Security Bank v. Mar Tierra Corp.
REITERATIONFacts
The Antecedents: Respondent Mar Tierra Corporation, through its president Wilfrido C. Martinez, applied for a ₱12,000,000 credit accommodation with petitioner Security Bank and Trust Company. The credit line was later increased to ₱14,000,000. Individual respondents Wilfrido C. Martinez, Miguel J. Lacson, and Ricardo A. Lopa executed an indemnity agreement, binding themselves jointly and severally with the corporation for the payment of the loan. Respondent corporation availed of ₱9,952,000 of the credit line, undertaking to pay by November 30, 1981. It paid a portion of the principal and interest but failed to pay the balance due to business reversals. Petitioner filed a collection case against the corporation and individual respondents. The case was later dismissed with respect to Lacson and Lopa, leaving Martinez as the sole individual respondent. A writ of attachment was issued, leading to the levy of the conjugal house and lot of spouses Wilfrido and Josefina Martinez. Procedural History: The Regional Trial Court (RTC) held respondent corporation and individual respondent Martinez jointly and severally liable for the outstanding loan balance but ordered the lifting of the attachment on the conjugal house and lot, finding that the obligation did not redound to the benefit of the family. The Court of Appeals (CA) affirmed the RTC's decision in toto. Petitioner's motion for reconsideration was denied. The Petition: Petitioner seeks review of the CA's decision, asserting that the courts erred in finding that only ₱9,952,000 was availed of from the credit line and in ruling that the conjugal partnership of the Martinez spouses could not be held liable for the obligation incurred by Wilfrido C. Martinez.
Issue(s)
Whether the RTC and CA erred in finding that respondent corporation availed of ₱9,952,000 only from its credit line and not the entire ₱14,000,000. Whether the RTC and CA erred in ruling that the conjugal partnership of the Martinez spouses could not be held liable for the obligation incurred by individual respondent Martinez.
Ruling
The Supreme Court denied the petition, upholding the decision of the Court of Appeals. The Court affirmed the factual finding that only ₱9,952,000 was availed of from the credit line. Furthermore, the Court ruled that the conjugal partnership of the Martinez spouses could not be held liable for the indemnity agreement executed by Wilfrido C. Martinez, as it was not proven to have redounded to the benefit of the conjugal partnership.
Ratio Decidendi
On the amount availed of from the credit line: The Court held that the factual findings of the CA, affirming those of the RTC, are conclusive and will not be disturbed on appeal. Petitioner itself admitted in its complaint that respondent corporation borrowed and received the principal sum of ₱9,952,000. Therefore, petitioner was bound by this judicial admission and the factual finding of the lower courts. The issue of the amount actually availed of is a factual matter, not within the scope of the Court's power of judicial review under Rule 45, which is concerned solely with questions of law. On the liability of the conjugal partnership: The Court reiterated the principle that under Article 161(1) of the Civil Code, the conjugal partnership is liable for debts and obligations contracted by the husband for the benefit of the conjugal partnership. However, when the husband acts as a surety or guarantor for a third party, such an act does not, by itself, benefit the conjugal partnership. The benefit must clearly be intended for a third party, not the conjugal partnership. In such cases, there is no presumption that the obligation redounds to the benefit of the conjugal partnership; proof must be presented to establish such benefit. The Court cited Luzon Surety Co., Inc. v. de Garcia and Ayala Investment and Development Corporation v. Court of Appeals in support of this principle. In the present case, the principal contract was for the benefit of respondent corporation, and the indemnity agreement was an accessory contract for the corporation's benefit. Petitioner failed to discharge its burden of proving that the conjugal partnership of the Martinez spouses benefited from the transaction. Holding the conjugal partnership liable for an obligation pertaining solely to the husband, without benefit to the family, would defeat the objective of the Civil Code to protect the solidarity and well-being of the family as a unit and to conserve the conjugal partnership.
Main Doctrine
The conjugal partnership cannot be held liable for an indemnity agreement executed by the husband to accommodate a third party, absent proof that the conjugal partnership benefited from the transaction. The husband's act of becoming a surety or guarantor for another does not, by itself, create a presumption of benefit to the conjugal partnership.