Ayala Investment and Development Corp. V.

CA,
and Spouses Ching
Facts:
In this case, Ayala Investment &
Development Corp. (AIDC) assails the decision
rendered by CA affirming RTCs decision, holding the
conjugal partnership of respondent Alfredo and
Encarnacion Ching not liable for the debt incurred by
Alfredo. Alfredo and Encarnacion are married, and
Alfredo was the EVP of Philippine Blooming Mills
(PBM). PBM took a loan from AIDC, and Alfredo as
the EVP executed a security agreement making him
jointly and severally liable with the debt of PBM.
PBM failed to pay the debt, thus prompting
AIDC to file a case for the collection of the sum of
money against PBM and Alfredo docketed as Civil
Case No. 42228. CFI rendered a decision holding
PBM and Alfredo liable. AIDC put upped an 8M bond,
thus a writ of execution was issued. The sheriff
began levying the conjugal partnership of Alfredo and
Encarnacion (3 properties) Then, 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. 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.
A petition for certiorari questioning the order
of the lower court enjoining the sale was filed by
AIDC, from which CA issued a TRO enjoining the
lower court from enjoining its earlier Order. Thus,
paving way for the scheduled action sale of the
conjugal properties of the Ching Spouses, where
Ayala won being the sole bidder. While CA decided
to set aside the lower courts decision, they decided
that the Civil Case should push thru. However, AIDC
filed a motion to dismiss since the case has been
moot and academic with the consummation of the
sale of the properties. Respondent filed an opposition
which was granted. AIDC made an appeal and CA

denied such and agreed with Alfredo that the

conjugal partnership should not be held liable, while
petitioner thinks otherwise. Petitioners claim that it
would benefit Alfredo by: a. The employment of
Alfredo would be extended, as well as his salary, b.
The shares of the stock of his family members would
appreciate, c. His prestige in the corporation would
be enhanced, thus boosting the survival of PBM.
Issue: WON the conjugal partnership was liable.
Held: No. The loan is a corporate loan and not a
personal one, given that the agreement was entered
for a third party which was PBM, there was no proof
to show that the loan was made to directly benefit the
family. The benefits cannot be a by-product or a
spin-off of the loan itself. Those benefits mentioned
by Petitioner could have happened, but the gravity of
the funds involved (50,000,000,.00), the probable
prolongation of employment and increase in the
value of stocks would be too small to qualify the
transaction as a benefit for the suretys family.
The SC made a conclusion based on various
jurisprudence regarding the issue where the surety
bond entered by the husband for the employer is well
within the provision that it should be charged to the
conjugal partnership:
If the husband contracts an obligation on
behalf of a family business, the law presumes, and
rightfully so, that such obligation benefited the
conjugal partnership. It is immaterial whether the
business succeeds or not.
On the other hand, if the money or service
was given to another person or entity, and husband
acted only as 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.
Which in this case, AIDC was unable to prove.