There are three kinds of property relationship of married couples: absolute community property if they married after August 3, 1988, the date when the Family Code took effect; conjugal partnership of gains if they married before that date and separation of property if they sign an ante-nuptial contract before their wedding date.
The first consists of all property owned by spouses at the time of the celebration of the marriage or acquired thereafter [Article 91, FC]. In fine, all their properties before and after the wedding shall be jointly owned by them, except their inherited properties. The second consists of all properties they put in a common fund or own during the marriage [Article 106, FC]. In effect, only those they bought after the wedding shall be conjugal while the properties they own before the wedding shall remain their exclusive property, which is termed as capital if it is owned by the husband or paraphernal if owned by the wife. The third, each spouse has no right over the other’s property. If there is no ante-nuptial agreement, all the properties acquired after the wedding is presumed conjugal [Article 116, FC] or absolute community [Article 93, FC]. Also, the family home is exempt from execution, forced sale or attachment [Article 155, FC].
What happens if a spouse was held liable in a suit for an obligation he incurred, may the creditor run after the conjugal property? The issue was answered by our Honorable Supreme Court in Cordova v. Ty, G.R. 246255, 03 February 2021. In this case, a decision was rendered by the Metropolitan Trial Court on the civil aspect of the criminal case for B.P. 22 [Anti-Bouncing Check Law]. It held Chi Tim and Young liable for P6.2 million representing the value of 11 rubber checks they drew using their company Wood Technology Corp. to obtain cash from Ty. As it became final, the MTC issued a writ of execution and levied two properties of Teresita Cordova, married to Chi Tim, consisting of land and condominium unit. They filed an injunction at the Regional Trial Court arguing that the liability of Chi Tim from the B.P. 22 case was a corporate obligation; thus he should not be held personally liable. The RTC ruled for the Cordovas as it held that the MTC erred in levying the properties because the land is exclusive property of the wife and the condominium unit is a family home of their daughter. Ty appealed. The Court of Appeals ruled in his favor, as It reversed the RTC decision. The fact that the loan was acquired during the marriage was sufficient to levy the family home to satisfy Chi Tim’s civil obligation with Ty.
On appeal by the Cordovas, the Supreme Court found that records show the spouses were married prior to August 3, 1988. As there is no pre-nuptial contract, their property relations is governed by conjugal partnership of gains. All properties of the marriage is presumed to be conjugal, unless it is proven that they are exclusively owned by either spouse. It was held in Ching v. CA that it is not even necessary to prove the properties were acquired with funds of the partnership. It held that the CA correctly ruled that the land was not the paraphernal property of the wife as it was acquired during the marriage. The claim that the condo unit is a family home is not a magic wand that will freeze the court’s hand and stop the execution of its final and executory ruling. In Salazar v. Felias, it was ruled that the claim for exemption must be set up and proved, but Cordovas failed to do so. But, the properties were purchased during the marriage and in the absence of proof to the contrary, the presumption of conjugality of the properties prevail. As the land and condo unit are conjugal properties, Ty must prove his transaction with Chi Tim benefited the family, but he failed.
To resolve the issue if the properties are answerable for the civil liability imposed on Chi Tim, there is a need to resort to the Family Code. In Article 121 (3), the conjugal partnership is liable for debts and obligations contracted by either spouse without the other’s consent to the extent that the family may have benefited. While Ty has a right to enforce the MTC Decision, he cannot levy the conjugal properties because of the rule that conjugal property cannot be liable for the personal obligation contracted by one spouse, unless an advantage or benefit is shown to have accrued to the conjugal partnership. Article 122 is emphatic that payment of personal debts contracted by the husband or 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. The liability of the husband Chi Tim arose out of a corporate obligation and due to the separate personality of the corporation, its liability is its own, not of the conjugal partnership. Thus, the SC ruled in favor of Cordova, as it reversed the CA decision and reinstated the RTC decision voiding the MTC execution.