Fortun,24 the CA held that the
subject property, originally Erlinda's exclusive paraphernal property,
became conjugal property when it was used as collateral for a housing
loan that was paid through conjugal funds — Eliseo's monthly salary
deductions; the subject property, therefore, cannot be validly sold or
mortgaged without. Eliseo's consent, pursuant to Article 124 25 of
the Family Code. Thus, the CA declared void the deed of absolute
sale, and set aside the RTC decision.
When the CA denied 26 the subsequent motion for
reconsideration, 27 the petitioner filed the present petition for review
on certiorari under Rule 45 of the Revised Rules of Court.
THE PETITION
The petitioner argues that the CA misapplied the second
paragraph of Article 158 of the Civil
Code and Calimlim-Canullas 28 because the respondents admitted in
the complaint that it was the petitioner who gave the money used to
cancel the GSIS mortgage on TCT No. 1427; Article 120 29 of
the Family Code is the applicable rule, and since the value of the
house is less than the value of the lot, then Erlinda retained ownership
of the subject property. He also argues that the contract between the
parties was a sale, not a mortgage, because (a) Erlinda did not deny
her signature in the document;30 (b) Erlinda agreed to sign a contract
of lease over the subject property; 31 and, (c) Erlinda executed a letter,
dated April 30, 1992, confirming the conversion of the loan application
to a deed of sale. 32
THE CASE FOR THE RESPONDENTS
The respondents submit that it is unnecessary to compare the
respective values of the house and of the lot to determine ownership
of the subject property; it was acquired during their marriage and,
therefore, considered conjugal property. They also submit that the
transaction between the parties was not a sale, but an equitable
mortgage because (a) they remained in possession of the subject
property even after the execution of the deed of absolute sale, (b) they
paid the 1993 real property taxes due on the subject property, and (c)
they received P200,000.00 only of the total stated price of
P602,000.00. ACTIHa

THE ISSUE
The issues in the present case boil down to (1) whether the
subject property is paraphernal or conjugal; and, (2) whether the
contract between the parties was a sale or an equitable mortgage.
OUR RULING
We deny the present Petition but for reasons other than
those advanced by the CA.
 This Court is not a trier of facts. However, if the inference,
drawn by the CA, from the facts is manifestly mistaken, as in the
present case, we can review the evidence to allow us to arrive at the
correct factual conclusions based on the record. 33
First Issue:
Paraphernal or Conjugal?
As a general rule, all property acquired during the marriage,
whether the acquisition appears to have been made, contracted or
registered in the name of one or both spouses, is presumed to be
conjugal unless the contrary is proved. 34
In the present case, clear evidence that Erlinda inherited the
residential lot from her father has sufficiently rebutted this
presumption of conjugal ownership. 35 Pursuant to Articles 92 36 and
109 37 of the Family Code, properties acquired by gratuitous title by
either spouse, during the marriage, shall be excluded from the
community property and be the exclusive property of each
spouse. 38 The residential lot, therefore, is Erlinda's exclusive
paraphernal property.
The CA, however, held that the residential lot became conjugal
when the house was built thereon through conjugal funds, applying
the second paragraph of Article 158 of the Civil
Code and Calimlim-Canullas. 39 Under the second paragraph of
Article 158 of the Civil Code, a land that originally belonged to one
spouse becomes conjugal upon the construction of improvements
thereon at the expense of the partnership. We applied this provision
inCalimlim-Canullas, 40 where we held that when the conjugal house
is constructed on land belonging exclusively to the husband, the
land ipso factobecomes conjugal, but the husband is entitled to
reimbursement of the value of the land at the liquidation of the
conjugal partnership.
The CA misapplied Article 158 of the
Civil Code and Calimlim-Canullas
We cannot subscribe to the CA's misplaced reliance on Article
158 of the Civil Code and Calimlim-Canullas. ISTCHE

As the respondents were married during the effectivity of the

Civil Code, its provisions on conjugal partnership of gains (Articles
142 to 189) should have governed their property relations. However,
with the enactment of the Family Code on August 3, 1989, the Civil
Code provisions on conjugal partnership of gains, including Article
158, have been superseded by those found in the Family
Code (Articles 105 to 133). Article 105 of the Family Codestates:
xxx xxx xxx
The provisions of this Chapter [on the Conjugal
Partnership of Gains] shall also apply to conjugal
partnerships of gains already established between
spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance with
the Civil Code or other laws, as provided in Article 256.
Thus, in determining the nature of the subject property, we refer to the
provisions of the Family Code, and not the Civil Code, except with
respect to rights then already vested.
Article 120 of the Family Code, which supersedes Article 158 of
the Civil Code, provides the solution in determining the ownership of
the improvements that are made on the separate property of the
spouses, at the expense of the partnership or through the acts or
efforts of either or both spouses. Under this provision, when the cost
of the improvement and any resulting increase in value are more than
the value of the property at the time of the improvement, the entire
property of one of the spouses shall belong to the conjugal partnership,
subject to reimbursement of the value of the property of the
owner-spouse at the time of the improvement; otherwise, said
property shall be retained in ownership by the owner-spouse, likewise
subject to reimbursement of the cost of the improvement. 41
In the present case, we find that Eliseo paid a portion only of the
GSIS loan through monthly salary deductions. From April 6, 1989 42 to
April 30, 1992, 43 Eliseo paid about P60,755.76, 44 not the entire
amount of the GSIS housing loan plus interest, since the petitioner
advanced the P176,445.27 45paid by Erlinda to cancel the mortgage
in 1992. Considering the P136,500.00 amount of the GSIS housing
loan, it is fairly reasonable to assume that the value of the residential
lot is considerably more than the P60,755.76 amount paid by Eliseo
through monthly salary deductions.
Thus, the subject property remained the exclusive paraphernal
property of Erlinda at the time she contracted with the petitioner; the
written consent of Eliseo to the transaction was not necessary. The
NBI finding that Eliseo's signatures in the special power of attorney
and affidavit were forgeries was immaterial.
Nonetheless, the RTC and the CA apparently failed to consider
the real nature of the contract between the parties.
 Second Issue:
Sale or Equitable Mortgage?
Jurisprudence has defined an equitable mortgage "as one
which although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention
of the parties to charge real property as security for a debt, there being
no impossibility nor anything contrary to law in this intent." 46cISDHE

Article 1602 of the Civil Code enumerates the instances when

a contract, regardless of its nomenclature, may be presumed to be an
equitable mortgage: (a) when the price of a sale with right to
repurchase is unusually inadequate; (b) when the vendor remains
in possession as lessee or otherwise; (c) when upon or after the
expiration of the right to repurchase another instrument extending the
period of redemption or granting a new period is executed; (d) when
the purchaser retains for himself a part of the purchase price;
(e) when the vendor binds himself to pay the taxes on the thing
sold; and, (f) in any other case where it may be fairly inferred that
the real intention of the parties is that the transaction shall
secure the payment of a debt or the performance of any other
obligation. These instances apply to a contract purporting to be an
absolute sale. 47
For the presumption of an equitable mortgage to arise under
Article 1602 of the Civil Code, two (2) requisites must concur: (a) that
the parties entered into a contract denominated as a contract of sale;
and, (b) that their intention was to secure an existing debt by way of a
mortgage. Any of the circumstances laid out in Article 1602 of the
Civil Code, not the concurrence nor an overwhelming number of the
enumerated circumstances, is sufficient to support the conclusion that
a contract of sale is in fact an equitable mortgage. 48 CHEDAc

