G.R. No. 143382 - Security Bank and Trust Co. vs. Mar Tierra Corporation

On May 7, 1980, Mar Tierra Corporation, represented by its president Wilfrido C. Martinez, applied for a credit accommodation of P12,000,000 from Security Bank and Trust Company.
The bank approved the application and entered into a credit line agreement with Mar Tierra Corporation, secured by an indemnity agreement.
The indemnity agreement was executed by individual respondents Wilfrido C. Martinez, Miguel J. Lacson, and Ricardo A. Lopa, obligating themselves jointly and severally with the corporation for the repayment of the loan.

On July 2, 1980, the original credit line agreement was amended to increase the loan amount to P14,000,000.
Individual respondents accordingly executed a new indemnity agreement to secure the increased credit line.
On September 25, 1981, Mar Tierra Corporation availed of its credit line, receiving P9,952,000, and undertook to settle the balance before November 30, 1981.

The corporation managed to pay P4,648,000 towards the principal and P2,729,195.56 towards interest and other charges.
Owing to business reversals and eventual cessation of operations in 1984, the corporation could not settle the remaining balance of the loan.

Security Bank filed a complaint in Regional Trial Court (RTC) of Makati, Branch 66 (Civil Case No. 3947), seeking recovery of the unpaid balance along with preliminary attachment of properties.
The case initially involved both the corporation and the individual respondents; however, the proceedings later dismissed Lacson and Lopa, leaving Martinez as the sole individual defendant.
On August 10, 1982, the RTC issued a writ of attachment covering all assets of Mar Tierra Corporation and individual respondent Martinez, which notably included the conjugal house and lot of Wilfrido and Josefina Martinez.
The RTC, on June 20, 1994, rendered its decision, finding the corporation and Martinez jointly and severally liable for P5,304,000 with additional interest, penalties, and attorney’s fees.
The RTC also ruled that the obligation entered into by Martinez did not benefit his family, thereby ordering the lifting of the attachment on the conjugal property.
Security Bank appealed the RTC decision to the Court of Appeals (CA), which affirmed the trial court’s decision in its entirety.
Petitioner subsequently filed a petition for review on certiorari with the Supreme Court.

The petitioner contended in its appeal that there was an error in the finding of the credited amount, arguing that the full P14,000,000 credit line should be considered instead of only P9,952,000.
The petitioner also argued that the conjugal partnership should be held liable for the indemnity agreement entered into solely by the husband, asserting that this should bind both members of the conjugal partnership.

Whether the actual amount availed by Mar Tierra Corporation from the credit line should be considered as the full P14,000,000 or only the P9,952,000 admitted by the petitioner.
Whether the conjugal partnership of the Martinez spouses can be held liable for an indemnity (or surety) agreement entered into solely by the husband, given that the obligation was purportedly for the benefit of accommodating a third party rather than directly benefiting the partnership.
The broader question under Article 161(1) of the Civil Code (now Article 121(2) of the Family Code) of how to determine if a debt contracted by the husband is for the benefit of the conjugal partnership.