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ALFREDO CHING v. CA

FACTS:

The case involves a loan transaction between Philippine Blooming Mills Company, Inc. (PBMCI) and Allied Banking Corporation (ABC). PBMCI obtained a loan from ABC and executed a continuing guaranty to secure the loan. When PBMCI defaulted on its loans, ABC filed a complaint for the collection of the loan amount and sought a writ of preliminary attachment against PBMCI and its executive vice-president, Alfredo Ching.

Ching filed a motion to dismiss or suspend the proceedings based on the pendency of a separate case before the Securities and Exchange Commission (SEC). The trial court partially granted the motion by suspending the proceedings only in relation to PBMCI. Ching subsequently filed another motion to suspend the proceedings on the same ground, but this was opposed by ABC.

Ching and another defendant, Tañedo, filed their answers to the complaint. Ching filed an omnibus motion seeking the dismissal of the complaint or suspension of the proceedings based on an injunctive order issued in the SEC case. Tañedo also filed an omnibus motion, arguing that the ABC had waived its right to proceed against the continuing guaranty by resorting to preliminary attachment.

The trial court eventually granted ABC's motion to reduce the attachment bond. In 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a motion to set aside the levy on attachment, claiming that the shares of stocks levied on were acquired using conjugal funds and did not benefit the conjugal partnership. The ABC opposed the motion, arguing that Encarnacion had no standing to file a motion since she was not a party to the case.

During the hearing, Encarnacion presented evidence to support her claim, including her marriage contract and documents related to Citycorp Investment Philippines, where Alfredo Ching was a member of the Board of Directors. The Spouses Ching filed their opposition to the motion to expunge records.

The trial court granted the motion to quash the preliminary attachment on the shares of stocks and ordered the return of the said stocks to the petitioners. ABC filed a motion for reconsideration, which was denied by the court. ABC then filed a petition for certiorari with the Court of Appeals, seeking the nullification of the court's order on the ground of lack of jurisdiction and grave abuse of discretion.

ISSUES:

  1. Whether the petitioner-wife has the right to file the motion to quash the levy on attachment on the 100,000 shares of stocks in Citycorp Investment Philippines.

  2. Whether or not the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders.

  3. Whether the petitioner-wife had the right to file a motion to set aside the levy on attachment of the shares of stocks.

  4. Whether the Court of Appeals (CA) erred in setting aside and reversing the orders of the Regional Trial Court (RTC).

RULING:

  1. On the first issue, the court held that the petitioner-wife had the right to file the motion to quash the levy on attachment, despite not being a party to the case. Citing the case of Ong v. Tating, it was established that a third person whose property has been erroneously attached and seized by the sheriff in execution of a writ of attachment may invoke the jurisdiction of the court to have the property released and returned.

  2. On the second issue, the court ruled that the RTC committed a grave abuse of its discretion in issuing the assailed orders. The Court of Appeals correctly granted the petition for certiorari filed by the private respondent, as the trial court deprived the private respondent of its right to file a bond under Section 14, Rule 57 of the Rules of Court. The trial court also acted without jurisdiction in accepting and granting a motion filed by a complete stranger to the case.

  3. Yes, the petitioner-wife had the right to file a motion to set aside the levy on attachment of the shares of stocks. The court stated that in solving the motion of the third party, it cannot pass upon the question of the title to the property with any character of finality. It can treat the matter only to decide if the sheriff has acted correctly or not. If the claimant's proof does not persuade the court of the validity of the title or right of possession, the claim will be denied by the court. The aggrieved third party may also avail himself of the remedy of "terceria" by executing an affidavit of his title or right of possession. The remedies available to the third-party claimant are cumulative, and any one of them may be resorted to without availing of other remedies.

  4. No, the CA erred in setting aside and reversing the orders of the RTC. The private respondent, who was the petitioner in the CA, was burdened to prove that the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction. The court held that a special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. The court found that the RTC did not commit any grave abuse of its discretion in issuing the assailed orders.

PRINCIPLES:

  • A third person whose property has been erroneously attached and seized by the sheriff in execution of a writ of attachment may invoke the jurisdiction of the court to have the property released and returned.

  • The trial court must allow a third party the opportunity to prove that the sheriff acted wrongly in levying an attachment on their property, and if proven, the court must order the release and return of the property to the third party.

  • The trial court must not accept and grant motions filed by individuals who are not parties to the case, as this would exceed the court's authority and jurisdiction.

  • The presumption of the conjugal nature of properties acquired during the marriage subsists in the absence of clear, satisfactory and convincing evidence to overcome the same. (Article 160 of the New Civil Code)

  • The burden of proof lies on the party claiming that property acquired by the spouses during their marriage is not conjugal partnership property but belongs to one of them as his personal property. The party claiming must prove the source of the money utilized to purchase the property. (Wong v. Intermediate Appellate Court)

  • The conjugal partnership is liable for debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by the wife, also for the same purpose, where she may legally bind the partnership. (Article 161[1] of the New Civil Code)

  • To make a conjugal partnership responsible for a liability that should belong solely to one of the spouses is to frustrate the objective of the New Civil Code to show utmost concern for the solidarity and well-being of the family as a unit.

  • The benefits contemplated by Article 161 of the New Civil Code must be those directly resulting from the loan and cannot be a mere by-product or spin-off of the loan itself.

  • If the husband himself is the principal obligor in the contract, where he directly received the money and services to be used in or for his own business or profession, the contract falls within the term "obligations for the benefit of the conjugal partnership." The family is presumed to benefit from the loan or services to be rendered to the husband's business or profession. However, this is different from a situation where the husband acts as a surety or guarantor for a loan obtained by a business or third party.