Contract is an equitable mortgage

In the present case, there are four (4) telling circumstances
pointing to the existence of an equitable mortgage.
First, the respondents remained in possession as lessees of the
subject property; the parties, in fact, executed a one-year contract of
lease, effective May 1, 1992 to April 30, 1993. 49
Second, the petitioner retained part of the "purchase price," the
petitioner gave a P200,000.00 advance to settle the GSIS housing
loan, but refused to give the P402,000.00 balance when Erlinda failed
to submit Eliseo's signed affidavit of waiver of rights.
 Third, respondents paid the real property taxes on July 8, 1993,
despite the alleged sale on April 30, 1992; 50 payment of real property
taxes is a usual burden attaching to ownership and when, as here,
such payment is coupled with continuous possession of the property,
it constitutes evidence of great weight that the person under whose
name the realty taxes were declared has a valid and rightful claim over
the land. 51
Fourth, Erlinda secured the payment of the principal debt owed
to the petitioner with the subject property. The records show that the
petitioner, in fact, sent Erlinda a Statement of Account showing that as
of February 20, 1993, she owed P384,660.00, and the daily interest,
starting February 21, 1993, was P641.10. 52 Thus, the parties clearly
intended an equitable mortgage and not a contract of sale.
That the petitioner advanced the sum of P200,000.00 to Erlinda
is undisputed. This advance, in fact, prompted the latter to transfer the
subject property to the petitioner. Thus, before the respondents can
recover the subject property, they must first return the amount of
P200,000.00 to the petitioner, plus legal interest of 12% per annum,
computed from April 30, 1992.
We cannot sustain the ballooned obligation of P384,660.00,
claimed in the Statement of Account sent by the
petitioner, 53 sans any evidence of how this amount was arrived at.
Additionally, a daily interest of P641.10 or P19,233.00 per month for a
P200,000.00 loan is patently unconscionable. While parties are free to
stipulate on the interest to be imposed on monetary obligations, we
can step in to temper the interest rates if they are unconscionable.54
In Lustan v. CA, 55 where we established the reciprocal
obligations of the parties under an equitable mortgage, we ordered the
reconveyance of the property to the rightful owner therein upon the
payment of the loan within ninety (90) days from the finality of the
decision. 56
WHEREFORE, in light of all the foregoing, we
hereby DENY the present petition. The assailed decision and
resolution of the Court of Appeals in CA-G.R. CV No. 57126
are AFFIRMED with the following MODIFICATIONS: AECcTS

1. The Deed of Absolute Sale dated April 30, 1992 is hereby

declared an equitable mortgage; and
2. The petitioner is obligated to RECONVEY to the respondents
the property covered by Transfer Certificate of Title No. 7650 of the
Register of Deeds of Mandaluyong City, UPON THE PAYMENT OF
 P200,000.00, with 12% legal interest from April 30, 1992, by
respondents within NINETY DAYS FROM THE FINALITY OF THIS
DECISION.
Costs against the petitioner.
SO ORDERED.
(Muñoz, Jr. v. Ramirez, G.R. No. 156125, [August 25, 2010], 643 PHIL
|||

267-282)

SECOND DIVISION

[G.R. No. 118305. February 12, 1998.]

AYALA INVESTMENT & DEVELOPMENT CORP. and

ABELARDO
MAGSAJO, petitioners, vs. COURT OF APPEALS and
SPOUSES ALFREDO & ENCARNACION
CHING, respondents.

Acosta and Corvera Law Offices for petitioner.

Quianson Makalintal Baro Torres and Ibarra for private
respondent.

SYLLABUS

1. CIVIL LAW; FAMILY CODE; CONJUGAL PARTNERSHIP

PROPERTIES; WHEN MAY BE LIABLE FOR CONTRACTED
OBLIGATIONS. — This court does not agree that is a difference
between the terms "redounded to the benefit of" or "benefited from" on
the one hand; and "for the benefit of" on the other. They mean one and
the same thing. Article 161 (1) of the Civil Code and Article 121 (2) of the
Family Code are similarly worded, i.e., both use the term "for the
benefit of". On the other hand, Article 122 of the Family Code provides
that "The payment of personal debts 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." As can be
seen, the terms are used interchangeably. From jurisprudential
rulings of this Court, the following conclusions can be derived: (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 ofthe 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. In all our decisions
involving accommodation contracts of the husband, we underscored the
requirement that: "there must be the requisite showing . . . of some
advantage which clearly accrued to the welfare of the spouses" or
"benefits to his family" or "that such obligations are productive of some
benefit to the family."
2. ID.; ID.; ID.; RATIONALE FOR THE RESTRICTIONS ON
LIABILITY. — The provisions of the Family Code highlight the underlying
concern of the law for the conservation of the conjugal partnership; for
the husband's duty to protect and safeguard, if not augment, not to
dissipate it. This is the underlying reason why the Family Code clarifies
that the obligations entered into by one of the spouses must be those that
redounded to the benefit of the family and that the measure of the
partnership's liability is to "the extent that the family is benefited." (Article
121, Nos. 2 & 3, Family Code.) These are all in keeping with the spirit and
intent of the other provisions of the Civil Code which prohibits any of the
spouses to donate or convey gratuitously any part of the conjugal
property. (Article 174, Civil Code.)
3. ID.; ID.; CHARGES UPON AND OBLIGATIONS OF THE
CONJUGAL PARTNERSHIP; SIGNING AS A SURETY, WHEN NOT AN
EXERCISE OF AN INDUSTRY OR PROFESSION; CASE AT BAR. —
The respondent court correctly observed that: "Signing as a surety is
certainly not an exercise of an industry or profession, hence the cited
cases of Cobb-Perez vs. Lantin; Abella de Diaz vs. Erlanger & Galinger;
G-Tractors, Inc. vs. CA do not apply in the instant case. Signing as a
surety is not embarking in a business," We are likewise of the view that
no matter how often an executive acted or was persuaded to act, as a
surety for his own employer, this should not be taken to mean that he had
thereby embarked in the business of suretyship or guaranty. This is not to
say, however, that we are unaware that executives are often asked to
stand as surety for their company's loan obligations. This is especially
true if the corporate officials have sufficient property of their own;
otherwise, their spouses' signatures are required in order to bind the
conjugal partnerships. The fact that on several occasions the lending
institutions did not require the signature of the wife and the husband
signed alone does not mean that being a surety became part ofhis
profession. Neither could he be presumed to have acted for the conjugal
partnership. Article 121, paragraph 3, of the Family Code is emphatic
that 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 to the extent that they redounded to the benefit of the
family. Here, the property in dispute also involves the family home. The
loan is a corporate loan not a personal one. Signing as a surety is
certainly not an exercise of an industry or profession nor
an act of administration for the benefit of the family.

