Facts Application of Law
AYALA  Philippine Blooming Mills (PBM)
INVESTMENT obtained P50,300,000.00 loan from
V. CA petitioner Ayala Investment and
Development Corporation (AIDC).
 Respondent Alfredo Ching, EVP of
PBM, executed security agreements
making him jointly and severally
answerable with PBM’s
indebtedness to AIDC.
 PBM failed to pay the loan hence
filing of complaint against PBM and
Ching. The RTC rendered judgment
ordering PBM and Ching to jointly
and severally pay AIDC the principal
amount with interests.
 Pending the appeal of the judgment,
RTC issued writ of execution.
Thereafter, Magsajo, appointed
deputy sheriff, caused the issuance
and service upon respondent
spouses of the notice of sheriff sale
on 3 of their conjugal properties.
 Respondent spouses filed injunction
against petitioners on the ground
that subject loan did not redound to
the benefit of the said conjugal
partnership.
 CA issued a TRP enjoining lower
court from enforcing its order
paving way for the scheduled
auction sale of respondent spouse’s
conjugal properties. A certificate of
sale was issued to AIDC, being the
only bidder and was registered.
 ISSUE: Whether or not the debts
and obligations contracted by the
husband alone is considered “for
the benefit of the conjugal
partnership” and is it chargeable.
 The loan procured from AIDC was
for the advancement and benefit
of PBM and not for the benefit of
the conjugal partnership of Ching.
Furthermore, AIDC failed to prove
that Ching contracted the debt for
the benefit of the conjugal
partnership of gains.
 PBM has a personality distinct and
separate from the family of Ching
despite the fact that they
happened to be stockholders of
said corporate entity. Clearly, the
debt was a corporate debt and
right of recourse to Ching as
surety is only to the extent of his
corporate stockholdings.
 The contract of loan or services is
clearly for the benefit of the
principal debtor and not for the
surety or his family. Ching only
signed as a surety for the loan
contracted with AIDC in behalf of
PBM. Signing as a surety is
certainly not an exercise of an
industry or profession, it is not
embarking in a business. Hence,
the conjugal partnership should
not be made liable for the surety
agreement which was clearly for
the benefit of PBM.
 The court did not support the
contention of the petitioner that a
benefit for the family may have
resulted when the guarantee was
in favor of Ching’s employment
(prolonged tenure, appreciation of
shares of stocks, prestige
enhanced) since the benefits
contemplated in Art. 161 of the
Civil Code must be one directly
resulting from the loan. It must
not be a mere by product or a
spinoff of the loan itself.