The Supreme Court held that a husband who wasn’t a party to a suit can file a separate action to protect his conjugal property if the debt incurred by his spouse didn’t benefit the family. The Court emphasized the importance of proper summons and due process in depriving individuals of their property, reinforcing constitutional rights and ensuring fair legal proceedings. This ruling underscores the necessity for diligent efforts in serving summons and recognizes the right of a non-debtor spouse to challenge the attachment of conjugal assets.

Safeguarding Family Assets: Can a Husband Shield Conjugal Property from His Wife’s Debts?

This case revolves around Carmelita and Eliseo Borlongan, whose property was subject to an execution sale due to Carmelita’s alleged surety agreements with Banco de Oro (BDO). The core legal question is whether the Pasig RTC has jurisdiction to hear Eliseo’s complaint to annul the levy and execution sale of their conjugal property ordered by the Makati RTC against his wife, Carmelita. The controversy arose when the Borlongans discovered an annotation on their property title indicating it was subject to an execution sale in connection with a case against Tancho Corporation, where Carmelita was implicated as a surety. The ensuing legal battle exposed issues regarding the proper service of summons, the rights of a non-debtor spouse, and the extent to which conjugal property can be held liable for one spouse’s debts.

The Supreme Court’s analysis hinged on the constitutional right to due process, emphasizing that no person shall be deprived of property without due process of law. Central to this is the proper service of summons, ensuring that individuals are notified of legal proceedings affecting their interests and have an opportunity to defend themselves. The Court found that the initial attempts to serve summons on Carmelita were deficient. Specifically, the process server tried to serve the summons at Fumakilla Compound, a property already foreclosed by BDO, before seeking leave for service by publication. This approach, the Court noted, did not constitute a diligent effort to locate Carmelita, undermining the presumption that official duty had been regularly performed.

No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

Building on this principle, the Court addressed the issue of substituted service and service by publication. It reiterated the established hierarchy: personal service is preferred; substituted service is permissible only when personal service is impractical; and service by publication is a last resort when the defendant’s whereabouts are unknown after diligent inquiry. The Court cited Manotoc v. Court of Appeals, emphasizing the requirements for valid substituted service:

(1) Impossibility of Prompt Personal Service… Several attempts means at least three (3) tries, preferably on at least two different dates. In addition, the sheriff must cite why such efforts were unsuccessful. It is only then that impossibility of service can be confirmed or accepted.
(2) Specific Details in the Return… The sheriff must describe in the Return of Summons the facts and circumstances surrounding the attempted personal service.

The Court highlighted that serving the summons by publication was not justified in this case, as BDO did not demonstrate diligent efforts to locate Carmelita before resorting to publication. The availability of Carmelita’s address in the General Information Sheet (GIS) filed by Tancho Corporation with the SEC further underscored the lack of reasonable effort to effect personal service. The Court distinguished between the facts of this case and those in Spouses Ching v. Court of Appeals, emphasizing that unlike in Ching, Eliseo had no opportunity to intervene in the Makati RTC case since he only became aware of the attachment after the decision had become final.

Furthermore, the Court addressed the issue of whether Eliseo, as a non-debtor spouse, could file an independent action to annul the attachment of their conjugal property. The Court referenced Section 16, Rule 39 of the Rules of Court, which allows third-party claimants to vindicate their claims in a separate action. The critical question, as framed by the Court, was whether the husband, who was not a party to the suit but whose conjugal property was executed on account of the other spouse’s debt, is considered a “stranger” to the suit. Citing Buado v. Court of Appeals, the Court clarified that the determination hinges on whether the debt redounded to the benefit of the conjugal partnership.

A third-party claim must be filed [by] a person other than the judgment debtor or his agent. In other words, only a stranger to the case may file a third-party claim.

In this case, the Court noted that the obligation stemmed from a surety agreement allegedly signed by Carmelita for Tancho Corporation. The Court cited its 2004 Decision in Spouses Ching v. Court of Appeals, which stated that there is no presumption that the conjugal partnership is benefited when a spouse enters into a contract of surety. BDO failed to establish that the surety agreement benefited the conjugal partnership, thus Eliseo’s claim was deemed proper, vesting jurisdiction in the RTC Pasig. In essence, the Supreme Court reinforced the principle that conjugal property cannot be held liable for the personal obligations of one spouse unless it’s proven that the conjugal partnership derived a benefit from the obligation.

FAQs

What was the main issue in this case?	The central issue was whether a husband could file a separate action to annul the levy and execution sale of conjugal property due to his wife’s debts. The court addressed whether the debt benefited the conjugal partnership and if the husband could be considered a third party to the original case.
Why was the service of summons considered defective?	The service was flawed because the process server attempted to serve the summons at a location already foreclosed by the bank. The bank also did not make diligent efforts to locate the defendant before resorting to service by publication, violating due process.
What is the rule regarding the service of summons?	The hierarchy for serving summons is: (1) personal service; (2) substituted service, if personal service is not possible; and (3) service by publication, only when the defendant’s whereabouts are unknown after diligent inquiry. Personal service is always the preferred method.
When can a non-debtor spouse file a separate action?	A non-debtor spouse can file a separate action if the debt incurred by the other spouse did not benefit the conjugal partnership. In this situation, the non-debtor spouse is considered a third party to the original case.
What is the significance of the surety agreement in this case?	The surety agreement was crucial because the conjugal property was attached based on it. The court emphasized there is no presumption that a surety agreement benefits the conjugal partnership, and the creditor must prove the benefit.
What did the court say about third-party claims?	The court reiterated that a third-party claim must be filed by someone other than the judgment debtor or their agent. Only a stranger to the case can file such a claim to protect their property rights.
What was the role of due process in the court’s decision?	Due process was central to the decision, as the court emphasized that no one can be deprived of property without it. This includes proper notification through summons and an opportunity to defend one’s interests.
What was the outcome of the consolidated petitions?	The Supreme Court granted the petitions, reversed the Court of Appeals’ decisions, and ordered the trial court to continue proceedings in the case filed by the husband to protect the conjugal property. A Temporary Restraining Order was also issued.

The Supreme Court’s decision underscores the importance of adhering to procedural rules, especially regarding the service of summons, and reaffirms the constitutional right to due process. It provides clarity on the rights of non-debtor spouses and the extent to which conjugal property can be held liable for the debts of one spouse. This ruling serves as a reminder of the legal protections available to families and individuals facing similar circumstances.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Carmelita T. Borlongan v. Banco De Oro, G.R. No. 217617, April 05, 2017