[G.R. No. 156125. August 25, 2010.
] Mandaluyong City, on September 8, 1993, or sixteen days
FRANCISCO MUÑOS, JR., petitioner, vs.
ERLINDA RAMIREZ and ELISEO
CARLOS, respondents.
Facts: 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,
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
Issue
Whether or not the subject property was Erlinda's exclusive
paraphernal property that was inherited from her father?
Ruling:
Yes, the subject property remained the exclusive
paraphernal property of Erlinda at the time she contracted with
the petitioner. 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.
[G.R. No. 118305. February 12, 1998.]
AYALA INVESTMENT & DEVELOPMENT
CORP. and ABELARDO
MAGSAJO, petitioners, vs. COURT OF APPE
ALS and SPOUSES ALFREDO & however, denied. No pronouncement is here
ENCARNACION CHING, respondents.
Facts:
Philippine Blooming Mills (hereinafter referred to as PBM)
obtained a P50,300,000.00 loan from petitioner Ayala Investment
and Development Corporation (hereinafter referred to as AIDC). As
added security for the credit line extended to PBM, respondent
Alfredo Ching, Executive Vice President 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,
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."
Issue:
Whether or not THE OBLIGATION INCURRED BY RESPONDENT
HUSBAND DID NOT REDOUND TO THE BENEFIT OF THE
CONJUGAL PARTNERSHIP OF THE PRIVATE RESPONDENT?
Ruling:
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
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.
[G.R. No. 124642. February 23, 2004.]
ALFREDO CHING and
ENCARNACION CHING, petitioners, vs. THE
HON. COURT OF APPEALS and ALLIED
BANKING CORPORATION,respondents.
Facts:
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 Ruling
preliminary attachment and/or motion to expunge records,
contending that: The petitioner-wife had the right to file the motion for said
relief. In Ong v. Tating, 49 we held that the sheriff may attach only
2.1 The supposed movant, those properties of the defendant against whom a writ of attachment
Encarnacion T. Ching, is not a party to has been issued by the court. When the sheriff erroneously levies on
this present case; thus, she has no attachment and seizes the property of a third person in which the
personality to file any motion before said defendant holds no right or interest, the superior
this Honorable Court; authority of the court which has authorized the execution may be
invoked by the aggrieved third person in the same case. Upon
2.2 Said supposed movant did not file application ofthe third person, the court shall order a summary
any Motion for Intervention pursuant to hearing for the purpose of determining whether the sheriff has acted
Section 2, Rule 12 of the rightly or wrongly in the performanceof his duties in the
Rules of Court; execution of the writ of attachment, more specifically if he has
2.3 Said Motion cannot even be indeed levied on attachment and taken hold of property not
construed to be in the nature of a belonging to the plaintiff. If so, the court may then order the sheriff to
Third-Party Claim conformably with release the property from the erroneous levy and to return the same
Sec. 14, Rule 57 of the Rules of Court. 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
3. Furthermore, assuming in gratia the property with any character of finality. It can treat the matter only
argumenti that the supposed movant has the insofar as may be necessary to decide if the sheriff has acted
required personality, her Motion cannot be acted correctly or not. If the claimant's proof does not persuade
upon by this Honorable Court as the the court of the validity of the title, or right of possession thereto, the
above-entitled case is still in the archives and claim will be denied by the court. The aggrieved third party may also
the proceedings thereon still remains avail himself of the remedy of"terceria" by executing an
suspended. And there is no previous Motion to affidavit of his title or right of possession over the property levied on
revive the same. 34 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,
The ABC also alleged that the motion was barred by which should be a totally separate and distinct action from the former
prescription or by laches because the shares of stocks were case. The abovementioned remedies are cumulative and any
in custodia legis. one of them may be resorted to by one third-party claimant without
availing of the other remedies. 50
During the hearing of the motion, Encarnacion
T. Ching adduced in evidence her marriage contract to In this case, the petitioner-wife filed her motion to set aside
Alfredo Ching to prove that they were married on January 8, the levy on attachment of the 100,000 shares of stocks in the
1960; 35 the articles of incorporation of Citycorp Investment name of petitioner-husband claiming that the said shares of stocks
Philippines dated May 14, 1979; 36 and, the General Information were conjugal in nature; hence, not liable for the account of her
Sheet of the corporation showing that petitioner Alfredo Ching was a husband under his continuing guaranty and suretyship agreement
member of the Board of Directors of the said corporation and was with the PBMCI. The petitioner-wife had the right to file the motion for
one of its top twenty stockholders. said relief.

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.

Issue

Whether or not the petitioner-wife had the right to file the said
motion, although she was not a party in Civil Case No. 142729.