DECISION

MARTINEZ, J : p

Under Article 161 of the Civil 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?
These are the issues which we will resolve in this petition for
review.
The petitioner assails the decision dated April 14, 1994 of the
respondent Court of Appeals in "Spouses Alfredo and Encarnacion
Ching vs. AyalaInvestment and Development Corporation, et. al.,"
docketed as CA-G.R. CV No. 29632, 1 upholding the decision of the
Regional Trial Court of Pasig, Branch 168, which ruled that the conjugal
partnership of gains of respondents-spouses Alfredo and Encarnacion
Ching is not liable for the payment of the debts secured by
respondent-husband Alfredo Ching.
A chronology of the essential antecedent facts is necessary for a
clear understanding of the case at bar. cdtai

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 ofPBM, executed security agreements on
December 10, 1980 and on March 20, 1981 making himself jointly and
severally answerable with PBM's indebtedness to AIDC.
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 with the then Court of First Instance of Rizal (Pasig), Branch VIII,
entitled "Ayala Investment and Development Corporation vs. Philippine
Blooming Mills and Alfredo Ching," docketed as Civil Case No. 42228.
After trial, the court rendered judgment ordering PBM and
respondent-husband Alfredo Ching to jointly and severally pay AIDC the
principal amount ofP50,300,000.00 with interests.
Pending appeal of the judgment in Civil Case No. 42228, upon
motion of AIDC, 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. Thereafter, petitioner
Abelardo Magsajo, Sr., Deputy Sheriff of Rizal and appointed sheriff in
Civil Case No. 42228, caused the issuance and service upon
respondents-spouses of a notice of sheriff sale dated May 20, 1982 on
three (3) of their conjugal properties. Petitioner Magsajo then scheduled
the auction sale of the properties levied.
On June 9, 1982, private respondents filed a case of injunction
against petitioners with the then Court of First Instance of Rizal (Pasig),
Branch XIII, to enjoin the auction sale alleging that petitioners cannot
enforce the judgment against the conjugal partnership levied on the
ground that, among others, the subject loan did not redound to the
benefit of the said conjugal partnership. 2 Upon application of private
respondents, the lower court issued a temporary restraining order to
prevent petitioner Magsajo from proceeding with the enforcement of the
writ of execution and with the sale of the said properties at public auction.
AIDC filed a petition for certiorari before
the Court of Appeals, 3 questioning the order of the lower court enjoining
the sale. Respondent Court ofAppeals issued a Temporary Restraining
Order on June 25, 1982, enjoining the lower court 4 from enforcing its
Order of June 14, 1982, thus paving the way for the scheduled auction
sale of respondents-spouses conjugal properties.
On June 25, 1982, the auction sale took place. AIDC being the only
bidder, was issued a Certificate of Sale by petitioner Magsajo, which was
registered on July 2, 1982. Upon expiration of the redemption period,
petitioner sheriff issued the final deed of sale on August 4, 1982 which
was registered on August 9, 1983.
In the meantime, the respondent court, on August 4, 1982,
decided CA-G.R. SP No. 14404, in this manner:
"WHEREFORE, the petition for certiorari in this case is
granted and the challenged order of the respondent Judge
dated June 14, 1982 in Civil Case No. 46309 is hereby set aside
and nullified. The same petition insofar as it seeks to enjoin the
respondent Judge from proceeding with Civil Case No. 46309 is,
however, denied. No pronouncement is here made as to
costs. . . ." 5
On September 3, 1983, AIDC filed a motion to dismiss the petition
for injunction filed before Branch XIII of the CFI of Rizal (Pasig) on the
ground that the same had become moot and academic with the
consummation of the sale. Respondents filed their opposition to the
motion arguing, among others, that where a third party who claims
ownership of the property attached or levied upon, a different legal
situation is presented; and that in this case, two (2) of the real properties
are actually in the name of Encarnacion Ching, a non-party to Civil Case
No. 42228. LibLex

The lower court denied the motion to dismiss. Hence, trial on the
merits proceeded. Private respondents presented several witnesses. On
the other hand, petitioners did not present any evidence.
On September 18, 1991, the trial court promulgated its decision
declaring the sale on execution null and void. Petitioners appealed to the
respondentcourt, which was docketed as CA-G.R. CV No. 29632.
On April 14, 1994, the respondent court promulgated the assailed
decision, affirming the decision of the regional trial court. It held that:
"The loan procured from respondent-appellant AIDC was
for the advancement and benefit of Philippine Blooming Mills
and not for the benefit of the conjugal
partnership of petitioners-appellees.
xxx xxx xxx
 As to the applicable law, whether it is Article 161 of the
New Civil Code or Article 1211 of the Family Code-suffice it to
say that the two provisions are substantially the same.
Nevertheless, We agree with the trial court that the Family
Code is the applicable law on the matter . . .
Article 121 of the Family Code provides that 'The
conjugal partnership shall be liable for: . . . (2) All debts and
obligations contracted during the marriage by the designated
Administrator-Spouse for the benefit of the conjugal
partnership of gains . . .' The burden of proof that the debt was
contracted for the benefit of the conjugal partnership of gains,
lies with the creditor-party litigant claiming as such. In the case
at bar, respondent-appellant AIDC failed to prove that the debt
was contracted by appellee-husband, for the benefit of the
conjugal partnership of gains."
The dispositive portion of the decision reads:
"WHEREFORE, in view of all the foregoing, judgment is
hereby rendered DISMISSING the appeal. The decision of the
Regional Trial Court is AFFIRMEDin toto." 6
Petitioner filed a Motion for Reconsideration which was denied by
the respondent court in a Resolution dated November 28, 1994. 7
Hence, this petition for review. Petitioner contends that the
"respondent court erred in ruling that the conjugal partnership of private
respondents is not liable for the obligation by the respondent-husband."
Specifically, the errors allegedly committed by the
respondent court are as follows:
"I. RESPONDENT COURT ERRED IN RULING THAT THE
OBLIGATION INCURRED BY RESPONDENT
HUSBAND DID NOT REDOUND TO THE
BENEFIT OF THE CONJUGAL
PARTNERSHIP OF THE PRIVATE RESPONDENT.
II. RESPONDENT COURT ERRED IN RULING THAT
THE ACT OF RESPONDENT HUSBAND IN
SECURING THE SUBJECT LOAN IS NOT
PART OF HIS INDUSTRY, BUSINESS OR CAREER
FROM WHICH HE SUPPORTS HIS FAMILY."
Petitioners in their appeal point out that there is no need to prove
that actual benefit redounded to the benefit of the partnership; all that is
necessary, they say, is that the transaction was entered into for the
benefit of the conjugal partnership. Thus, petitioners aver that:
 "The wordings of Article 161 of the Civil Code is very
clear: for the partnership to be held liable, the husband must
have contracted the debt 'for the benefit of' the partnership,
thus:
'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 . . .'
There is a difference between the phrases: 'redounded
to the benefit of' or 'benefited from' (on the one hand) and 'for
the benefit of' (on the other). The former require that actual
benefit must have been realized; the latter requires only that the
transaction should be one which normally would produce
benefit to the partnership, regardless of whether or not actual
benefit accrued." 8
We do not agree with petitioners that there is a difference between
the terms "redounded to the benefit of" or "benefited from" on the one
hand; and "for the benefit of" on the other. They mean one and the same
thing. Article 161 (1) of the Civil Code and Article 121 (2) of the Family
Code are similarly worded, i.e., both use the term "for the benefit of." On
the other hand, Article 122 of the Family Code provides that "The
payment of personal debts 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." As can be seen,
the terms are used interchangeably.
Petitioners further contend that the ruling of the
respondent court runs counter to the pronouncement of this Court in the
case of Cobb-Perez vs. Lantin, 9 that the husband as head of the family
and as administrator of the conjugal partnership is presumed to have
contracted obligations for the benefitof the family or the conjugal
partnership. cdrep

