CASE DIGEST: Alfredo and Encarnacion Ching v. Court of Appeals

 

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

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

 

FACTS:

On September 26, 1978, the Philippine Blooming Mills Company, Inc. obtained a loan of P9,000,000.00 from the Allied Banking Corporation. 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. As added security for the said loan, 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.

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 of preliminary 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.

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 in that they falsely represented themselves to be in a financial position to pay their obligation upon maturity thereof.” Its supporting affidavit stated, inter alia, that the defendants have removed or disposed of their properties, or are ABOUT to do so, with intent to defraud their creditors.”

The trial court denied 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. On motion for reconsideration, however, the trial court reconsidered its previous order and granted the ABC’s application for a writ of preliminary attachment on a bond of P12,700,000.

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. 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.

Acting on the aforementioned motion, the trial court lifted the writ of preliminary attachment on the shares of stocks and ordered the sheriff to return the said stocks to the petitioners.

Petitioner forthwith filed a petition for certiorari for the nullification of the said court. The CA granted the petition and set aside the assailed orders of the trial court.

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.

ISSUE:

WON the 100,000 shares of stock may be levied on to answer for the loans guaranteed by Alfredo Ching

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.

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.

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.