SECOND DIVISION

[G.R. No. 118305. February 12, 1998.]

AYALA INVESTMENT & DEVELOPMENT CORP. and ABELARDO

MAGSAJO, petitioners, vs. COURT OF APPEALS and SPOUSES
ALFREDO & ENCARNACION CHING, respondents.

Acosta and Corvera Law Offices for petitioner.

Quianson Makalintal Baro Torres and Ibarra for private respondent.

SYLLABUS

1. CIVIL LAW; FAMILY CODE; CONJ UGAL 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
of the 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 of his 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.

DECISION

MARTINEZ, J :

Under Article 161 of the Civil Code, what debts and obligations contracted by the
husband alone are considered "for the benefit of the conjugal partnership" which
are chargeable against the conjugal partnership? Is a surety agreement or an
accommodation contract entered into by the husband in favor of his employer
within the contemplation of the said provision?
These are the issues which we will resolve in this petition for review.

The petitioner assails the decision dated April 14, 1994 of the respondent Court
of Appeals in "Spouses Alfredo and Encarnacion Ching vs. Ayala Investment
and Development Corporation, et. al.," docketed as CA-G.R. CV No. 29632, 1
upholding the decision of the Regional Trial Court of Pasig, Branch 168, which
ruled that the conjugal partnership of gains of respondents-spouses Alfredo and
Encarnacion Ching is not liable for the payment of the debts secured by
respondent-husband Alfredo Ching.

A chronology of the essential antecedent facts is necessary for a clear

understanding of the case at bar.

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 of
PBM, 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 of
P50,300,000.00 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 of Appeals issued
a Temporary Restraining Order on J une 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 chall enged order of the respondent Judge dated June 14, 1982 in
Civil Case No. 46309 is hereby set aside and null ified. The same petition
insofar as it seeks to enjoin the respondent Judge from proceeding with
Civil Case No. 46309 is, however, denied. No pronouncement is here
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.

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 respondent court, 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-appell ant AIDC was for the
advancement and benefit of Philippine Blooming Mill s and not for the
benefit of the conjugal partnership of petitioners-appell ees.

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 substantiall y 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-appell ant AIDC failed to prove that the debt was contracted
by appell ee-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 AFFIRMED in 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."

Specifically, the errors allegedly committed by the respondent court are as follows:

"I. RESPONDENT COURT ERRED IN RULING THAT THE OBLIGATION

INCURRED BY RESPONDENT HUSBAND DID NOT REDOUND TO THE
BENEFIT OF THE CONJUGAL PARTNERSHIP OF THE PRIVATE
RESPONDENT.

II. RESPONDENT COURT ERRED IN RULING THAT THE ACT OF

RESPONDENT HUSBAND IN SECURING THE SUBJECT LOAN IS NOT
PART OF HIS INDUSTRY, BUSINESS OR CAREER FROM WHICH HE
SUPPORTS HIS FAMILY."

Petitioners in their appeal point out that there is no need to prove that actual
benefit redounded to the benefit of the partnership; all that is necessary, they say,
is that the transaction was entered into for the benefit of the conjugal partnership.
Thus, petitioners aver that:

"The wordings of Article 161 of the Civil Code is very clear: for the
partnership to be held liable, the husband must have contracted the
debt 'for the benefit of' the partnership, thus:

'Art. 161. The conjugal partnership shall be liable for:

1) all debts and obligations contracted by the husband for the

benefit of the conjugal partnership . . .'

There is a difference between the phrases: 'redounded to the benefit of' or

 'benefited from' (on the one hand) and 'for the benefit of' (on the other).
The former require that actual benefit must have been realized; the latter
requires only that the transaction should be one which normall y would
produce benefit to the partnership, regardless of whether or not actual
benefit accrued." 8

We do not agree with petitioners that there 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.

Petitioners further contend that the ruling of the respondent court runs counter to
the pronouncement of this Court in the case of Cobb-Perez vs. Lantin, 9 that the
husband as head of the family and as administrator of the conjugal partnership is
presumed to have contracted obligations for the benefit of the family or the
conjugal partnership.

Contrary to the contention of the petitioners, the case of Cobb-Perez is not

applicable in the case at bar. This Court has, on several instances, interpreted
the term "for the benefit of the conjugal partnership."

