Case Summary (G.R. No. 143382)
Factual Background
On May 7, 1980, Mar Tierra Corporation, represented by its president, Wilfrido C. Martinez, applied for a credit accommodation of ₱12,000,000 with Security Bank and Trust Company. Petitioner approved this application, which was secured by an indemnity agreement executed by individual respondents Martinez, Lacson, and Lopa. The credit line was amended to ₱14,000,000 on July 2, 1980, leading to a new indemnity agreement. Subsequently, the corporation drew ₱9,952,000 from this credit line and, despite initial repayments, defaulted on the remaining balance after ceasing operations in 1984.
Procedural History
In light of the unpaid balance, Security Bank filed a complaint for a sum of money with a request for preliminary attachment against Mar Tierra Corporation and the individual respondents in the Regional Trial Court (RTC) of Makati, which was logged as Civil Case No. 3947. Following the legal proceedings, the RTC issued a writ of attachment on the real properties of the Martinez couple. The RTC later ruled that while Mar Tierra Corporation and Martinez were jointly liable for ₱5,304,000, the obligation contracted by Martinez did not benefit his family. Consequently, the attachment on their conjugal property was lifted.
Court of Appeals Ruling
Security Bank's appeal to the Court of Appeals (CA) resulted in the affirmation of the RTC's decision. It maintained that the amount availed of by Mar Tierra Corporation was only ₱9,952,000, which was acknowledged by the bank in its complaint. The CA expressed that the factual findings of the RTC were conclusive as they were not based on mere legal interpretations but on established facts.
Issued Raised
The central question before the courts was whether the conjugal partnership of Martinez and his spouse could be held liable for the indemnity agreement signed by Martinez for the loan obtained by the corporation, which was perceived as a third-party benefit.
Legal Principles
According to Article 161(1) of the Civil Code, a conjugal partnership is liable for obligations contracted by the husband if they benefit the partnership. Previous rulings (e.g., Luzon Surety Co., Inc. v. de Garcia and Ayala Investment and Development Corporation v. Court of Appeals) delineate that obligations for the benefit of a third party do not equate to obligations of the conjugal partnership unless it can be proven that the partnership derived some benefit from the transaction. This underscores the burden of proof falling on the creditor to show that the conjugal partnership should be liable.
Court's Conclusion
The court held that since the credit line agreement and
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Case Overview
- This case involves a petition for review on certiorari regarding the liability of a conjugal partnership for an indemnity agreement entered into by the husband to accommodate a third party.
- The case was decided by the Supreme Court of the Philippines on November 29, 2006.
- The petitioner is Security Bank and Trust Company, while the respondents include Mar Tierra Corporation and individual respondents Wilfrido C. Martinez, Miguel J. Lacson, and Ricardo A. Lopa.
Factual Background
- On May 7, 1980, Mar Tierra Corporation, led by Wilfrido C. Martinez, applied for a credit accommodation of P12,000,000 from Security Bank.
- The bank approved the application and established a credit line agreement, secured by an indemnity agreement signed by the individual respondents, who bound themselves jointly and severally with the corporation.
- The credit line was later amended to P14,000,000, and the individual respondents executed a new indemnity agreement.
- Mar Tierra Corporation drew P9,952,000 from the credit line but failed to pay the outstanding balance due to business reversals, ultimately ceasing operations in 1984.
Legal Proceedings
- Security Bank filed a complaint for a sum of money and sought a preliminary attachment against Mar Tierra Corporation and the individual respondents in the Regional Trial Court (RTC) of Makati.
- The RTC issued a writ of attachment on the properties of