Debts and conjugal liabilities

All marriages make promises such until the end, they will end up being together forever. Many have stayed that way, but some are less fortunate with their partners leading to separations or even nullity of marriages. But even if they've moved on their separate ways, liabilities won't stop making legal actions a possibility when they've remained unsettled.
Par. 2 of the Art. 121 of the Family Code states 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, or by both spouses or by one of them with the consent of the other.
This means that 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. 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 equally bear the indebtedness and the losses, unless he deliberately acted to the prejudice of his family.

But like most provisions of law, there are exceptions. If the husband incurred indebtedness but did not accrue an actual benefit to the family, his personal payment on the said debts shall not be charged to the conjugal properties.

Art. 122 states 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 properties partnership except insofar as they have redounded to the benefit of the family.

A good example of this is the case of Ayala Investment and Development Corporation and Abelardo Magsajo v. Court of Appeals (G.R. 118305 12 February 1998). Philippine Blooming Mills obtained a P50,300,000 loan from AIDC with the corresponding surety agreement from respondent Alfredo Ching, executive vice president of PBM, as collateral. Under the agreement, Ching was made jointly and severally answerable with PBM's indebtedness to AIDC. PBM failed to pay the loan, hence a complaint was filed against PBM and Ching.

The RTC rendered judgment ordering PBM and Ching to jointly and severally pay AIDC the principal amount with interest. To implement the judgment, a notice of sheriff sale on three of the conjugal properties of the Chings was issued. The court ruled that the loan procured from respondent-appellant AIDC was for the advancement and benefit of PBM and not for the benefit of the conjugal partnership. PBM has a personality distinct and separate from the family of petitioners-appellees — this despite the fact that the members of the said family happened to be stockholders of said corporate entity.

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 be charged to the conjugal partnership except to the extent that they redounded to the benefit of the family.

In sum, 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, it is enough that the benefit to the family is apparent at the time of the signing of the contract if, 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.

But 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."