In the cases of Javier vs. Osmeña, 10 Abella de Diaz vs. Erlanger & Galinger, Inc., 11
Cobb-Perez vs. Lantin 12 and G-Tractors, Inc. vs. Court of Appeals, 13 cited by
the petitioners, we held that:

"The debts contracted by the husband during the marriage relation, for
and in the exercise of the industry or profession by which he contributes
toward the support of his family, are not his personal and private
debts, and the products or income from the wife's own property, which,
like those of her husband's, are liable for the payment of the marriage
expenses, cannot be excepted from the payment of such debts." (Javier)

"The husband, as the manager of the partnership (Article 1412, Civil

Code), has a right to embark the partnership in an ordinary commercial
enterprise for gain, and the fact that the wife may not approve of a
venture does not make it a private and personal one of the husband."
(Abell a de Diaz)

"Debts contracted by the husband for and in the exercise of the industry
or profession by which he contributes to the support of the family,
cannot be deemed to be his exclusive and private debts." (Cobb-Perez)

". . . if he incurs an indebtedness in the legitimate pursuit of his career

or profession or suffers losses in a legitimate business, the conjugal
partnership must equall y bear the indebtedness and the losses, unless he
deliberately acted to the prejudice of his family." (G-Tractors)
However, in the cases of Ansaldo vs. Sheriff of Manila, Fidelity Insurance & Luzon
Insurance Co., 14 Liberty Insurance Corporation vs. Banuelos, 15 and Luzon Surety
Inc. vs. De Garcia, 16 cited by the respondents, we ruled that:

"The fruits of the paraphernal property which form part of the assets of
the conjugal partnership, are subject to the payment of the debts and
expenses of the spouses, but not to the payment of the personal
obligations (guaranty agreements) of the husband, unless it be proved that
such obligations were productive of some benefit to the family."
(Ansaldo; parenthetical phrase ours.)

"When there is no showing that the execution of an indemnity agreement

by the husband redounded to the benefit of his family, the undertaking is
not a conjugal debt but an obligation personal to him." (Liberty Insurance)

"In the most categorical language, a conjugal partnership under Article

161 of the new Civil Code is liable only for such 'debts and obligations
contracted by the husband for the benefit of the conjugal partnership.'
There must be the requisite showing then of some advantage which
clearly accrued to the welfare of the spouses. Certainly, to make a
conjugal partnership respond for a liability that should appertain to the
husband alone is to defeat and frustrate the avowed 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." (Luzon Surety, Inc.)

From the foregoing jurisprudential rulings of this Court, we can derive the
following conclusions:

(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 of the 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.
Thus, the distinction between the Cobb-Perez case, and we add, that of the three
other companion cases, on the one hand, and that of Ansaldo, Liberty Insurance and
Luzon Surety, is that in the former, the husband contracted the obligation for his
own business; while in the latter, the husband merely acted as a surety for the loan
contracted by another for the latter's business.

The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed
as surety for the P50M loan contracted on behalf of PBM. Petitioner should have
adduced evidence to prove that Alfredo Ching's acting as surety redounded to the
benefit of the conjugal partnership. The reason for this is as lucidly explained by
the respondent court:

"The loan procured from respondent-appell ant AIDC was for the
advancement and benefit of Philippine Blooming Mill s and not for the
benefit of the conjugal partnership of petitioners-appell ees. Philippine
Blooming Mill s has a personality distinct and separate from the family
of petitioners- appell ees — this despite the fact that the members of
the said family happened to be stockholders of said corporate entity."

xxx xxx xxx

. . . 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-appell ant AIDC failed to prove
that the debt was contracted by appell ee-husband, for the benefit of
the conjugal partnership of gains. What is apparent from the facts of the
case is that the judgment debt was contracted by or in the name of the
Corporation Philippine Blooming Mill s and appell ee-husband only signed as
surety thereof. The debt is clearly a corporate debt and respondent-
appell ant's right of recourse against appell ee-husband as surety is only to
the extent of his corporate stockholdings. It does not extend to the
conjugal partnership of gains of the family of petitioners-appell ees. . . ." 17

Petitioners contend that no actual benefit need accrue to the conjugal partnership.
To support this contention, they cite J ustice J.B.L. Reyes' authoritative opinion in
the Luzon Surety Company case:

"I concur in the result, but would like to make of record that, in my
opinion, the words 'all debts and obligations contracted by the husband
for the benefit of the conjugal partnership' used in Article 161 of the
Civil Code of the Philippines in describing the charges and obligations
for which the conjugal partnership is liable do not require that actual
profit or benefit must accrue to the conjugal partnership from the
husband's transaction; but it suffices that the transaction should be one
that normall y would produce such benefit for the partnership. This is
the ratio behind our ruling in Javier vs. Osmeña, 34 Phil. 336, that
obligations incurred by the husband in the practice of his profession are
coll ectible from the conjugal partnership."

