Conjugal Partnerships; Effect of the spouses signing as suretyALFREDO CHING and

ENCARNACION CHING vs. COURT OF APPEALS[G.R. No. 124642. February 23, 2004.]
CALLEJO, SR.
FACTS:
The Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of P9,000,000 fromthe 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
onDecember 22, 1978 at an interest rate of 14% per annum. As an added security for
the said loan,Alfredo Ching, together with Emilio Taedo and Chung Kiat Hua, executed a continuing
guarantywith the ABC binding themselves to jointly and severally guarantee the payment of all the
PBMCIobligations owing to the ABC. The PBMCI defaulted in the payment of all its loans. Hence, on
August2 1 , 1 9 8 1 , t h e A B C fi l e d a c o m p l a i n t f o r s u m o f m o n e y w i t h p r a y e r f o r a
w r i t o f p r e l i m i n a r y attachment against the PBMCI to collect the P12,612,972.88 exclusive of
interests, penalties andother bank charges. Impleaded as co-defendants in the
complaint were Alfredo Ching, EmilioTaedo and Chung Kiat Hua in their capacity as sureties of the
PBMCI. Citing as one of the
groundsf o r t h e w r i t w a s t h e f r a u d d e f e n d a n t s e m p l o y e d i n i n c u r r i n g t h e o b l i g a t i o n
s b y r e p r e s e n t i n g themselves as having the fi nancial capacity to pay the loan when in
fact they did not have
suchcapacity.I n t h e m e a n t i m e , o n J u l y 2 6 , 1 9 8 3 , t h e d e p u t y s h e r i f o f t h e t
r i a l c o u r t l e v i e d o n attachment the 100,000 common shares of Citycorp stocks
i n t h e n a m e o f A l f r e d o C h i n g . O n November 16, 1993, Encarnacion T. Ching, assisted by her
husband Alfredo Ching, filed a Motion toSet Aside the levy on attachment. She alleged inter alia that the
100,000 shares of stocks levied onby the sherif were acquired by her and her husband during
their marriage out of conjugal fundsafter the Citycorp Investment Philippines was established in
1974. Furthermore, the
indebtednesscovered by the continuing guaranty/comprehensive suretyship contract execute
d by petitionerAlfredo 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
entitledto file a motion for the release of the properties. She attached therewith a copy of her
marriagecontract with Alfredo Ching.The petitioner-spouses aver that the source of funds in the
acquisition of the levied sharesof stocks is not the controlling factor when invoking the
presumption of the conjugal nature of stocks under Art. 160 and that such presumption subsists
even if the property is registered only inthe name of one of the spouses, in this case, petitioner Alfredo
Ching. According to the petitioners,the suretyship obligation was not contracted in the pursuit of
the petitioner-husband's profession orbusiness. And where conjugal assets are attached in a collection
suit on an obligation contracted bythe husband, the wife should exhaust her motion to quash in the main
case and not file a separatesuit. Furthermore, the petitioners contend that under Art. 125 of the Family
Code, the petitioner-husband's gratuitous suretyship is null and void ab initio, and that the share of one of
the spouses inthe conjugal partnership remains inchoate until the dissolution and liquidation of the
partnership.T h e t r i a l c o u r t i n i t i a l l y g r a n t e d t h e l i f t i n g o f t h e p r e l i m i n a r y
a t t a c h m e n t b u t o n a p p e a l , t h e decision was reversed, the appellate court holding that
petitioner Encarnacion Ching was not a proper party to the action and that even if she possessed
such right, her action was already barredby laches. The appellate court also ruled that the presumption

under Art. 160 was inapplicable inthe present case, when petitioner-spouses failed to prove the source of
the money used to acquirethe shares of stock. Hence this present petition.
ISSUES:
C
IVIL
L
AW
C
OMMITTEE
AND
D
IGEST
P
OOL

