16-13 Ching vs. Ca

Charges upon and obligations of Conjugal Partnership of Gains:
ALFREDO CHING and ENCARNACION CHING, petitioners vs. THE HON. COURT OF

APPEALS and ALLIED BANKING CORPORATION, respondents.
G.R. No. 124642 February 23, 2004
CALLEJO, SR., J.
FACTS:
The Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of P9,000,000
from the Allied Banking Corporation (ABC). As an added security for the said loan, Alfredo
Ching, together with Emilio Tadeo and Chung Kiat Hua, executed a continuing guaranty with
the ABC binding them to jointly and severally guarantee the payment of all the PBMCI
obligations owing to the ABC. The PBMCI defaulted in the payment of all its loans.
Hence, the ABC filed a complaint for sum of money with prayer for a writ of
preliminary attachment. Citing as one of the grounds for the writ was the fraud defendants
employed in incurring the obligations by representing themselves as having the financial
capacity to pay the loan when in fact they did not have such capacity. 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 name of Alfredo Ching.
On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo

Ching, filed a Motion to Set Aside the levy on attachment. She alleged inter 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. 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. She attached
therewith a copy of her marriage contract with Alfredo Ching.
ISSUE:
Is the conjugal partnership liable for the payment of the liability?
RULING:
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, the court 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 of
clear, satisfactory and convincing evidence to overcome the same.
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. 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.
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 wellbeing 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, the private respondent failed to prove that the conjugal partnership of
the petitioners was benefited by the petitioner-husband’s 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 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.
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. In this case, the
petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the
private respondent. 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.

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Charges upon and obligations of Conjugal Partnership of Gains:

ALFREDO CHING and ENCARNACION CHING, petitioners vs. THE HON. COURT OF

On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo

Is the conjugal partnership liable for the payment of the liability?

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