The aforequoted concurring opinion agreed with the majority decision that the
conjugal partnership should not be made liable for the surety agreement which
was clearly for the benefit of a third party. Such opinion merely registered an
exception to what may be construed as a sweeping statement that in all cases
actual profit or benefit must accrue to the conjugal partnership. The opinion
merely made it clear that no actual benefits to the family need be proved in
some cases such as in the Javier case. There, the husband was the principal
obligor himself. Thus, said transaction was found to be "one that would normally
produce . . . benefit for the partnership." In the later case of G-Tractors, Inc., the
husband was also the principal obligor — not merely the surety. This latter
case, therefore, did not create any precedent. It did not also supersede the
Luzon Surety Company case, nor any of the previous accommodation contract
cases, where this Court ruled that they were for the benefit of third parties.

But it could be argued, as the petitioner suggests, that even in such kind of
contract of accommodation, a benefit for the family may also result, when the
guarantee is in favor of the husband's employer.

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 benefit of 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- appell ants is purely a corporate debt granted to PBM,
with petitioner- appell ee-husband merely signing as surety. While such
petitioner-appell ee- husband, as such surety, is solidarily liable with the
principal debtor AIDC, such liability under the Civil Code provisions is
specificall y 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-appell ants insist that the corporate debt in question fall s

under the exception laid down in said Article 122 (par. one). We do not
agree. The loan procured from respondent-appell ant AIDC was for the
sole advancement and benefit of Philippine Blooming Mill s and not for the
benefit of the conjugal partnership of petitioners-appell ees.

. . . appell ee-husband derives salaries, dividends benefits from

Philippine Blooming Mill s (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- appell ee-husband or his family.
The all eged benefit, if any, continuously harped by respondents-
appell ants, are not only incidental but also speculative." 19

We agree with the respondent court. Indeed, considering the odds involved in
guaranteeing a large amount (P50,000,000.00) of loan, the probable
prolongation of employment in PBM and increase in value of its stocks, would
be too small to qualify the transaction as one "for the benefit" of the surety's
family. Verily, no one could say, with a degree of certainty, that the said
contract is even "productive of some benefits" to the conjugal partnership.

We likewise agree with the respondent court (and this view is not contested by the
petitioners) that the provisions of the Family Code is applicable in this case.
These provisions 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." 20

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. 21 Thus, when co-respondent Alfredo Ching
entered into a surety agreement he, from then on, definitely put in peril the
conjugal property (in this case, including the family home) and placed it in
danger of being taken gratuitously as in cases of donation.

In the second assignment of error, the petitioner advances the view that acting as
surety is part of the business or profession of the respondent-husband.

This theory is new as it is novel.

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; Abell a 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." 22

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 offi cials 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 of his 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.

On the basis of the facts, the rules, the law and equity, the assailed decision
should be upheld as we now uphold it. This is, of course, without prejudice to
petitioner's right to enforce the obligation in its favor against the PBM receiver
in accordance with the rehabilitation program and payment schedule approved or
to be approved
by the Securities & Exchange Commission.

WHEREFORE, the petition for review should be, as it is hereby, DENIED for lack of
merit.

SO ORDERED.

Regalado, Melo, Puno and Mendoza, JJ ., concur.

Footnotes

1. Penned by Hon. Associate Justice Asaali S. Isnani and concurred in by

Associate Justices Nathanael P. de Pano, Jr. and Corona Ibay-Somera,
Former Fourth Division, Decision, pp. 34-39, rollo.

2. Annex "C," petition; pp. 43-52,

rollo. 3. CA-G.R. No. SP-14404.

4. Branch VIII, CFI of Rizal.

5. Par. 4, 5, dispositive portion of the Decision in CA-G.R. No. SP-14404; p. 36,

rollo.

6. Decision in CA-G.R. CV No. 29632; p. 39, rollo.

7. See p. 41, rollo.

8. See p. 18, par. 3-6, rollo.

9. No. L-22320, May 22, 1968, 23 SCRA 637; 645.

10. No. 9984, March 23, 1916, 34 Phil. 336.

11. No. 38052, December 23, 1933, 59 Phil. 326.

12. No. L-22320, May 23, 1968, supra.

13. No. L-57402, February 28, 1995, 135 SCRA 193.

14. No. 43257, February 19, 1937, 64 Phil. 115.

15. 59 OG No. 29, 4526.

16. No. L-25659, October 31, 1969, 30 SCRA 111.

17. See pp. 38-39, rollo.

18. Ansaldo, et. al., vs. Liberty Insurance Company Inc. & Luzon Surety
Company, supra.

19. Court of Appeals Resolution of Nov. 28, 1994 denying the motion for
reconsideration, pp. 1-2; Annex "B"; p. 41, rollo.
20. Article 121, Nos. 2 & 3, Family Code.

21. Article 174, Civil Code.

22. Denial of motion for reconsideration, supra.