Contrary to the contention of the petitioners, the

case of Cobb-Perez is not applicable in the case at bar. This Court has,
on several instances, interpreted the term "for the benefit of the conjugal
partnership."
In the cases of Javier vs. Osmeña, 10 Abella de Diaz vs. Erlanger &
Galinger, Inc., 11 Cobb-Perez vs. Lantin 12 and G-Tractors,
Inc. vs. Court of Appeals, 13cited by the petitioners, we held that:
"The debts contracted by the husband during the
marriage relation, for and in the exercise of the industry or
profession by which he contributes toward the support of his
 family, are not his personal and private debts, and the products
or income from the wife's own property, which, like those of her
husband's, are liable for the payment of the marriage expenses,
cannot be excepted from the payment of such debts." (Javier)
"The husband, as the manager of the partnership (Article
1412, Civil Code), has a right to embark the partnership in an
ordinary commercial enterprise for gain, and the fact that the
wife may not approve of a venture does not make it a private
and personal one of the husband." (Abella de Diaz)
"Debts contracted by the husband for and in the
exercise of the industry or profession by which he contributes to
the support of the family, cannot be deemed to be his exclusive
and private debts." (Cobb-Perez)
". . . if he incurs an indebtedness in the legitimate
pursuit of his career or profession or suffers losses in a
legitimate business, the conjugal partnership must equally bear
the indebtedness and the losses, unless he deliberately acted
to the prejudice of his family." (G-Tractors)
However, in the cases of Ansaldo vs. Sheriff of Manila, Fidelity
Insurance & Luzon Insurance Co., 14 Liberty Insurance Corporation vs.
Banuelos, 15 and Luzon Surety Inc. vs. De Garcia, 16 cited by the
respondents, we ruled that:
"The fruits of the paraphernal property which form
part of the assets of the conjugal partnership, are subject to the
payment of the debts and expenses of the spouses, but not to
the payment of the personal obligations (guaranty
agreements) of the husband, unless it be proved that such
obligations were productive of some benefit to the family."
(Ansaldo; parenthetical phrase ours.)
"When there is no showing that the execution of an
indemnity agreement by the husband redounded to the
benefit of his family, the undertaking is not a conjugal debt but
an obligation personal to him." (Liberty Insurance)
"In the most categorical language, a conjugal partnership
under Article 161 of the new Civil Code is liable only for such
'debts and obligations contracted by the husband for the
benefit of the conjugal partnership.' There must be the requisite
showing then of some advantage which clearly accrued to the
welfare of the spouses. Certainly, to make a conjugal
partnership respond for a liability that should appertain to the
husband alone is to defeat and frustrate the avowed
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." (Luzon Surety, Inc.)
From the foregoing jurisprudential rulings of this Court, we can
derive the following conclusions:
(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. LLphil

Thus, the distinction between the Cobb-Perez case, and we add,

that of the three other companion cases, on the one hand, and
that of Ansaldo, Liberty Insurance and Luzon Surety, is that in the former,
the husband contracted the obligation for his own business; while in the
latter, the husband merely acted as a surety for the loan contracted by
another for the latter's business.
The evidence of petitioner indubitably show that co-respondent
Alfredo Ching signed as surety for the P50M loan contracted on
behalf of PBM. Petitioner should have adduced evidence to prove that
Alfredo Ching's acting as surety redounded to the benefit of the conjugal
partnership. The reason for this is as lucidly explained by the
respondent court:
 "The loan procured from respondent-appellant AIDC was
for the advancement and benefit of Philippine Blooming Mills
and not for the benefit of the conjugal
partnership of petitioners-appellees. Philippine Blooming Mills
has a personality distinct and separate from the
family of petitioners-appellees — this despite the fact that the
members of the said family happened to be
stockholders of said corporate entity."
xxx xxx xxx
. . . The burden of proof that the debt was contracted for
the benefit of the conjugal partnership of gains, lies with the
creditor-party litigant claiming as such. In the case at bar,
respondent-appellant AIDC failed to prove that the debt was
contracted by appellee-husband, for the benefit of the conjugal
partnership of gains. What is apparent from the facts of the
case is that the judgment debt was contracted by or in the
name of the Corporation Philippine Blooming Mills and
appellee-husband only signed as surety thereof. The debt is
clearly a corporate debt and respondent-appellant's
right of recourse against appellee-husband as surety is only to
the extent of his corporate stockholdings. It does not extend to
the conjugal partnership of gains of the
familyof petitioners-appellees. . . ." 17
Petitioners contend that no actual benefit need accrue to the
conjugal partnership. To support this contention, they cite Justice J.B.L.
Reyes' authoritative opinion in the Luzon Surety Company case:
"I concur in the result, but would like to make of record
that, in my opinion, the words 'all debts and obligations
contracted by the husband for the benefit of the conjugal
partnership' used in Article 161 of the Civil Code of the
Philippines in describing the charges and obligations for which
the conjugal partnership is liable do not require that actual profit
or benefit must accrue to the conjugal partnership from the
husband's transaction; but it suffices that the transaction should
be one that normally would produce such benefit for the
partnership. This is the ratio behind our ruling in Javier vs.
Osmeña, 34 Phil. 336, that obligations incurred by the husband
in the practice of his profession are collectible from the conjugal
partnership."
The aforequoted concurring opinion agreed with the majority
decision that the conjugal partnership should not be made liable for the
surety agreement which was clearly for the benefit of a third party. Such
opinion merely registered an exception to what may be construed as a
sweeping statement that in all cases actual profit or benefit must accrue
to the conjugal partnership. The opinion merely made it clear that no
actual benefits to the family need be proved in some cases such as in the
Javier case. There, the husband was the principal obligor himself. Thus,
said transaction was found to be "one that would normally produce . . .
benefit for the partnership." In the later case of G-Tractors, Inc., the
husband was also the principal obligor — not merely the surety. This
latter case, therefore, did not create any precedent. It did not also
supersede the Luzon Surety Company case, nor any of the previous
accommodation contract cases, where this Court ruled that they were for
the benefit of third parties.
LLjur