C
HAIRPERSON
: Romuald Padilla

A
SST
.C
HAIRPERSON
: Vida Bocar, Joyce Vidad

EDP
S
: Alnaiza Hassiman,
Dots Gayon

S
UBJECT
H
EADS
: Butch Marasigan(Persons and Family Relations), Donnie Casabar (Property), Aira Ferrer (Wills and
Succession), Ian Pua (Obligations and Contracts), Lai Dumama(Sales and Lease),Stephen Quiambao
(PAT), Chris Cabigao (Credit Transactions), Ligaya Alipao (Torts and Damages), Anthony Purganan
(LTD), Rica Tugadi (Conflicts of Law)

D
IGEST
P
OOL
: Michael Acejo, Johnsen Alejandro, Madelyn Almazora, Rowena Antonio, nissa Apolinario, Katrina
Atienza, , Jen Balboa, IshmalynBalbontin, Ian Bartolome, Regina Batac, Janet Calderon, Hashreen

Caudang, Bambi Delos Reyes, Jeenice de Sagun, Wren Dones, Edsel Duque,Rojane Elopre, Ulysses
Gonzales, Randy Guina, Mae Ann Gutierrez, Ghia Hurtado, Anelyn Javillonar, Louell Pamela Neriessette
Labriaga, MaureenLontoc, Diana Marie Miano, Sophie Nepomuceno, Genevieve Nueve, Iggy Sapalo, Ayn
Sarsaba, Rachelle Saya, Pam Solis, Tom Timbol, Paulette Tongcua, Jocelyn Tsang, Joanne Villareal,
Rhyne Ypulong.Rhyne Ypulong.y

Case
C
IVIL
L
AW
26
San Beda College of Law
2005
C
ENTRALIZED
B
AR
O
PERATIONS
1.Do the 100,000 shares of stock in the name of Alfredo Ching belong to the
c o n j u g a l partnership?2.Is the conjugal partnership liable for the payment of the liability?
HELD:
1.
YES.
Article 160 of the New Civil Code provides that all the properties acquired duringthe marriage are
presumed to belong to the conjugal partnership; unless it be proved that itpertains
exclusively to the husband, or to the wife. In Tan v. Court of Appeals, we held that it isnot
even necessary to prove that the properties were acquired with funds of the partnership.
Aslong as the properties were acquired by the parties during the marriage, they are presumed to
beconjugal in nature. In fact, even when the manner in which the properties were acquired does
notappear, the presumption will still apply, and the properties will still be considered conjugal.
Thepresumption of the conjugal nature of the properties acquired during the marriage subsists in
theabsence 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 sharesof stocks in the Citycorp
Investment Philippines were issued to and registered in its corporate booksin 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 ofstocks are, thus,
presumed to be the conjugal partnership property of the petitioners. The privaterespondent failed to
adduce evidence that the petitioner-husband acquired the stocks with hisexclusive money.
The barefaced fact that the shares of stocks were registered in the corporatebooks of
Citycorp Investment Philippines solely in the name of the petitioner-husband does
notconstitute proof that the petitioner-husband, not the conjugal partnership, owned the same.2.
NO.
For the conjugal partnership to be liable for a liability that should appertain to thehusband 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 thespouses is to frustrate

the objective of the New Civil Code to show the utmost concern for thesolidarity and
well being of the family as a unit. The husband, therefore, is denied the power toassume
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 petitionerswas benefi ted by the
petitioner-husband's act of executing a continuing guaranty and suretyship a g r e e m e n t
with the private respondent for and in behalf of PBMCI. The contract of loan
w a s between the private respondent and the PBMCI, solely for the benefit of the latter. No
presumptioncan be inferred from the fact that when the petitioner-husband entered into an
accommodationagreement or a contract of surety, the conjugal partnership would thereby
be benefi ted.
Thep r i v a t e r e s p o n d e n t w a s b u r d e n e d t o e s t a b l i s h t h a t s u c h b e n e fi t r e d o u n d e d t
o t h e c o n j u g a l partnership