But it could be argued, as the petitioner suggests, that even in such

kind of contract of accommodation, a benefit for the family may also
result, when the guarantee is in favor of the husband's employer.
In the case at bar, petitioner claims that the benefits the
respondent family would reasonably anticipate were the following:
(a) The employment of co-respondent Alfredo Ching
would be prolonged and he would be entitled to his
monthly salary of P20,000.00 for an extended
length of time because of the loan he guaranteed;
(b) The shares of stock of the members of his family would
appreciate if the PBM could be rehabilitated through
the loan obtained;
(c) His prestige in the corporation would be enhanced and
his career would be boosted should PBM survive
because of the loan.
However, these are not the benefits contemplated by Article
161 of the Civil Code. The benefits must be one directly resulting from the
loan. It cannot merely be a by-product or a spin-off of the loan itself.
In all our decisions involving accommodation contracts of the
husband, 18 we underscored the requirement that: "there must be the
requisite showing . . . of some advantage which clearly accrued to the
welfare of the spouses" or "benefits to his family" or "that such obligations
are productive of some benefit to the family." Unfortunately, the petition
did not present any proof to show: (a) Whether or not the corporate
existence of PBM was prolonged and for how many months or years;
and/or (b) Whether or not the PBM was saved by the loan and its
shares of stock appreciated, if so, how much and how substantial was
the holdings of the Ching family.
 Such benefits (prospects of longer employment and probable
increase in the value of stocks) might have been already apparent or
could be anticipated at the time the accommodation agreement was
entered into. But would those "benefits" qualify the transaction as
one of the "obligations . . . for the benefitof the conjugal partnership"? Are
indirect and remote probable benefits, the ones referred to in Article
161 of the Civil Code? The Court of Appeals in denying the motion for
reconsideration, disposed of these questions in the following manner:
"No matter how one looks at it, the debt/credit extended
by respondents-appellants is purely a corporate debt granted to
PBM, with petitioner-appellee-husband merely signing as
surety. While such petitioner-appellee-husband, as such surety,
is solidarily liable with the principal debtor AIDC, such liability
under the Civil Code provisions is specifically restricted by
Article 122 (par. 1) of the Family Code, so that debts for which
the husband is liable may not be charged against conjugal
partnership properties. Article 122 of the Family Code is explicit
— '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.'
Respondents-appellants insist that the corporate debt in
question falls under the exception laid down in said Article 122
(par. one). We do not agree. The loan procured from
respondent-appellant AIDC was for the sole advancement and
benefit of Philippine Blooming Mills and not for the benefit of the
conjugal partnership of petitioners-appellees.
. . . appellee-husband derives salaries, dividends
benefits from Philippine Blooming Mills (the debtor corporation),
only because said husband is an employee of said PBM. These
salaries and benefits, are not the 'benefits' contemplated by
Articles 121 and 122 of the Family Code. The 'benefits'
contemplated by the exception in Article 122 (Family Code) is
that benefit derived directly from the use of the loan. In the case
at bar, the loan is a corporate loan extended to PBM and used
by PBM itself, not by petitioner-appellee-husband or his family.
The alleged benefit, if any, continuously harped by
respondents-appellants, are not only incidental but also
speculative." 19
We agree with the respondent court. Indeed, considering the odds
involved in guaranteeing a large amount (P50,000,000.00) of loan, the
probable prolongation of employment in PBM and increase in value of its
stocks, would be too small to qualify the transaction as one "for the
benefit" of the surety's family. Verily, no one could say, with a
degree of certainty, that the said contract is even "productive of some
benefits" to the conjugal partnership.
We likewise agree with the respondent court (and this view is not
contested by the petitioners) that the provisions of the Family Code is
applicable in this case. These provisions highlight the underlying
concern of the law for the conservation of the conjugal partnership; for
the husband's duty to protect and safeguard, if not augment, not to
dissipate it.
This is the underlying reason why the Family Code clarifies that the
obligations entered into by one of the spouses must be those that
redounded to the benefit of the family and that the measure of the
partnership's liability is to "the extent that the family is benefited." 20
These are all in keeping with the spirit and intent of the other
provisions of the Civil Code which prohibits any of the spouses to donate
or convey gratuitously any part of the conjugal property. 21 Thus, when
co-respondent Alfredo Ching entered into a surety agreement he, from
then on, definitely put in peril the conjugal property (in this case, including
the family home) and placed it in danger of being taken gratuitously as in
cases of donation.
In the second assignment of error, the petitioner advances the
view that acting as surety is part of the business or profession of the
respondent-husband.
This theory is new as it is novel. cdphil

The respondent court correctly observed that:

"Signing as a surety is certainly not an exercise of an
industry or profession, hence the cited cases of Cobb-Perez vs.
Lantin; Abella de Diaz vs. Erlanger & Galinger; G-Tractors,
Inc. vs. CA do not apply in the instant case. Signing as a surety
is not embarking in a business." 22
We are likewise of the view that no matter how often an executive
acted or was persuaded to act, as a surety for his own employer, this
should not be taken to mean that he had thereby embarked in the
business of suretyship or guaranty.
This is not to say, however, that we are unaware that executives
are often asked to stand as surety for their company's loan obligations.
This is especially true if the corporate officials have sufficient
property of their own; otherwise, their spouses' signatures are required in
order to bind the conjugal partnerships.
 The fact that on several occasions the lending institutions did not
require the signature of the wife and the husband signed alone does not
mean that being a surety became part of his profession. Neither could he
be presumed to have acted for the conjugal partnership.
Article 121, paragraph 3, of the Family Code is emphatic that 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 to the extent that they redounded to the benefit of the family.
Here, the property in dispute also involves the family home. The
loan is a corporate loan not a personal one. Signing as a surety is
certainly not an exercise of an industry or profession nor
an act of administration for the benefit of the family.
On the basis of the facts, the rules, the law and equity, the assailed
decision should be upheld as we now uphold it. This is, of course, without
prejudice to petitioner's right to enforce the obligation in its favor against
the PBM receiver in accordance with the rehabilitation program and
payment schedule approved or to be approved by the Securities &
Exchange Commission.
WHEREFORE, the petition for review should be, as it is hereby,
DENIED for lack of merit. dctai

SO ORDERED.
(Ayala Investment & Development Corp. v. Court of Appeals, G.R. No.
|||

118305, [February 12, 1998], 349 PHIL 942-959)

SECOND DIVISION

[G.R. No. 124642. February 23, 2004.]

ALFREDO CHING and

ENCARNACION CHING, petitioners, vs. THE
HON. COURT OF APPEALS and ALLIED BANKING
CORPORATION,respondents.

DECISION

CALLEJO, SR., J : p
 This petition for review, under Rule 45 of the Revised
Rules of Court, assails the Decision 1 of the Court of Appeals (CA) dated
November 27, 1995 in CA-G.R. SP No. 33585, as well as the
Resolution 2 on April 2, 1996 denying the petitioners' motion for
reconsideration. The impugned decision granted the private respondent's
petition for certiorari and set aside the Orders of the trial court dated
December 15, 1993 3 and February 17, 1994 4 nullifying the
attachment of100,000 shares of stocks of the Citycorp Investment
Philippines under the name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company,
Inc. (PBMCI) obtained a loan of P9,000,000.00 from the Allied Banking
Corporation (ABC). By virtue of this loan, the PBMCI, through its
Executive Vice-President Alfredo Ching, executed a promissory note for
the said amount promising to pay on December 22, 1978 at an interest
rate of 14%per annum. 5 As added security for the said loan, on
September 28, 1978, Alfredo Ching, together with Emilio Tañedo and
Chung Kiat Hua, executed a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee the payment of all the
PBMCI obligations owing the ABC to the extent of P38,000,000.00. 6 The
loan was subsequently renewed on various dates, the last renewal
having been made on December 4, 1980. 7
Earlier, on December 28, 1979, the ABC extended another loan to
the PBMCI in the amount of P13,000,000.00 payable in eighteen months
at 16% interest per annum. As in the previous loan, the PBMCI, through
Alfredo Ching, executed a promissory note to evidence the loan maturing
on June 29, 1981. 8This was renewed once for a period of one month. 9
The PBMCI defaulted in the payment of all its loans. Hence, on
August 21, 1981, the ABC filed a complaint for sum of money with prayer
for a writ ofpreliminary attachment against the PBMCI to collect the
P12,612,972.88 exclusive of interests, penalties and other bank charges.
Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio
Tañedo and Chung Kiat Hua in their capacity as sureties of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional
Trial Court of Manila, Branch XVIII. 10 In its application for a
writ of preliminary attachment, the ABC averred that the "defendants are
guilty of fraud in incurring the obligations upon which the present action is
brought 11 in that they falsely represented themselves to be in a financial
position to pay their obligation upon maturity thereof." 12 Its supporting
affidavit stated, inter alia, that the "[d]efendants have removed or
disposed of their properties, or [are] ABOUT to do so, with intent to
defraud their creditors." 13
On August 26, 1981, after an ex-parte hearing, the
trial court issued an Order denying the ABC's application for a
writ of preliminary attachment. The trial court decreed that the grounds
alleged in the application and that of its supporting affidavit "are all
conclusions of fact and of law" which do not warrant the issuance of the
writ prayed for. 14 On motion for reconsideration, however, the trial court,
in an Order dated September 14, 1981, reconsidered its previous order
and granted the ABC's application for a writ of preliminary attachment on
a bond of P12,700,000. The order, in relevant part, stated:
With respect to the second ground relied upon for the
grant of the writ of preliminary attachment ex-parte, which is the
alleged disposal of properties by the defendants with intent to
defraud creditors as provided in Sec. 1(e) of Rule 57 of the
Rules of Court, the affidavits can only barely justify the
issuanceof said writ as against the defendant
Alfredo Ching who has allegedly bound himself jointly and
severally to pay plaintiff the defendant corporation's obligation
to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue
as against the defendant Alfredo Ching requiring the
sheriff of this Court to attach all the properties of said
Alfredo Ching not exceeding P12,612,972.82 in value, which
are within the jurisdiction of this Court and not exempt from
execution upon, the filing by plaintiff of a bond duly approved by
this Court in the sum of Twelve Million Seven Hundred
Thousand Pesos (P12,700,000.00) executed in favorof the
defendant Alfredo Ching to secure the payment by plaintiff to
him of all the costs which may be adjudged in his favor and all
damages he may sustain by reason of the attachment if
the court shall finally adjudge that the plaintiff was not entitled
thereto.
SO ORDERED. 15
Upon the ABC's posting of the requisite bond, the trial court issued
a writ of preliminary attachment. Subsequently, summonses were served
on the defendants, 16 save Chung Kiat Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly
filed a petition for suspension of payments with the Securities and
Exchange Commission (SEC), docketed as SEC Case No. 2250, at the
same time seeking the PBMCI's rehabilitation. 17
 On July 9, 1982, the SEC issued an Order placing the PBMCI's
business, including its assets and liabilities, under rehabilitation
receivership, and ordered that "all actions for claims listed in Schedule
"A" of the petition pending before any court or tribunal are hereby
suspended in whatever stage the same may be until further orders from
the Commission." 18 The ABC was among the PBMCI's creditors named
in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and
Alfredo Ching jointly filed a Motion to Dismiss and/or motion to suspend
the proceedings in Civil Case No. 142729 invoking the PBMCI's pending
application for suspension of payments (which Ching co-signed) and
over which the SEC had already assumed jurisdiction. 19 On February 4,
1983, the ABC filed its Opposition thereto. 20
In the meantime, on July 26, 1983, the deputy sheriff of the
trial court levied on attachment the 100,000 common shares of Citycorp
stocks in the nameof Alfredo Ching. 21
Thereafter, in an Order dated September 16, 1983, the
trial court partially granted the aforementioned motion by suspending the
proceedings only with respect to the PBMCI. It denied Ching's motion to
dismiss the complaint/or suspend the proceedings and pointed out
that P.D. No. 1758 only concerns the activities of corporations,
partnerships and associations and was never intended to regulate and/or
control activities of individuals. Thus, it directed the individual defendants
to file their answers. 22
Instead of filing an answer, Ching filed on January 14, 1984 a
Motion to Suspend Proceedings on the same ground of the
pendency of SEC Case No. 2250. This motion met the opposition from
the ABC. 23
On January 20, 1984, Tañedo filed his Answer with counterclaim
and cross-claim. 24 Ching eventually filed his Answer on July 12, 1984. 25
On October 25, 1984, long after submitting their
answers, Ching filed an Omnibus Motion, 26 again praying for the
dismissal of the complaint or suspension of the proceedings on the
ground of the July 9, 1982 Injunctive Order issued in SEC Case No. 2250.
He averred that as a surety of the PBMCI, he must also necessarily
benefit from the defenses of his principal. The ABC opposed Ching's
omnibus motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus
Motion 27 praying for the dismissal of the complaint, arguing that the ABC
had "abandoned and waived" its right to proceed against the continuing
guaranty by its act of resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the
amount of his preliminary attachment bond from P12,700,000 to
P6,350,000. 28 AlfredoChing opposed the motion, 29 but on April 2, 1987,
the court issued an Order setting the incident for further hearing on May
28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual
value of the properties of Alfredo Ching levied on by the sheriff. 30
On March 2, 1988, the trial court issued an Order granting the
motion of the ABC and rendered the attachment bond of P6,350,000. 31
On November 16, 1993, Encarnacion T. Ching, assisted by her
husband Alfredo Ching, filed a Motion to Set Aside the levy on
attachment. She allegedinter alia that the 100,000 shares of stocks
levied on by the sheriff were acquired by her and her husband during their
marriage out of conjugal funds after the Citycorp Investment Philippines
was established in 1974. Furthermore, the indebtedness covered by the
continuing guaranty/comprehensive suretyship contract executed by
petitioner Alfredo Ching for the account of PBMCI did not redound to the
benefit of the conjugal partnership. She, likewise, alleged that being the
wife of Alfredo Ching, she was a third-party claimant entitled to file a
motion for the release of the properties. 32 She attached therewith a
copy ofher marriage contract with Alfredo Ching. 33
The ABC filed a comment on the motion to quash preliminary
attachment and/or motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not
a party to this present case; thus, she has no personality
to file any motion before this Honorable Court;
2.2 Said supposed movant did not file any Motion for
Intervention pursuant to Section 2, Rule 12 of the
Rules of Court;
2.3 Said Motion cannot even be construed to be in the
nature of a Third-Party Claim conformably with Sec. 14,
Rule 57 of the Rules of Court.
3. Furthermore, assuming in gratia argumenti that the
supposed movant has the required personality, her Motion
cannot be acted upon by this Honorable Court as the
above-entitled case is still in the archives and the proceedings
thereon still remains suspended. And there is no previous
Motion to revive the same. 34
 The ABC also alleged that the motion was barred by prescription or
by laches because the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced
in evidence her marriage contract to Alfredo Ching to prove that they
were married on January 8, 1960; 35 the
articles of incorporation of Citycorp Investment Philippines dated May 14,
1979; 36 and, the General Information Sheet of the corporation showing
that petitioner Alfredo Ching was a member of the
Board of Directors of the said corporation and was one of its top twenty
stockholders.
On December 10, 1993, the Spouses Ching filed their
Reply/Opposition to the motion to expunge records.
Acting on the aforementioned motion, the trial court issued on
December 15, 1993 an Order 37 lifting the writ of preliminary attachment
on the sharesof stocks and ordering the sheriff to return the said stocks to
the petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary
Attachment, dated November 9, 1993, is hereby granted. Let
the writ of preliminary attachment subject matter of said motion,
be quashed and lifted with respect to the attached 100,000
common shares of stock of Citycorp Investment Philippines in
the name of the defendant Alfredo Ching, the said
shares of stock to be returned to him and his movant-spouse by
Deputy Sheriff Apolonio A. Golfo who effected the levy thereon
on July 26, 1983, or by whoever may be presently in possession
thereof.
SO ORDERED. 38
The plaintiff Allied Banking Corporation filed a motion for the
reconsideration of the order but denied the same on February 17, 1994.
The petitioner bank forthwith filed a petition for certiorari with the CA,
docketed as CA-G.R. SP No. 33585, for the nullification of the said
order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted
without jurisdiction in taking cognizance of, and granting
a "Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave
abuse of discretion in lifting the writ of preliminary
attachment without any basis in fact and in law, and
contrary to established jurisprudence on the matter. 39
 On November 27, 1995, the CA rendered judgment granting the
petition and setting aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is
GRANTED, hereby setting aside the questioned orders (dated
December 15, 1993 and February 17, 1994) for being null and
void.
SO ORDERED. 40
The CA sustained the contention of the private respondent and set
aside the assailed orders. According to the CA, the RTC deprived the
private respondent of its right to file a bond under Section 14, Rule
57 of the Rules of Court. The petitioner Encarnacion T. Ching was not a
party in the trial court; hence, she had no right of action to have the levy
annulled with a motion for that purpose. Her remedy in such case was to
file a separate action against the private respondent to nullify the levy on
the 100,000 Citycorp shares of stocks. The court stated that even
assuming that Encarnacion T. Ching had the right to file the said motion,
the same was barred by laches.
Citing Wong v. Intermediate Appellate Court, 41 the CA ruled that
the presumption in Article 160 of the New Civil Code shall not apply
where, as in this case, the petitioner-spouses failed to prove the
source of the money used to acquire the shares of stock. It held that the
levied shares of stocks belonged to Alfredo Ching, as evidenced by the
fact that the said shares were registered in the corporate
books of Citycorp solely under his name. Thus, according to the
appellate court, the RTC committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed orders.
The petitioners' motion for reconsideration was denied by the CA in a
Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review
on certiorari, asserting that the RTC did not commit any grave
abuse of discretion amounting to excess or lack of jurisdiction in issuing
the assailed orders in their favor; hence, the CA erred in reversing the
same. They aver that the source of funds in the acquisition of the levied
shares of stocks is not the controlling factor when invoking the
presumption of the conjugal nature of stocks under Art. 160, 42and that
such presumption subsists even if the property is registered only in the
name of one of the spouses, in this case, petitioner
Alfredo Ching. 43According to the petitioners, the suretyship obligation
was not contracted in the pursuit of the petitioner-husband's profession
or business. 44 And, contrary to the ruling of the CA, where conjugal
assets are attached in a collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to quash in the main case
and not file a separate suit. 45 Furthermore, the petitioners contend that
under Art. 125 of the Family Code, the petitioner-husband's gratuitous
suretyship, is null and void ab initio, 46 and that the share of one of the
spouses in the conjugal partnership remains inchoate until the dissolution
and liquidation of the partnership. 47
In its comment on the petition, the private respondent asserts that
the CA correctly granted its petition for certiorari nullifying the assailed
order. It contends that the CA correctly relied on the
ruling of this Court in Wong v. Intermediate Appellate Court.
Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v.Court of Appeals, the
private respondent alleges that the continuing guaranty and suretyship
executed by petitioner Alfredo Ching in pursuit of his profession or
business. Furthermore, according to the private respondent, the
right of the petitioner-wife to a share in the conjugal partnership property
is merely inchoate before the dissolution of the partnership; as such, she
had no right to file the said motion to quash the levy on attachment of the
shares of stocks. HSTCcD

The issues for resolution are as follows: (a) whether the

petitioner-wife has the right to file the motion to quash the levy on
attachment on the 100,000 shares of stocks in the Citycorp Investment
Philippines; (b) whether or not the RTC committed a grave abuse of its
discretion amounting to excess or lack ofjurisdiction in issuing the
assailed orders.
On the first issue, we agree with the petitioners that the
petitioner-wife had the right to file the said motion, although she was not a
party in Civil Case No. 142729. 48
In Ong v. Tating, 49 we held that the sheriff may attach only those
properties of the defendant against whom a writ of attachment has been
issued by the court. When the sheriff erroneously levies on attachment
and seizes the property of a third person in which the said defendant
holds no right or interest, the superior authority of the court which has
authorized the execution may be invoked by the aggrieved third person in
the same case. Upon application ofthe third person, the court shall order
a summary hearing for the purpose of determining whether the sheriff
has acted rightly or wrongly in the performanceof his duties in the
execution of the writ of attachment, more specifically if he has indeed
levied on attachment and taken hold of property not belonging to the
plaintiff. If so, the court may then order the sheriff to release the property
from the erroneous levy and to return the same to the third person. In
resolving the motion of the third party, the court does not and cannot
pass upon the question of the title to the property with any
character of finality. It can treat the matter only insofar as may be
necessary to decide if the sheriff has acted correctly or not. If the
claimant's proof does not persuade the court of the validity of the title, or
right of possession thereto, the claim will be denied by the court. The
aggrieved third party may also avail himself of the remedy of"terceria" by
executing an affidavit of his title or right of possession over the property
levied on attachment and serving the same to the office making the levy
and the adverse party. Such party may also file an action to nullify the
levy with damages resulting from the unlawful levy and seizure, which
should be a totally separate and distinct action from the former case. The
abovementioned remedies are cumulative and any one of them may be
resorted to by one third-party claimant without availing of the other
remedies. 50
In this case, the petitioner-wife filed her motion to set aside the levy
on attachment of the 100,000 shares of stocks in the
name of petitioner-husband claiming that the said shares of stocks were
conjugal in nature; hence, not liable for the account of her husband under
his continuing guaranty and suretyship agreement with the PBMCI. The
petitioner-wife had the right to file the motion for said relief.
On the second issue, we find and so hold that the CA erred in
setting aside and reversing the orders of the RTC. The private
respondent, the petitioner in the CA, was burdened to prove that the RTC
committed a grave abuse of its discretion amounting to excess or
lack of jurisdiction. The tribunal acts without jurisdiction if it does not have
the legal purpose to determine the case; there is excess of jurisdiction
where the tribunal, being clothed with the power to determine the case,
oversteps its authority as determined by law, There is grave
abuse of discretion where the tribunal acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its judgment and is
equivalent to lack of jurisdiction. 51
It was incumbent upon the private respondent to adduce a
sufficiently strong demonstration that the RTC acted whimsically in total
disregard ofevidence material to, and even decide of, the controversy
before certiorari will lie. A special civil action for certiorari is a remedy
designed for the correction oferrors of jurisdiction and not
errors of judgment. When a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of its jurisdiction being
exercised when the error is committed. 52
 After a comprehensive review of the records of the RTC
and of the CA, we find and so hold that the RTC did not commit any grave
abuse of its discretion amounting to excess or lack of jurisdiction in
issuing the assailed orders.
Article 160 of the New Civil Code provides that all the properties
acquired during the marriage are presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband,
or to the wife. In Tan v. Court of Appeals, 53 we held that it is not even
necessary to prove that the properties were acquired with funds of the
partnership. As long as the properties were acquired by the parties during
the marriage, they are presumed to be conjugal in nature. In fact, even
when the manner in which the properties were acquired does not appear,
the presumption will still apply, and the properties will still be considered
conjugal. The presumption of the conjugal nature of the properties
acquired during the marriage subsists in the absence ofclear, satisfactory
and convincing evidence to overcome the same. 54
In this case, the evidence adduced by the petitioners in the RTC is
that the 100,000 shares of stocks in the Citycorp Investment Philippines
were issued to and registered in its corporate books in the name of the
petitioner-husband when the said corporation was incorporated on May
14, 1979. This was done during the subsistence of the marriage of the
petitioner-spouses. The shares of stocks are, thus, presumed to be the
conjugal partnership property of the petitioners. The private respondent
failed to adduce evidence that the petitioner-husband acquired the stocks
with his exclusive money. 55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment
Philippines solely in the name of the petitioner-husband does not
constitute proof that the petitioner-husband, not the conjugal partnership,
owned the same. 56 The private respondent's reliance on the
rulings of this Courtin Maramba v. Lozano 57 and Associated Insurance
& Surety Co., Inc. v. Banzon, 58 is misplaced. In the Maramba case, we
held that where there is no showing as to when the property was acquired,
the fact that the title is in the wife's name alone is determinative of the
ownership of the property. The principle was reiterated in the Associated
Insurance case where the uncontroverted evidence showed that the
shares of stocks were acquired during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the
ruling of this Court in Wong v. Intermediate Appellate Court 59 buttresses
the case for the petitioners. In that case, we ruled that he who claims that
property acquired by the spouses during their marriage is not conjugal
partnership property but belongs to one of them as his personal property
is burdened to prove the source of the money utilized to purchase the
same. In this case, the private respondent claimed that the
petitioner-husband acquired the shares of stocks from the Citycorp
Investment Philippines in his own name as the owner thereof. It was, thus,
the burden of the private respondent to prove that the source of the
money utilized in the acquisition of the shares of stocks was that ofthe
petitioner-husband alone. As held by the trial court, the private
respondent failed to adduce evidence to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing
guaranty and suretyship agreement with the private respondent for the
payment of the PBMCI loans, the petitioner-husband was in the
exercise of his profession, pursuing a legitimate business. The
appellate court erred in concluding that the conjugal partnership is liable
for the said account of PBMCI under Article 161(1) of the New Civil
Code.
Article 161(1) of the New Civil Code (now Article 121[2 and
3] 60 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.
The petitioner-husband signed the continuing guaranty and
suretyship agreement as security for the payment of the loan obtained by
the PBMCI from the private respondent in the amount of P38,000,000.
In Ayala Investment and Development
Corp. v. Court of Appeals, 61 this Court ruled "that the signing as surety is
certainly not an exercise of an industry or profession. It is not embarking
in a business. No matter how often an executive acted on or was
persuaded to act as surety for his own employer, this should not be taken
to mean that he thereby embarked in the business of suretyship or
guaranty."
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. 62
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the
petitioner-husband's act ofexecuting 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
presumption can be inferred from the fact that when the
petitioner-husband entered into an accommodation agreement or a
contract of surety, the conjugal partnership would thereby be benefited.
The private respondent was burdened to establish that such benefit
redounded to the conjugal partnership. 63
It could be argued that the petitioner-husband was a
member of the Board of Directors of PBMCI and was one of its top
twenty stockholders, and that the shares of stocks of the
petitioner-husband and his family would appreciate if the PBMCI could be
rehabilitated through the loans obtained; that the petitioner-husband's
career would be enhanced should PBMCI survive because of the
infusion of fresh capital. However, these are not the benefits
contemplated by Article 161 of the New Civil Code. The benefits must be
those directly resulting from the loan. They cannot merely be a
by-product or a spin-off of the loan itself. 64
This is different from the situation where the husband borrows
money or receives services to be used for his own business or profession.
In the Ayalacase, we ruled that it is such a contract that is one within the
term "obligation for the benefit of the conjugal partnership." Thus:
(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. 65
 The Court held in the same case that the
rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not
controlling because the husband, in those cases, contracted the
obligation for his own business. In this case, the petitioner-husband acted
merely as a surety for the loan contracted by the PBMCI from the private
respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.
The Decision and Resolution of the Court of Appeals are SET ASIDE
AND REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.
(Ching v. Court of Appeals, G.R. No. 124642, [February 23, 2004], 467
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PHIL 830-851)